Confusion about the TPP

By Eric Crampton 10/08/2015


I agree with much of what Brian Easton says here about the TPP.

  • The car dispute between the US, Mexico and Japan (and Canada) is likely a bigger dealbreaker than dairy;
  • The Pharmac provisions don’t break Pharmac, they just make it more expensive for the government to run;
  • It’s possible to have a deal that’s good enough on dairy to make the Pharmac bit worthwhile;
  • There’s no clear consensus on optimal patent length, with some argument it should be shorter.
I disagree with him on one point though, and it’s a point I’ve seen raised by others. The argument runs as follows. Because New Zealand unilaterally did away with just about all its tariffs some time ago, the only negotiating chips it has left on dairy access are copyright and IP provisions. So because we did away with tariffs, we’re stuck having to take on IP provisions we don’t like in the TPP.
I could understand this argument if we were talking about bilateral trade deals. But, New Zealand is only one of many countries in the TPP. Whatever deal comes in applies to all of them. If one gets crazily long copyright duration, they all do. If one gets a longer period before generic drugs can be used, they all do. And it will be interesting to see whether the final copyright provisions are that different from those in the US/Australia trade agreement, where Australia still got stuck with a pile of copyright nonsense despite having a pile of tariff barriers up for negotiation.
I just can’t see how New Zealand’s tariff status affects things. We’re a small enough country that, even if we had crazy high tariffs, no US domestic industry would care enough about getting access to the NZ market to outweigh US dairy wishes to keep NZ out. This is just standard Mancur Olson stuff: the costs of free trade with NZ, in the US, are concentrated; the benefits are diffused. And that would be true no matter New Zealand’s tariff status.