By Bernard Hickey
The growing opposition in recent months to the Trans Pacific Partnership both here and overseas has surprised a few people.
The less-than-grateful response to the deal itself was more than a shock to those who had worked for a couple of decades to get a trade deal with two of our biggest trading partners -- Japan and the United States.
The contrast with the response to New Zealand's Trade Agreement with China in 2008 could not be more stark. That deal, rightly, was judged a huge win for New Zealand diplomacy that would open up an enormous new market. That deal set the stage for merchandise exports to China to rise from NZ$1.6 billion in 2008 to NZ$11.6 billion in 2014. Without it, New Zealand's recovery from the Global Financial Crisis might have looked very different and not in a good way, although it's worth noting that Australia's exports to China rose by even more over the same period and it did not have a deal.
This TPP deal, which on the face of it delivers more than than twice as many tariff reductions as the China deal, has instead sparked so much opposition that tens of thousands marched against it it before it was even agreed.
The first response by many this week was to focus on the disappointing deal for dairy, to criticise the permanent block on a ban on foreign buying of property and to highlight the extra costs of longer copyright protections for drugs, books, movies and music.
A trade deal done with America and Japan a decade ago would have sparked a national celebration. This time around all we got was a collective round bout of nitpicking and fossicking through the entrails. Even Trade Minister Tim Groser, the TPP's biggest cheerleader, set the scene by talking about how New Zealand would have to swallow a few "dead rats" to get a deal.
So what has changed? Firstly, this was far from the 'free' trade deal of olden days where tariffs on commodities were reduced over time and a whole range of restrictions on investment and freedom of movement for people were removed. The gold standard example is New Zealand's Closer Economic Relations agreement with Australia.
The TPP was much more about winning a few tariff reductions (and remember Canada and America will still have painfully high barriers to entry for our dairy after this deal) in exchange for a US-led drive to strengthen intellectual property protections for America's music and movie studios and its drug companies. It was also mostly about the United States 'pivoting' its strategic focus towards Asia in the face of China's rise. The inclusion of Japan and the exclusion of China was the main game.
President Barack Obama gave the clearest indication about the TPP's role in the world this week when he said: "When more than 95 percent of our potential customers live outside our borders, we can’t let countries like China write the rules of the global economy. We should write those rules."
Even Nobel Prize-winning and avowedly pro-free trade economists such as Joseph Stiglitz and Paul Krugman have ridiculed the TPP's attempts to describe itself as a free trade deal. These American economists argue the TPP was much more about US companies trying to protect their interests than any sort of blanket removal of trade restrictions.
Luckily for us, the US companies driving the TPP's 'rule writing' didn't get most of what they wanted. The TPP even includes a clause allowing countries to keep cracking down on tobacco use without being sued and the drug companies got far less than the 12 years of patent protection they were wanting, although it's not quite the slam dunk retention of the five years Australia pushed to keep.
But the biggest difference between now and 2008 was the Global Financial Crisis and the destruction of the consensus about a 30-year drive towards free trade, particularly in the parts of the developed world where the gutting of manufacturing jobs due to the globalisation of trade in goods has helped lead to a stagnation of wages for those on middle to lower incomes.
Essentially, globalisation of goods trade helped lift hundreds of millions out of poverty in Asia and drove down the real prices of all sorts of things, but it has also pressed down on the real wages of millions of workers in America and Europe. New Zealand has fared better, but also hasn't been immune from that downdraft.
The bitter opposition to the TPP from both sides of politics in America is a testament to how much the political and economic landscape under the free trade debate has changed. The grumpiness here is a paler reflection of that.
So the proponents of the TPP have an awful lot of work to do to convince a sceptical public of its benefits and to demonstrate its costs are relatively low.
They may even be better to highlight the TPP's actual irrelevance in the future of trade, which will mostly be about trade in services such as tourism, financial, health and education, rather than trade in physical goods and commodities. These are barely touched by the TPP and are now surging for New Zealand, thanks in large part to more realistically valued currency. Xero didn't need the TPP to launch into the US and British markets and the explosion in Chinese tourism here has nothing to do with the 2008 free trade agreement.
It may be best to move on and paint the TPP as just another diplomatic agreement that was more about politics than real trade in goods and services.
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A version of this article first appeared in the Herald on Sunday. It is here with permission.
16 Comments
Absolutely! I see the Germans are awake.. http://www.reuters.com/article/2015/10/10/us-trade-germany-ttip-protest…
But there never was any sort of global consensus on free trade anyway. That's why WTO failed - as it (the initiative) was actually about free (as in unemcumbered) trade.
So with the failure of WTO we had the rise of bi-lateral agreements, which can serve two individual countries quite well, as the agreement can be tailored to meet the interests of both sovereigns in the interest of their respective publics.
The TPP model is a major divergence from WTO and bi-lateral trade. The very nature of such multi-lateral trade agreements is directed at the interest of multi-national corporates/conglomerates. They become about protecting the rights of the corporates, not the member states/citizens.
Citizens the world over can see this.
What's changed since 2008 and all the praise for the China FTA?
National are currently in so all the lefties, luvvies, unions & rent-a-mob are set to "auto-hate" / lets-organise-a-protest in response to any announcement.
This is in contrast to the "auto-cheer" / send-a-nobel-nomination response to any announcement Labour makes when in Government.
Simples.
My view is that - on the face of it - a reduction in tariffs are a good thing. So both are good.
I'm reserving full judgement until the entire agreement is available - unlike some people who, since negotiations started, have appeared resigned to the fact that the sky will fall if this thing is signed....
...because Key, National & America - the unholy Trinity don't you know!
If you think JK/National is so important to America such that a trinity (unholy or otherwise) has formed, you're seriously delusional. As Tim Groser said this morning, his 'gold plated' deal on dairy was dependent on the US giving him the backing - and that simply did not happen. In other words, they dumped on him/us. Listen to him on Q+A this morning.
The opposition to TPP is just part of an unease about the way New Zealanders are faring. They are seeing a rise in GDP, or a rise in trade turnover being trumpeted as a success. At the same time they can't afford a house like their parents could.
Raising GDP for most of the population is just saying to them 'get busier on the treadmill'. They are asking if GDP rising/Trade turnover up, just who is it good for. New Zealanders are waking up that it's not their interest being pursued.
In such an environment of concern, it's no surprise at all there is opposition to TPP. If Groser and Co are surprised, then they need to get out more.
My view is that economic progress derives first from democracy. In terms of democracy TPP is a dog.
YES! More than that though. The average Kiwi sees the rich getting richer and the pollies feathering their own nests, chasing their own agendas once in power (because once in they can't be kicked out before the next election). Helen Clark was fairly obvious about it, JK equally so. Protest and disaffection because we can't stop it. If there is no agreement by the next election and Labour gets in will the TPP still get signed - almost certainly despite Andrew Little's current position.
I imagine National will likely ratify it before the next election. And what Andrew Litltle said about that this morning was that Labour, if elected subsequently, would go ahead and legislate to restrict foreign purchases of residential RE (as it has promised to do so) despite the agreement. His position is very similar to Donald Trump's position in the US on NAFTA - he's also claiming his administration won't be bound by that FTA.
Essentially Labour will try to do in NZ what Tispiras did in Greece? Why would anyone vote for Labour if they plan to attempt to renege on international commitments and in so doing draw the ire of the international community resulting in sanctions that get lifted once Labor agrees to a much worse deal than the one we have now? If the Greeks hadn't tried to reneg they would have gotten a much better deal.
Sometimes I feel like Labour don't know how the real world works.....
While you as an extreme right winger would never vote for Labour anyway, many NZers do and frankly they want NZ for NZers, ditto Green's. In terms of property if its not part of the US lobbyists agenda like say Pharmac no one in Govn will care enough to do sanctions.
Really I dont think your reality is anything like the real world actually is.
It is like voting for a flag change, when no change is needed.
We, cannot say 'no change needed'..no matter how ye may want to Vote.
If people need our products they will willingly pay, IF they have the money.
The flag has no bearing.
We are selling ourselves short.
Some are buying up our land, piece by piece so they do not have to pay for product profit, I think it will become 'Piece Meal' eventually.
They will profit not our Producers of Old, like Fonterror..
Some are also buying up Australia, Some have just bought in a New Leader.
They are cutting out the Home Brand and establishing their own Home Brand.
When you can change the Market, so easily, what good is TPP to NZ, unless an ulterior motive.
Might as well not bother. Why work, be Happy.
No protectionism, is forthcoming from our "Dear Leaders". That I know about.
We will be providing "Loss Leaders" by proxy.
Many of our previous "dear leaders' are now well established on Boards and Directorships and in touch with their mates. None of them mind living abroad, amending their lives to suit.
We should be grateful we do not live in or near North Korea, they are starved of food and affection, apart from their "Dear Leader" and his million strong army.
It Borders on stupidity, but other Borders are not quite so stupid.
Maybe we should be thankful that a certain country that shall be nameless is willing to send a 5th rate rebate to over look their discretion's and help feed their passions.
Personally I think we are nuts to sell anything to out overseas interests, "Lost Leaders'.
We should send em all home and fend for ourselves.
It is not worth importing Foreign Money, we should have enough of our own By now, not sell at a loss, when led up the garden path.
But running a deficit is child's play, any fool can do it...and still does.
Then we could all live off the fat of the land, not support the Fat Cats of our land in their devotions.
Selling us all down the river is another story.
Being over paid and invited to do it is immoral, if you follow my logic.
And that is my moral for today.
Beware of Leaders who think their interest is Flagging. They know best..or at least they think they do.
And some will wage your wages on TPP.. and others wager your lives on thinking they are right. and may cripple you until you cry Uncle.
And some will Border on megalomania and atrocities Nation wide, before heading South. Or have I just lost my sense of direction.
Maybe we all are...who knows..
That is just my opinion
Please do not Lead us not into temptation. Be thankful for small mercies.
Stop.............. Pandering to others. Do not let them Milk us dry.
This pact must be one of the most protectionist 'free trade' deals ever, and seems to be more about spreading american ideas of intellectual property protection than enabling trade.
Xero didn't need the TPP to launch into the US, but until we see the details on patent law changes you may find the TPP ensures Xero is the last kiwi software company to launch into the US.
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