As expected, TPPA gives a peanut return

lprent
9 years ago
Categories: accountability, john key, phil goff, Politics, trade
Tags: flag referendum, tim groser, TPPA

In 15 to 25 years, the expected tariff reduction return to NZ will be (summarized by kiwiblog)

The Beehive site has some details on the deal. The savings on tariffs, once full implemented by sector are:

Dairy $102 million

Meat $72 million

Fruit and vegetables $26 million

Other agriculture $18 million

Wine $10 million

Manufacturing $10 million

Forestry $9 million

Fish $8 million

Wool $4 million

Somewhere around $260 million per year in possible benefits long after I have retired. The upbeat guesstimates by the beehive propaganda sheet say

The full benefit of TPP is estimated to be at least $2.7 billion a year extra in New Zealand’s GDP by 2030.

To give you a sense of the scale of Tim Groser’s achievement, compare it to the current exports to China

Source: Statistics New Zealand
Country	Goods NZ$ Millions	Services NZ$ Millions	Total NZ$ Millions	Year end
Australia	8,773	4,076	12,850	31-Dec-14
China	9,986	1,829	11,815	31-Dec-14
United States	4,704	2,577	7,281	31-Dec-14
Japan	2,938	709	3,648	31-Dec-14

This is less than 7 years after signing the Chinese Free trade agreement. The starting base of trade with China in 2007 started at well less than $2 billion.

It was an effective free trade agreement. As its architect Phil Goff justifiably said 5 years after the agreement came into effect.

I predicted at the time that the Agreement would increase New Zealand exports to China by up to $350 million a year. In fact we have done better than that with our exports trebling to $6 billion over the period.

So the increase in exports alone per year from the China FTA is greater than the expected export benefits to NZ from the TPPA in 15+ years. Yeah right… That sucks as a free trade agreement.

However the costs of the TPPA agreement start immediately. As an example and using the conservative estimate from Tim Groser, $4.5 million extra for Pharmec in the first year to install software, and increasing its costs by $2.5 million per year. So in 15 years, this means that Pharmac will have cost the taxpayer an extra $42 million.

By less self-serving measures, the whining processes that have to be set up for pharmaceutical firms as part of the TPPA alone will probably add 10’s of millions to the Pharmac costs in both the costs of the process and in the way it allows those companies to jam their expensive medicines into the taxpaid system.

And this is before we consider the time value of money. I have no idea what the cost of the TPPA negotiation was for NZ. But I’d expect it far exceeds the $26 million that John Key is wasting on his egotistical and fatally flawed flag referendum. Just think what that money wasted on these exercises in egotism could have done over 15 years if it was invested in something more productive.