Monday 9 December 2013

When the Cost of Free Trade is Too High

New Zealand has been involved in the negotiations over the content of the TPPA (Trans-Pacific Partnership Agreement) since 2010. The details of the negotiations and the content of the agreement have been kept secret from the public by the parties involved and it is only through recent leaked documents that the public have been able to get some idea of what is being negotiated. There has been widespread concern about what has been found in those documents and there have already been numerous protests going on in New Zealand and around the world over what is at stake for the countries involved.

 Prime Minister John Key's has responded to the protests with what now seems to be his standard - don't worry about it, I know best - reply - “The people that are opposed sometimes are just opposed to free trade and they live in a world that doesn't want to see New Zealand intersecting globally with the rest of the world,” says Mr Key. “They’re entitled to their view but in my view they’re wrong… I think people should ignore them."

 However despite Key's assurances and the attempts to keep the negotiations secret, it seems now widely known that the US holds the upper hand at the negotiating table and is pushing for all sorts of concessions on the part of large corporations that will effect laws already passed in New Zealand, the ability of future government's to make new laws, the ability of future governments to regulate the economy and the prices we pay for many our goods and especially our healthcare.

 A few of the contentious areas current under negotiation are:

 Investor–state arbitration - giving foreign companies the ability to challenge local laws in a privately run international court - this could include things like environmental laws (regulating emissions, laws that protect endangered species etc) and health regulations (cigarette packaging, fatty foods, food labelling laws - including the labelling of genetically engineered food etc). This is something that Canada signed up under the NAFTA agreement and is having to deal with lawsuits by companies like Exxon-Mobil Dow Chemicals and Eli Lilly in regards to Canada's laws on fracking, off-shore oil drilling, patients, pesticides etc.

The removal of banking regulations - The US is pushing for regulations that stop the use of 'capital controls' to regulate their economies. This would include things like the recent regulations introduced to cap low deposit lending and cool the housing market - in other words banning countries from introducing regulations that could have prevented the global financial crisis. It would also also limit a countries ability to stop capital outflow during a financial crisis - taking away one of the few ways a country has to limit the damage once it starts.

 New copyright laws - The TPPA could force New Zealand to introduce new laws around copyright that would force internet providers to police their own users (something New Zealand has already rejected), making copyright infringement a much more serious crime and making unintentional copyright infringement a serious crime also. This part of the agreement could also seriously undermine current internet freedoms, for example forcing websites to take down pages before any infringement is proven and forcing the owner to pay to prove their own innocence. These new laws could also end up costing schools and libraries a lot more.

 Intellectual Property - The intellectual property part of the agreement includes the extension of patient laws on pharmaceuticals, keeping the price of medicines higher for longer. The US is also attempting to limit or remove the governments ability to use Pharmac to negotiate for lower drug prices.

 Parallel importation - The United States is pushing for regulation making it illegal to import goods that are sold much cheaper elsewhere in the world for resale in New Zealand - likely pushing up the prices of many goods for all New Zealanders.

 International Investment - Possible removal of abilities to limit foreign investment and ownership of New Zealand.

While it is slightly reassuring that that latest revelations in the Huffington Post show that New Zealand (along with most other countries) is currently rejecting many of the contentious parts of the agreement, the USA has shown little flexibility in all of these areas. Given the superior bargaining power of the US and the fact that New Zealand and the other nations involved are pushing for a final draft agreement before Christmas, it seems obvious that for anything to be completed on time, New Zealand with have to make major concessions in many of the areas they are currently rejecting and in that case John Key's reassurances hold very little water.

 There does seem to be simple (thought perhaps not easy) answer to the current impasse - remove both the contentious areas from the agreement along with the country pushing for them all to be included. The US wasn't part of the original group of countries negotiating the TPSEP and given they are the country creating the majority of the problems, there seems little doubt that the remaining countries would be better off without them.

Edit: January 14th 2014
I found this discussion between Bill Moyers, Yves Smith and Dean Baker particularly enlightening and it raises the question of whether the TPP really has anything to do with free trade at all... 


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