When a government prepares to surrender a share of its sovereignty, you would expect a compelling reason for doing so. No country would accept limits on its law-making power without an equal trade-off, surely?
Well, no country except New Zealand. The Trans-Pacific Partnership Agreement (TPPA), the twelve nation trade deal scheduled for its signing ceremony in Auckland on Thursday, places substantial limits on the government’s law-making powers while offering very little in return.
Economic modelling commissioned by the Ministry of Foreign Affairs and Trade predicts that the deal will be worth $2.7 billion by 2030, or a 0.9 percent increase in GDP. That sounds like a tremendous upfront benefit, at least until you realise the projected benefit (commissioned by the government department most invested in the deal’s success) is spread across a fifteen year period.
Analysis by leading economists found that after extrapolating from current growth rates GDP is expected to increase 47 percent by 2030 without the TPPA or 47.9 percent with the TPPA. In other words, the projected benefits from the TPPA essentially amount to a rounding error. Unexpected changes in commodity prices could wipe out the projected gains.
Advocates insist that the TPPA will open the door to economic boom times, but even the government’s own projections show that the deal fails its own terms for success – GDP growth. Even the darling of the New Zealand economy – dairy – will struggle as tariff barriers will remain in Japan, Canada and the US (in fact, the TPPA is likely to “lock in” these barriers).
But the questions is: what are we giving up in return for growth of less than 1 percent across 15 years? The answer is sovereignty. If the deal is implemented it will be enforced through secretive overseas tribunals with the power to impose sanctions on countries it rules have breached the agreement. This is commonly called Investor-State Dispute Settlement (ISDS) and it gives a privileged class of foreign investors the right to bypass national legal processes.
Maybe a future government decides it will favour local workers over overseas contractors, but if it does so then it will have to consult the “performance requirements” in the deal first. This chapter of the agreement places limits on policy-making. If the overseas contractors disagree with the government’s interpretation then it’s off to the overseas tribunal under the ISDS provisions. Would massive sanctions follow?
The TPPA hasn’t been negotiated in the interest of working families and the New Zealand economy. Instead the deal overwhelmingly favours overseas companies, especially companies that can exploit their monopoly power (think of pharmaceutical companies who use their intellectual property rights to keep the price of medicines artificially high).
For these reasons and many more, I’ll be urging the 27,000 members of FIRST Union to join the tens of thousands of other New Zealanders who will hit the streets of Thursday to say “no” to this deal that harms our collective future. News is already breaking that the US is attempting to renegotiate certain aspects of the deal, including stronger rights for pharmaceutical companies to keep medicine prices high, in an effort to secure support from the Republican-controlled Congress.
Is this really the sort of deal we want to burden our children and grandchildren with?
Robert Reid is General Secretary of FIRST Union, the union representing retail, finance, and transport and logistics workers.