The Dim-Post

October 11, 2015

Second thoughts on the TPPA

Filed under: Uncategorized — danylmc @ 12:19 pm

I still can’t get over the estimations of how little this deal is worth to us. From MFAT:

  • estimated GDP gains for New Zealand of US$2 billion in the year 2025 (a 0.9% increase in GDP);
  • estimated export gains for New Zealand of US$4.1 billion in the year 2025 (a 6.8% increase in exports);
  • and further income gains (up to US$2.1 billion) are estimated from a lift in the terms of trade and greater consumer access to goods and services.

Just to put that in perspective our GDP grew by 0.8% in the first quarter of this year. So the TPP will deliver the equivalent of a couple of months of growth in ten years time. Now, our diplomatic corps has been working on this for about ten years, and they cost us well over a quarter of a billion dollars a year. Have we spent more putting this trade partnership together than we’ll actually earn from it?

Then there are the costs from the deal itself. We don’t know whether investor state dispute mechanisms are going to be a disaster or a big nothing. We do know about the intellectual property provisions because they were leaked to WikiLeaks, and that we’re increasing the duration of copyright from fifty years after a creator’s death to seventy years. What’s interesting there is that advocates for free trade deals in general and the TPP in particular have always talked about the economic merits of these deals. They’re about opening economies up, creating benefits for consumers. They’re about freedom! But there isn’t an economic case to be made for the expansion of US copyright laws. Just about every economist alive thinks the US model is awful: anti-competitive and anti-innovation and terrible for consumers. So in this very significant way the TPP is a move away from free markets.

The whole things feels more-and-more like a bait-and-switch, just as its critics warned throughout the process. All the way through the secret negotiations the government promised us that the gains from the free trade elements of the deal would be awesome. Just you wait! And now we’ve seen them and even the parties that negotiated the deal admit that they’re mediocre. The most significant provisions aren’t about free trade or are actually anti-free trade, but the advocates for the deal keep attacking its critics on the basis that they’re ‘anti-free trade’.

The government’s cheerleaders are attacking the deal’s critics instead of celebrating the wins from the deal because there aren’t really any wins. Matthew Hooton’s NBR column on TPP was all about speculating on which Labour MPs would cross the floor to vote in favor of the TPPA, when no such vote will take place and even if it did the government has the numbers to pass legislation without the opposition – because that is a more favorable topic of discussion than the merits of the deal.

36 Comments »

  1. You think the creation of the equivalent of four more kiwifruit industries, based on a static analysis of just tariff gains, and not attempting to take into account any dynamic gains, is nothing?

    On that basis, you’d be totally relaxed if a biosecurity incursion destroyed the entire Kiwifruit, wine, Apple and citrus industries. No big deal. Not worth speaking about really.

    And, in return for this, there is pretty much no downside whatsoever.

    I think there is a real insanity on the left on this issue. Just what are the terrible things that are meant to happen, that governments in 12 countries have agreed to?

    And even if those things happen, there is the right to withdrawn unilaterally, any time in the future, no questions asked, by giving six months notice.

    It can’t be opposition to the deal that is driving the campaign against TPP. It is ideological opposition to globalisation and capitalism, which is fine. But why not say so.

    Comment by Matthew Hooton — October 11, 2015 @ 1:05 pm

  2. In thirty-plus years of working for exporting companies, I’ve never come across a situation where a free-trade agreement made any difference to our chances of making a sale. If people want your stuff, they’ll buy it, if they don’t, they won’t. At the commodity end, it’s even more clear-cut – there is a global price for milk powder or crude oil, and an FTA won’t increase it – if anything, it’ll drive prices down.

    Comment by Rich — October 11, 2015 @ 1:50 pm

  3. Honestly, your perspective on this is just so weird. The benefits to the TPPA were immediately apparent, and are obvious to anyone who understands the subject matter. The downsides are less clear, but that’s why no-ones talking about the benefits. The bigger issue is, a) did we agree to a whole bunch of shit we don’t want (no – simplifying here, but only the copyright issue is significant) and b) do Labour seriously want to argue against a trade deal that has very few negatives but would tie us closer to numerous countries around the globe? Because if they are, they’re pulling further away from the party I used to vote for. Amazingly, this is a big fucking deal to people; because we used to have a liberal party that actually encouraged the idea of trade, and that era of the compassionate “neoliberal” left seems to be vanishing.

    No-one was ever claiming that this would MAGICALLY double our GDP, as some people seem to think. Less than 1% of GDP would have been my guess prior to the agreement being signed. $2.7 billion is not pocket change. Of course it could be better, but it is what it is; it was the best that could be agreed out of years of multi-lateral negotiation. And if we were getting shafted with a whole bunch of crap, such as software patents, perhaps there would be some scope to argue that the government is signing up to a poor deal.

    It doesn’t matter anyhow; those on our side of the fence have won, and I’m confident down the years that this will be looked on as a beneficial agreement. But I would like to think that Labour could be seen to be economically literate on this subject. It would encourage me to switch my vote back to them.

    Comment by ntrancer — October 11, 2015 @ 1:57 pm

  4. If the market in say in USA, only needs X tonnes of a product then why would we bank of a huge surge of that product X+++ bursting across the frontiers?

    Comment by ianmac40 — October 11, 2015 @ 2:00 pm

  5. Actually the burden of proof is on the deal’s advocates. The arguments so far have been unimpressive. In summary, they are:

    1. “I know stuff, you don’t”. 2. “Better in than out”. 3. “Trade is good.”

    So that’s 1) a line nobody can possibly engage with

    2) an argument for almost any bloc which includes Japan and the USA, if the alternative is exclusion. That doesn’t make it a good deal, just the only deal

    3) an insulting truism.

    Of course it’s hard to know what it really represents, since the media commentary is all Mandy Rice Davies.

    Comment by sammy 3.0 — October 11, 2015 @ 2:23 pm

  6. And, in return for this, there is pretty much no downside whatsoever.

    Would you mind releasing the text since you’ve obviously read it…

    Comment by Ross — October 11, 2015 @ 3:04 pm

  7. @sammy Then there is the Hooten argument in favour of T PP which seems to be alomg the lines that anyone questioning TPP benefits/costs is an evil dishonest commie.

    A real quality argument.

    Comment by Andrew R — October 11, 2015 @ 3:28 pm

  8. I hope you have third thoughts when the 30 days is up and the full text is released. I know I’m waiting for that to make up my mind.

    Comment by Korakys — October 11, 2015 @ 3:55 pm

  9. The TPPA did actually start out as a genuine free trade agreement. As always, lobbyists in Washington, Ottawa and Tokyo hijacked it and turned into an excuse to resurrect the East India Company. And contrast the openness of the NZ-China FTA with the TPPA in its current form.

    And what guarantees are there that Martin Shkreli and his ilk won’t start dictating the prices of generic meds in NZ?

    Comment by Kumara Republic — October 11, 2015 @ 4:51 pm

  10. In 2011 Groser was saying:
    “However, Groser said today New Zealand had laid down a position which said: “Our public health system is not up for negotiation or part of any trade negotiation”.

    More recently he was saying ‘it could be tinkered with” and others were saying “”It forces healthcare authorities to give big pharmaceutical companies more information about national decisions on public access to medicine, and grants corporations greater powers to challenge decisions they perceive as harmful to their interests,”

    So its gone from ‘not for negotiation” to having a substantial sum spent each and every year that foreign companies can have their lawyers look over every drug buying decision and pricing, and as Pharmacy Today said:
    Mr Powell says that overseas pharmaceutical companies will have unprecedented levels of interference in Pharmac’s work on medicines and medical devices, and will be able to use highly controversial investor-state dispute processes against Pharmac’s ability to negotiating arrangements for the purchase of drugs essential for the treatment of New Zealanders.”

    All that for a benefit to our GDP that would be barely decernable blip on the normal ups and downs

    Comment by duker — October 11, 2015 @ 4:53 pm

  11. I’ve seen quite a lot of discussion of the merits of the deal from supporters of the TPP.

    Mathew Hooten had been a bit harsh on Kelsey but mostly TPP supporters have focused on issues and gains – as well as the negative aspects. And Kelsey and others are not above being abusive to those with different opinions.

    But if the TPP is so bad what is James Shaw going to do about it? Surely it’s so bad he and Labour will have withdraw as a major policy commitment going into the next election.

    Comment by NeilM — October 11, 2015 @ 5:23 pm

  12. We may not like aspects of the deal especially as regards the new economy but standing on the sidelines isn’t going to change US policy and right now we have Obama who is pro free trade and has pushed back against some invested US interest groups. Perhaps worth taking advantage of while there.

    But what else can we do? Wait til some magic time in the future where everyone else agrees with us? Or engage and put our views about IP etc foward. Other countries have joined in pressuring the recalcitrant US and Canada, pulling out isn’t going to go anywhere, isn’t going to get our voice heard.

    Comment by NeilM — October 11, 2015 @ 5:38 pm

  13. NeilM: Or if the ‘rules’ can’t be broken, they could still be bent. E.g., if the TPPA prohibits governments from outlawing absentee ownership of land or property, a stamp duty could still get around it.

    Here’s another thought: if it’s good enough to sign the TPPA, then it’s also good enough to honour the ILO, the UNHCR, the IPCC, the WHO, the UDHR…

    Comment by Kumara Republic — October 11, 2015 @ 5:41 pm

  14. And what if, against the odds, Bernie Sanders and Donald Trump clinch the 2016 Democrat and Republican primaries respectively?

    Comment by Kumara Republic — October 11, 2015 @ 5:43 pm

  15. Sanders and Trump would withdraw from the TPP – they don’t want the restrictions on U.S. business the agreement brings. Which just goes to show the level of benefit it brings to the other partnership countries such as NZ.

    Us pulling out won’t be of any concern to them.

    But most likely it will be Clinton who is making nominal oppositional sounds while in campaign mode so my guess the U.S. will stay in.

    Comment by NeilM — October 11, 2015 @ 6:00 pm

  16. ” Now, our diplomatic corps has been working on this for about ten years, and they cost us well over a quarter of a billion dollars a year. Have we spent more putting this trade partnership together than we’ll actually earn from it?” Depends, did MOFAT’s entire apparatus focus on this to the exclusion of any other business over the last ten years?

    Comment by kalvarnsen — October 11, 2015 @ 7:41 pm

  17. Matthew Hooton wrote: And, in return for this, there is pretty much no downside whatsoever.

    Those of us whose work is related to intellectual property don’t regard a further extension of NZ’s already ridiculously-lengthy copyright period as “pretty much no downside whatsoever,” let me assure you. The other items in the leaked IP provisions are equally toxic and are the exact opposite of a free trade agreement.

    Comment by Psycho Milt — October 11, 2015 @ 7:42 pm

  18. For Little the big sticking point is dairy which is pretty funny given the big talk from Labour about diversification.

    He “reserves the right” to go somewhere else other than the TPP which is hardly a herioic stand given any govt can just withdrew. Why he can’t give a simple commitment to withdraw is just indicative their lack of principle.

    Mind you, he’s a bit of an expert on international agreements unlike Clark who he said didn’t know what she was talking about.

    Comment by NeilM — October 11, 2015 @ 9:58 pm

  19. Some are talking about how “easy it is to withdraw”. The idea after joining that you would leave in a very loud and public way is simply absurd.

    It would send all the wrong messages ( let alone what to do about the transferring of favoured nation status to other existing trade agreements – that is real trade agreements not the gerrymanded stuff that is the TPA).
    Lets be frank, there is NO going back once its signed, unless you wanted to follow the path of Venezuela. This has the same tone about extending US power in the face of the trade behemoth that is China, but instead of the US giving up much, they decided to bottle feed their worst sort of corporate interests, at the same time they keep China off the dancefloor.

    Comment by duker — October 11, 2015 @ 10:23 pm

  20. NeilM – Little said he reserves the right to legislate in the public interest. You’re misrepresenting what he said.

    Comment by Jamesey — October 11, 2015 @ 10:26 pm

  21. Why he can’t give a simple commitment to withdraw is just indicative their lack of principle.

    No Neil, it is in fact the opposite.

    He could easily oppose in opposition, and then shrug his shoulders once he’s in power and say “Oh well, things change, we’re stuck with it now.” This is John Key’s line every other week. When the PM needs to reverse course he just does, to no apparent political cost. Who cares what he used to say (except people who have functioning memories and they’re just haters!!111!!).

    If anything, Labour’s problem is that they seriously think they have to say in opposition what they would do in government – instead of saying any old crap, in order to get into government in the first place. Call it principled, or dumb politics (yes, I sometimes wish they’d be as brazenly cynical as Key, and promise superannuation lollies for all, and no capital gains taxes, and abolishing Maori seats, and no GST increase, etc, etc).

    If this is only about short-term politics, Little should just be Anti. Learn from Key. Lie now, and fuck the future.

    Comment by sammy 3.0 — October 11, 2015 @ 11:44 pm

  22. At the end of last year it was reported that the dairy industry would be taking a hit of $6.8 billion in terms of reduced income…then there’s the multiplier effects.

    http://www.radionz.co.nz/news/rural/261525/loss-expected-for-most-dairy-farmers

    Comment by Ross — October 12, 2015 @ 6:54 am

  23. Rod Oram on TPP:

    “First, tariffs. The government talks of sweeping reductions. They are indeed broad but they are so shallow they are almost meaningless…small fluctuations in commodity prices and exchange rates will wipe out those miniscule gains. Moreover, tariff reductions will more likely benefit distributors, retailers and consumers overseas than producers here.

    …Maybe the TPP is a robust treaty offering us substantial gains, while protecting us from unreasonable losses. If so, the government needs to prove it.”

    https://www.facebook.com/note.php?note_id=10153121098206709

    Comment by Ross — October 12, 2015 @ 9:45 am

  24. The killer point is that the few benefits of this deal will flow to the usual National party cronies in the farming sector, whilst all the costs (increased healthcare being but one) will be loaded onto the precariat. So it’s deal for the 1%, and it’s apologists, who are hoping fro crumbs from the table. Grosser, for example, wants out of politics now. He is anticipating the raiments of success in being appointed ambassador to the imperial court in Washington and his shining coat of many dollars suvbsequent to that now he has delivered for his real bosses – the global elites

    Comment by Sanctuary — October 12, 2015 @ 10:41 am

  25. What terrible things are meant to happen, Matthew asks.

    Well, I find the copyright chapter (as leaked) pretty shit — https://www.eff.org/deeplinks/2015/10/final-leaked-tpp-text-all-we-feared — and the potential is there for jail time and equipment destruction for people just trying to use the things they thought they owned.

    Also wondering what the word will be on software patents.

    Comment by Stephen J — October 12, 2015 @ 1:48 pm

  26. “…The benefits to the TPPA were immediately apparent, and are obvious to anyone who understands the subject matter…”

    I love it when MFAT staff post under a pseudonym! It must be so tough struggling with the Sisyphean task of forever interacting with your inferiors.

    The benefits are not that obvious to the casual observer, who sees some trifling trade gains to a few narrow sectors promised sometime in the future, and a whole lot of losses that have been externalised or palmed off on the taxpayer. For example, how is possible to argue this free trade is good without linking it to the wider question of climate change in way whatsoever? Is any accelerated climate change costed in this deal? How is possible to claim this free trade is an absolute good if it results in the destruction of traditional dairy farming ways of life in favour of unsustainable corporatised food production from NZ? Is that disruption costed in anyway, or is this deal just about the fat profits of global corporations?

    The TPPA seems to me to be in some ways an agreement for the sake of it, designed to allow Tim Grosser to declare victory before getting the fuck outta Dodge with his self-declared reputation for being a technocratic genius intact. Anything really significant in favour of free trade appears to have been kicked down the road for a decade or three and/or is far from certain to survive the scrutiny of various lawmakers; Everything involving helping the rent-taking behaviour of US corporations is been hidden behind a confection of fudgery, a climate warming amount of hot bluster and an obsessively secretive level of obfuscation. And this idea that we must be in, well because FOMO, might be a suitable reason for teenagers at home on a Saturday night but is not for a mature nation mulling its future as a sovereign state.

    Comment by Sanctuary — October 12, 2015 @ 2:24 pm

  27. If you look at the population of New Zealand, then the amount we are predicted to earn from the TPPA makes more sense than if you merely look at from a perspective of “we are signing up to a twelve nation trade deal, we should make trillions from it”.

    Moreover, it hasn’t cost us anything as we still have our Free Trade Agreement with China and other countries such as Taiwan. It is important to have these trade agreements and not to disregard how good they are and have been to our economy.

    Even though China’s economy is contracting at the present time, New Zealand’s economy would still be markedly worse off if we hadn’t sign a trade agreement with them under the previous Clark Government.

    Combined with our signing of the twelve nation trade agreement, New Zealand is poised for a stable financial future. And, thank goodness, we have been able to wrangle ourselves out of most of the more unsavoury clauses. And we can get out of it in the future if a successive Government so chooses.

    Comment by Daniel Lang — October 12, 2015 @ 2:28 pm

  28. “And, thank goodness, we have been able to wrangle ourselves out of most of the more unsavoury clauses.”

    we dont actually know this yet,

    Comment by framu — October 12, 2015 @ 2:58 pm

  29. Moreover, it hasn’t cost us anything…

    Pretty sure it’s cost us (i.e. the taxpayer) quite a bit.
    As per framu though, we won’t know till we actually see the text of the deal.

    Comment by Gregor W — October 12, 2015 @ 4:12 pm

  30. ” It must be so tough struggling with the Sisyphean task of forever interacting with your inferiors.”

    I dunno, Sanc, is it?

    Comment by kalvarnsen — October 12, 2015 @ 4:35 pm

  31. Once the US got involved, bringing in Japan and Canada, it stopped being about “free trade”. It was all about US hegemony in the Pacific v China /Russia/Indonesia/ India.
    Nothing to do with trade. Everything to do with power politics. NZ is a vassal state of the US, just like the brown nosing Aussies. Thanks to to John Key and the National Party.
    I am surprised that Key did not “aspire” to a stars and stripes flag for NZ.

    Comment by peterlepaysan — October 12, 2015 @ 9:23 pm

  32. I think Trump has said he’d just flout the TPP as well.

    Comment by NeilM — October 13, 2015 @ 9:53 am

  33. “Have we spent more putting this trade partnership together than we’ll actually earn from it?”
    Lol, welcome to the world of government. You do sound surprised… Now do you appreciate the efficiency of Lange/Douglas Labour and unilateral deregulation?

    According to WikiLeaks-via-Scoop: “Hundreds of representatives from large corporations had direct access to the negotiations whereas elected officials had limited or no access.”
    Lol, welcome to the world of Agenda 21. Sucks a bit when you or your fav NGO is NOT one of the ones around the table.

    “Those of us whose work is related to intellectual property don’t regard a further extension of NZ’s already ridiculously-lengthy copyright period as “pretty much no downside whatsoever,” let me assure you.”
    So PM wants to be able to buy cheaper copies of Danyl’s book about Aro Valley? As I understand it, writing pays shit all, except in limited formulaic situations. So why can’t Danyl’s children and grandchildren receive small amounts of royalty to help eek out their existence? Please point out some specific examples of problems you see: not many examples in the news? There was someone from a University pointing out that a student was unable to afford the $500 royalty to include a copy of some painting in her thesis. The royalty was only payable because the thesis would be available to the public, so going beyond the fair-use for study exemptions. And this was thought to put the several hundred million in research contract income of that university in jeopardy. Sounds pretty unlikely to me. And there was the bloke from Internet NZ who gave a couple of examples a) blind people buying audiobooks that have technical protection measures that means they can only be played on certain software, which may not be accessible and b) a smart fridge that will only send product reorders to supermarket X, because that’s the supermarket that has done a deal with your fridge’s manufacturer. In the case of a), blind people are not, on the whole, thick, so they will quickly learn to ensure that they only buy audiobooks compatible with appropriately accessible software. If this isn’t possible, then I guess pretty soon, someone will ensure it happens. With the fridge; either buy the fridge with the “open source” supoermarket app, or learn to deal with a closed environment (e.g. Apple), and choose your fridge accordingly. Alternatively, don’t let your fridge make ordering decisions for you…

    “Combined with our signing of the twelve nation trade agreement, New Zealand is poised for a stable financial future.”
    Have you ever lived or travelled with a whole bunch of girls who start to cycle together? When it comes to a ever integrating world economy, nothing in what you says really offers stability.

    Comment by Clunking Fist — October 13, 2015 @ 7:56 pm

  34. So how will NZ ratify the TPPA? I’ve missed that part of the proceedings.

    Comment by Steve W (with a space) — October 14, 2015 @ 9:39 am

  35. @ kalvernsen:

    What a crazy analogy! Crazy, because It seems to me that no one has been allowed to see pictures of the girl cyclists.

    Once pictures of the girls (and their bikes) have been published, then people will be in a better position to gauge whether they would provide good cycling. (or have a history of good cycling, roadworthiness, fitness, and courtesy on the road). Until then, the intention is to not so much make girl cycling illegal, as to frown at it in gnereal as a pursuit, or wait to see what colour bike riding each girl cyclist is riding, and if they look right.

    Only then we can challenge the appropriateness of any cyclist who doesn’t quite measure up, or has the wrong coloured bike to be on the same road, as those with more acceptable livery.

    It is our patriotic duty.

    Of course this will only work after the girl cyclists have all started cycling, because most of them were just too intimidating to be told at the outset not to take part in the trip, but if we catch them by suprise, they might be less dangerous, and, well it would just be better for the country.

    or something.

    Comment by Lee Clark — October 16, 2015 @ 6:51 am

  36. sorry k., I meant @ Clunking Fist…

    Comment by Lee Clark — October 16, 2015 @ 5:31 pm


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