Polity by Rob Salmond


TPP, eh?

As everybody knows, the TPPA deal is settled, and we can expect a full text to scrutinise within a month.

The deal really is a very big one globally; it’s just not such a big deal for New Zealand.

It looks to me like the biggest loser in the deal is Mexico. It doesn’t get much in the way of market access that it didn’t already have via NAFTA, and the US-Japan deal on autos hurts a lot of Mexican factories purpose-built to supply auto parts from Japanese car companies into the US.

New Zealand isn’t as big of a loser as Mexico, but its gains are very small, and could get swallowed by the sovereignty losses. On the gains:

  • The increased beef access to Japan has to be shared with other big beef exporters and is slow to come in.
  • The increased dairy access is pathetic. Fonterra is right to be disappointed.
  • The US removing tariffs on baby formula but not milk powder is a non-event for New Zealand, because we mainly sell milk powder, not baby formula. Other, non-NZ, firms turn that milk powder into baby formula will reap the rewards.
  • The cheese access isn’t a big deal, because it is only very partial in the US, and Japanese cuisine is cheese-light compared to most others through the TPP region.

We have to give way on copyright rules, but for me I don’t see that as a huge deal as it only affects works that are between 50 and 70 years old. Right now it’s Elvis and early Hitchcock. Meh.

More problematic is the ground we’ve had to give on foreign investment. We now cannot prevent TPPA-nationals buying land in New Zealand unless it’s worth over $200 million. That doesn’t actually make things any worse for home ownership from their current situation, which allows foreign nationals to buy houses here without restriction. But it will make it harder for a future Labour government to fix it. The government’s propaganda on this suggests we could still have at least some levers left:

New Zealand retains the ability, however, to impose some types of new, discriminatory taxes on property.

I’m guessing the devil’s in the detail on this. Let’s see exactly what they mean by “some” taxes. My guess is that we’re now severely restricted, and this vague wording is spin. If I’m right on that, it will lock in the low level of home ownership in New Zealand, which is an awful result.

One bouquet here is that tobacco companies have been specifically shut out of the new ISDS rights, meaning we can now safely move to impose plain packaging on cigarettes. (They’d better get on with that now.) Good on whoever negotiated that exclusion into the ISDS chapter.

As a small country, however, we are still in danger of being spent into the ground by lawyers representing clothing companies or Hollywood over parallel importing, or global tech firms over taxation. That scares me.

Some in New Zealand – including Tim Groser – are claiming they can always renegotiate the bad bits of the deal later. I think they’re whistling Dixie. New Zealand has no leverage to demand a renegotiation, and nothing to trade with if one happens anyway. The renegotiation will go the same way as the negotiation we’ve just seen – New Zealand screams for more in the corner, and the big players ignore us. I’ve written about Groser and this naïve belief before. “Direction of travel” and “we’ll renegotiate” are both canards.

Among other countries, Canada did OK by continuing to protect dairy / poultry, and gaining better access to US beef markets. The Aussies did well, holding the line against Big Pharma while gaining new North American access for sugar, wheat, and other horticultural products.

From here, the only big wildcard is what happens in the US Senate. Because the Obama administration got trade promotion authority for the TPPA negotiations, the Senate will be stuck with a simple up-or-down vote on the deal, and won’t be able to try to insert amendments. Donald Trump hates the deal, but then the Senate hates Donald Trump. So, will that vote go up or down?

Well, Hollywood got what it wanted, with the copyright extensions. On the flip-side, the drug companies got very little. American agrictulture came out even as well, with small tariff concessions and modest access gains to Canadian and Japanese markets. And on autos, American consumers will get slightly cheaper Japanese-brand vehicles, which will hurt Detroit. But the Senate is probably past doing favours for Detroit after the auto bailouts. Overall, the US seems to have come out with one big, rich winner and one big, rich non-winner out of this deal, which I would guess isn’t enough to prevent it going through the Senate.

Next step – let’s see the damn text!

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