I've been thinking about the Trans Pacific Partnership Agreement (common twitter hashtag #tppa) for a while due to my professional interest in what is happening in international Intellectual Property Law.
This post sets out some of the bigger picture as I see it, and will be followed by a further post about the potential impact of the agreement, and then probably a final post on the implications for Labour's trade policy.
It's slightly heavy going. The takeaway point? Be concerned, and find out more.
What is the #tppa anyway?
The Trans Pacific Partnership Agreement is a "comprehensive" plurilateral agreement (i.e. between multiple countries), being negotiated between some Latin American, North American, Australasian and East Asian states (Viet Nam, Malaysia, Singapore, Brunei, Peru, Chile, the United States, Australia and New Zealand).
It is important to understand first that the TPPA is NOT A TRADE AGREEMENT. It will be called that a lot in the media, but that isn't its purpose. It goes "behind the border" and deals with a huge range of things that are about building comprehensive common standards and platforms in a huge range of areas - electronic commerce, investor-state dispute resolution, telecommunications, banking, services, intellectual property. These are all above and beyond the "trade" related aspects of the agreement.
The timetable is that the negotiators are aiming to finalise an agreement towards the end of this year, around the date of the U.S. Presidential election.
The TPPA builds on an existing agreement, known if memory serves as the P4, though it is in fact being negotiated from the ground up.
Japan, Canada and Mexico have all expressed an interest in joining the agreement, interest which has not so far been reciprocated by the negotiating parties. The total two-way trade value between the United States and the eight other countries is around $440bn a year, making the value of the agreement reasonably small in the scheme of U.S. and global trade.
So that is what it is. In thinking about it, there are three bits of context to keep in mind with this agreement:
- the geo-strategic situation,
- the nature of globalisation and trade agreements, and
- the future prospects of New Zealand's economy.
Geo-strategic situation: is it all about China?
I am not a geo-politics expert, but it seems to me that part of the web of conflicting ambitions about this agreement relate to whether the purpose is economic, or geo-political. U.S. policy in the Asia Pacific is at least in part about the containment of China. That has to be why China is not involved in the negotiations, at least in part.
Readers will be more across the foreign and security policy debate than me, but the important point about that context is this: to the extent that economics is the core of the agreement, the U.S. will push hard for (in particular) Intellectual Property rules, as that is the main area of potential economic gain for them. The other countries will push back. Agreement will be hard to find. If on the other hand the geo-political imperative is what is driving it, then the U.S. will be more likely to accommodate reasonable economic demands from the other countries in the agreement.
Nature of globalisation: less is best.
More globalisation isn't always better.
Dani Rodrik made an argument in a recent book "The Globalisation Paradox" (a Washington Post review is here) that I fundamentally agree with. The TPPA is an example of the constant pressure to try and go beyond freeing up global trade (which I support), and into reducing the differences between countries on a whole range of fronts that up until now have been left to national decision. His view is that globalisation would have more legitimacy, and actually deliver better, if it was in essence "thin" - focused on reducing trade barriers, but leaving democratic governments to regulate the social and cultural elements of their societies as they see fit.
This appeals to me on a number of grounds. One is practical. I think that "subsidiarity" is an awful word that hides a great concept: make decisions as close to the grassroots as you can. There isn't any problem with countries cooperating to do things they can't do by themselves: e.g. freer trade, or tackling climate change, and so on. But there isn't much point in taking things they can do for themselves (e.g. choosing the balance between the interests of creators and users in the intellectual property universe) and forcing decisions on those into complex, slow, multilateral or global forums. Governments are closer and more accountable to the public, and can change things faster.
Another is principled: I think as a matter of democratic choice that most choices SHOULD be available to governments. In trade you generally both gain, but in some of the other areas agreements like #tppa seek to regulate, there can be very one sided gains that just cost some parties a lot, to put money in the pocket of another. IP (intellectual property) is the classic example. The U.S. wants #tppa states to lengthen the copyright term. That would put more money in the hands of U.S. IP producers of old, end-of-term copyrights (like some early Disney stuff) at the expense of consumers who would, once copyright expires, be able to make free use of that content. States should choose that balance, based on what is good for their people. They should not be locked in to choices made in one context that cannot later be changed.
So I suppose my head is at a "thin" globalisation model. Free trade is broadly good. But trying to use international agreements to pick the pockets of the poorer countries is not good. Taking away government ability to choose what suits a country best isn't good either.
Next steps for New Zealand's economy - the future or the past?
The third bit of context is about what comes next for our economy. We are unusually dependent on primary industry today for our exports and our standard of living. We have a very efficient agricultural sector in economic terms.
I don't think that that represents our future. I apologise in advance for the generalisations here, but this is trying to set out some big themes.
Here's why it isn't our future. We are hitting limits. Environmental limits mainly: but also physical ones. There isn't a lot more land to use, and the rising intensity of use of existing agricultural land requires ever increasing inputs - that add to the pollution being caused. Also, our agriculture industry is quite polluting, and is resisting the imposition of simple pricing mechanisms that would force them to start down a less-polluting path.
We can make our best future as an economy by adding value through innovation. A lot of that will happen in agriculture, but it can also happen in other areas: design, music and culture, high value manufacturing, business services, electronic commerce, high value tourism etc.
Those sectors tend to be faster growing than agriculture, and importantly, they are less capital intensive than agriculture - and they create more and better jobs for a given investment than agriculture does.
One way the #tppa could fall would be to give us some limited goods market access to the U.S., say in dairy and in meat. The cost would be tougher IP laws that hurt those new economy sectors I mentioned above.
I think that would be cutting off our future. We should not sign up to an agreement that advantages the old-economy industries with relatively limited growth prospects, and puts barriers in the way of new-economy industries that represent cleaner, greener and richer jobs for people who live and work in New Zealand. We would be doubly disadvantaged: relative advantage would be with industries with a slower growth path, leaving all of us worse off; and the chances of upgrading our economy into a more high-tech and high-income zone would be lost to us.
So that presents three areas of context. There are others that I don't have time to cover in any depth. There might be nuance you care to share with me that I haven't thought of - I'd love to hear from you if that is the case.
My view is already probably quite obvious. I think there are major risks to New Zealand's future present in the #tppa, the Trans Pacific Partnership Agreement. I'll try and get to some of those specific concerns in the next post, probably over the weekend.