The Trans-Pacific Partnership was signed on Thursday in Auckland.

Group photo of the signatories


However, each country now has up to two years to ratify it (agree officially that they’re in – or not). The TPP doesn’t happen unless both the USA and Japan decide they’re up for it.

All of this makes the signing ceremony seem a bit premature and pointless. No doubt it was symbolic. Or an excuse to go for a winery for lunch (this got cancelled so they had to eat in the casino – sorry, conference centre – where they signed the thing).

Photo of protesters in Queen St, Auckland

So here’s the question: should we ratify it?

I tried to read the TPP. The legalese defeated me.

Opinion seems to be split between ‘OMG it’s gonna destroy us’ and ‘chill out, guys, we’re gonna be rich’. The government provides fact sheets that read like advertising features. The opposition to the TPP posts article after essay. And we have to figure out who we can trust to be objective and informed.

After weeks of trying to get it clear in my head, I think there are three main aspects to consider:

  1. Economic benefits (or lack thereof)
  2. Preservation of NZ’s sovereignty (or lack thereof)
  3. Cui bono?

1. Economic benefits of the TPP

We (i.e. businesses based in NZ) seem to be pretty likely to make some money from the TPP due to reductions in tariffs on our products and more efficient processes. As usual, the difficult questions are how much money and who gets it.

How much money? Well, MFAT reckons  $2.7 billion per year extra to our GDP by 2030. But this article rips that number to shreds.

For those of us not well-versed in economics, this stuff is kind of hard to understand. I’ll just show you the part where my jaw dropped:

The UN Global Policy Model differs from the Computerised General Equilibrium model (used in the MFAT and World Bank approaches) in removing the assumptions of full employment and constant income distribution, and updating the baseline data (using post-Global Financial Crisis date from 2013, instead of data from 2007).

The Economics of the Trans-Pacific Partnership Agreement

Got that? When MFAT figured out the benefits to NZ of the TPP, they assumed:

  1. Everyone is going to have a full time job, all the time. (NZ just hit it’s lowest unemployment rate in seven years – of 5.3%. No one expects it to stay that low.)
  2. Inequality is not going to increase (or decrease; but that would be an economic boost). (One of the reasons people oppose the TPP is that they expect it to increase inequality.)
  3. The world is the same now as it was in 2007. (You know, before the GFC changed everything.)

So that makes me a bit wary of everything else they’re telling us.

2. Risks to sovereignty

The concerns about losing NZ’s sovereignty are related to the fact that the TPP, like many other free trade agreements, includes provisions to protect or compensate foreign investors if the government (unfairly) makes laws that affect their profits.

It is unlikely that the government will really be successfully sued for non-discriminatory regulations.

Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining or enforcing any measure otherwise consistent with this Chapter that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental, health or other regulatory objectives.

TPP Chapter 9

Where’s the ‘but’?

The real concern among people who oppose the TPP is the ‘chilling effect’ it could have on legislation. Just the threat of being sued could discourage future governments from enacting legislation in the first place – even if they win, being sued is a PR nightmare and a time- and money-sink.

The most commonly cited example is when Philip Morris Asia brought an investor-state dispute against the Australian government. Australia passed tobacco plain-packaging laws in 2011. Philip Morris served them a notification of claim before the laws were even passed, and Australia finally won on 18 December 2015 – four years later.

The TPP specifically makes exceptions for tobacco laws, but there’s no such protection for environmental or other types of health legislation. It would take a stubborn government to risk four years of court cases in order to pass a piece of legislation.

3. Cui bono?

I’ll note here that the TPP does actually include chapters on Labour and Environment. They’re supposed to promote better conditions in the countries involved. The Labour chapter generously requires that the countries abolish slavery and child labour, and adopt laws governing ‘acceptable conditions of work’ (as decided by that country), while noting that labour standards may not be used for protectionist trade purposes… well, forgive me if I’m unimpressed.

Now, here’s where we get back to basics: who benefits?

Let’s assume that the TPP increases NZ’s GDP by $3 billion a year. Let’s say no one ever sues us. Let’s pretend all the best cases occur and none of the changes or restrictions imposed by the TPP cause major problems. Just little ones.

Who pays all those minimal costs? We all know the answer: the people who are already struggling. The small businesses with small margins who can’t afford to meet the new requirements. The kid who can’t afford a textbook because it’s only 69 years since the author died. The people who can’t (and now never will) afford a house in Auckland

And who profits? Somehow, I don’t think it will be ordinary New Zealanders. But I’d love to be proven wrong.


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