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Could you be more trans-pacific?
Last week Ministers from the twelve Pacific Rim countries involved in the TPP negotiations met in Hawaii to wrap up negotiations and conclude the agreement. However, unfortunately (or fortunately, depending on your point of view), the negotiations failed to come to fruition and produce an agreement that satisfied all parties.
Perhaps as David Capie, a member of our International Relations faculty observed, “Who chose Maui anyway? I bet if the TPP talks were in Palmerston North they’d have successfully wrapped up weeks ago.”
Alas, the lack of foresight by Trade Minister Tim Groser not to recommend a rendezvous in Palmerston North was not the only reason that the talks failed. The negotiation rooms filled with smoke when New Zealand representatives locked horns with their Canadian counterparts over barriers to agricultural trade. Japan and the U.S. disagreed over tariffs on auto-manufacturing, as well as various countries who were concerned that extended pharmaceutical patents would impact upon social welfare programmes.
How did this start?
The TPP can trace its origins back to little ol’ NZ under the previous Labour Government. What initially began as trade negotiations between NZ, Singapore, Brunei and Chile in 2002 under the auspices of the Pacific Four soon gathered momentum with the election of US President Barack Obama in 2008.
After George W. Bush spent years fighting ill considered conflicts in the Islamic world, Obama was keen to show some US love for the relatively neglected Asia-Pacific region.
Obama’s inauguration was soon followed by a declaration of a strategic “Pivot to Asia” as a policy response to the so-called “Asian century” and “Rise of China”. Obama’s tactical “Pivot” emphasised a comprehensive strategy to counter China’s rise incorporating diplomatic, militaristic and economic aspects. This is where the TPP comes in. The TPP has been turned into the economic arm of the Pivot.
Where does this leave NZ? For so long NZ has been the weird kid at the back of the class that no one is very interested in talking to. Now, however, suddenly all of the cool kids want us to go to their parties. How we position ourselves in these parties will determine our economic and strategic position in the future.
Remember what Muldoon said? “Our foreign policy is trade.” And he was right—we sure love our trade. All trade is good trade, so therefore all free trade is good free trade, right?
Unfortunately, it’s not quite as simple as that. New Zealand has signed numerous Free Trade Agreements (FTAs) since the advent of trade liberalisation in the 1980s. The “jewel in the crown” of these FTAs has arguably been the NZ-China FTA signed in 2008. NZ became the first OECD country to sign a comprehensive FTA with China which has reaped significant benefits for the NZ economy and then some.
Contrast the success of this bilateral deal with the multilateral nature of twelve states all vying for contradictory interests and you have a recipe for some potential disappointment.
From a NZ perspective, although the potential gains from a successful TPP are high, the potential losses are equally large, if not more so due to the compromise required to keep eleven other parties involved.
The key to success for NZ in these negotiations is making sure that tariffs on dairy and agricultural products are significantly reduced. We won’t get all of it, of course; we may be the Saudi Arabia of dairy, but we’re still a small power when the United States, Japan and Canada are at the table. But that’s the nature of a negotiation.
Japan, Canada and the US are the three markets NZ desperately wants to crack in terms of agricultural access. However, the democratic nature of the political systems in these countries means NZ will have a hard time getting its preferred outcome in negotiations.
If your sole source of news is Stuff, put this down and walk away because you’re fucked. Headlines and soundbites will tell you it’s a “Free-Trade” deal. It is indeed a “Free-Trade” deal, but that’s not all it is. International trade has been undergoing a process of trade liberalisation for decades. The TPP is not necessarily just about cutting tariffs because the liberalisation process has already made them low (with the exception of agriculture, which, as aforementioned, was a major bottom line for New Zealand throughout the negotiations).
Rather, the TPP is an attempt to impose a “high quality” regulatory environment in which international trade will become more streamlined and all states involved will begin to read from the same page.
All parties involved want the TPP to succeed, but the political issues may be painful for democratically elected governments. Damn you, Democracy!
Free-Trade is an important part of the TPP. But the reason the TPP is so important is that it zooms in and focuses on setting new rules and regulations for global commerce in the 21st century. Something that is needed in the 21st century as international commerce no longer has the emphasis on the exchange of material goods that it used to.
Twenty-nine long chapters were discussed over the week, encompassing the textile, agriculture and automotive industries, environmental rules and regulations, drug patent periods, copyright and IP rules, labour laws, establishment of supranational investment tribunal courts and on and on. The TPP is the deepest, broadest and most diverse multilateral trade deal in history.
Yet, this need global rules and regulations conflicts with a notion that we hold very dear. A notion that has been a rallying point for TPP opponents: Sovereignty.
If we put aside the issues of agriculture and medicines which are likely to be ironed out, herein lies the heart of many peoples struggle with the TPP. Disagreements about agriculture and other industrial areas resulting in Maui’s stumble provoked little reaction in the New Zealand public. Instead, it is our cherished hold on sovereignty that fans the largest backlash.
We want a 21st century approach to global changes and challenges, but we’re living and thinking with 20th century politics. No longer can we cling to the idea of sovereignty that we use to.
To tackle this new environment we have to devolve decision making authority to supranational agreements and treaties. We have to be willing to give up some of our sovereignty. We’re not just New Zealand citizens, we’re global citizens.
What’s that stupid saying? “You can’t have your cake and eat it too.”
This is important in dealing with a range of challenges, from the environment to global commerce, from intellectual property to foreign investment. The lack of comprehensive international laws and regulations threatens the economic competitiveness of businesses that have a stake in it.
We’re not saying that the TPP is perfect; it has many flaws. How many? We don’t know—it’s being negotiated in secret. This is where we’ve got our biggest beef with the TPP. There is something intrinsically unsettling about an agreement of this magnitude being negotiated behind closed doors.
I’m sure we can all appreciate the political sensitivities involved in the negotiations. Yet despite this, an agreement on this scale runs the risk of burying itself in controversy, and political and public backlash if it fails to be transparent.
Despite its drawbacks the TPP has the potential to be an avant-garde and progressive trade agreement that sets the tone for twenty-first-century trade. Its scope and depth make it its biggest enemy. But that said, can we afford to dilute it when the stakes are now so high? The Maui outcome does not spell the end for TPP. Far from it.