Cautionary tales of a free trade agreement

By SciBooks 21/02/2014

by Dion O’Untitled4Neale 

Review: Hidden Agendas: What we need to know about the TPPA
by Jane Kelsey

Bridget Williams Books, 2013
e-book RRP $4.99

Jane Kelsey makes no bones about the fact that she thinks that the Trans-Pacific Partnership Agreement is bad news for New Zealand: the first page of the book describes the TPPA as “a direct assault on our right to decide our own future”. In this short text, Professor Kelsey lays out what she believes are some of the potential dangers to New Zealand if the TPPA were to come into effect in something like the form of the latest (leaked) text.

It was always going to be difficult to write a book on a free trade agreement (FTA) that is being negotiated in secret and the proposed text of which changes from one negotiation round to the next as the negotiating parties contribute new documents. Rather than wait for a final version of the text which can be analysed in detail, Kelsey has rapidly produced a slim, 84 page text that does what it can with the various leaked chapters of the TPPA. As a consequence, the resulting book has a few holes, but then Kelsey’s goal was not to present a complete and balanced discussion of the agreement, but rather to convince New Zealanders that such an agreement is not in the country’s interest and that they should speak up and protest now rather than wait until the deal is done and the final agreement revealed.

Given most of the media coverage of the TPPA, you might be forgiven for thinking that New Zealand and the United States are the only parties at the negotiations. However, as the book points out early on, The TPPA began life as negotiations for an economic partnership agreement between New Zealand, Singapore, Chile and Brunei. Once the US joined the negotiations, followed shortly afterwards by Australia, Peru, Vietnam, and Malaysia and more recently Japan, the focus of the agreement, at least for New Zealand, shifted to the United States.

It’s likely that most of the other countries who are party to the negotiation feel like it’s just them and the United States too. A novel analysis of one of the leaked chapters of the TPPA and the notes of which countries agree with or oppose which sections revealed that the US is relatively isolated in the positions it holds on the draft text, even when considered alongside countries which would typically be considered partners.

The first chapter of the book “The Elephant in the Room” suggests that the involvement of the US in the TPPA negotiations has a lot to do with the one obvious country not involved in the negotiations: China, New Zealand’s largest trading partner and a country with whom we already have a free trade agreement. Professor Kelsey is not the only scholar to suggest that a prime reason for the participation of the US in the TPPA is motivated by a desire to slow the rise of the world’s second largest economy. Jagdish Bagwhati, an expert on international trade, who has served as an advisor to the World Trade Organisation and the United Nations, and who is generally held to be in favour of FTAs, has described the TPPA as a political response to China built on a spirit of confrontation and containment.

Much of the criticism of the TPPA, both in New Zealand and overseas, relates not to tariffs and terms of trade but to the inclusion of certain proposed conditions that would limit how governments and firms can do business within their own borders. This is the subject of the book’s second chapter “A Threat to New Zealand’s Autonomy”. Kelsey covers points such as the push for “regulatory coherence” – essentially compelling countries to adopt regulatory regimes mirroring those of the US rather than those which might best suit a country. Other contentious aspects of the TPPA which go beyond those found in a typical FTA include limits on state owned enterprises (though opposition from Vietnam, Singapore and Malaysia who have large state sectors are likely to limit this); investor-state resolution – providing a mechanism for international investors from member countries to sue governments; and tobacco control where the US has pushed for terms that would restrict any anti-smoking efforts within partner countries.

These criticisms of the TPPA, and others, are addressed again in the third chapter “Amidst Obsessive Secrecy”, which uses six issues as cautionary tales to illustrate how some of the proposed sections of the TPPA could affect New Zealand: smokefree Aotearoa 2025; reversing electricity privatisation; defending Pharmac; ‘Buy Kiwi’ policies; decent livelihoods; and preventing financial crises. Some of the issues have broader support, or clear policy pathways than others, but they provide the author with an opportunity to give examples of possible interactions between TPPA rules and future New Zealand government policies.

In the fourth chapter, “No Convincing Economic Rationale”, Kelsey, suggests that economic benefits to the TPPA to NZ have been overstated and that the agreement could have significant economic downsides, many flowing from proposed sections in the intellectual property chapter of the TPPA. Although Kelsey doesn’t go so far as to give examples, an illustration of the type of business which be adversely affected by changes due to the TPPA could be Douglas Pharmaceuticals, a New Zealand company with revenue of over $140M, which produces generic and out-of-patent drugs. Proposed changes to intellectual property rules in the TPPA could make patents broader and longer lasting, and make approvals more difficult to obtain for manufacturers of generic medicines. Also at risk would be New Zealand’s small, but rapidly growing, software industry. The passing into NZ law in 2013, of a patent bill, which excludes software from patentability, was praised by tech companies as fostering innovation and growth in the sector. If this legislation was brought in to line with US patent law which currently allows software patents, this stimulus would be undone.

The final chapter of the book addresses the process through which the TPPA would take effect if New Zealand were to become a signatory to it – pointing out that the agreement would be signed, essentially confirming that New Zealand would be bound by the agreement, before it is seen by parliament for the first time. Kelsey closes by warning the reader that the only chance to oppose the agreement is while it is still being negotiated and most of the text is still secret.

Although it clearly takes one side of the discussion regarding the TPPA, Hidden Agendas pulls together a large amount of worthwhile research material, in addition to providing some context for how the TPPA has reached the position it is in today. Worth a read, even if you are only wondering what all the TPPA fuss is about.

Dr Dion O’Neale is based in the physics department at Auckland University. He has a habit of taking techniques from physics and mathematics and applying them to topics for which they were never intended. He’s interested in the role that science and innovation plays in economic development.

0 Responses to “Cautionary tales of a free trade agreement”

    • That is a cool comic (who needs Wolf on Wall Street?) – and so’s the one on social security. But I am interested in why there has been so little discussion, let alone debate, about the potential impact of the TPPA among the science community. It’s obviously been a topic of conversation in the software industry and in the health sector, but it doesn’t seem to have cropped up in other fields where you’d imagine there’s be a lot of concern about changing regulation around patents. The US patent regime is very different from ours which has much tighter parameters around what can and can’t be patented.