Thursday 30 July 2015

The Trans-Pacific Partnership - 07/29/2015

I have little deal that (as Jane Kelsey pointed out at a talk I went to) that this deal will be signed by New Zealand with little or nothing to show for in it in terms of trade concessions.

America has a history of forcing small nations to compl with its wishes and this government is not going to do anything to upset its boss.

Sure as sunrise, New Zealand will sign up to the TPP if a deal is on offer
Vernon Small

Foreign buying of Auckland houses is a key point of difference between National and Labour over the Trans Tasman Partnership free trade deal.

30 July, 2015

OPINION: Based on previous observations the sun will more than likely come up tomorrow and New Zealand will sign the Trans-Pacific Partnership (TPP) trade deal if, as appears likely, it is finalised this week.

Actually it will sign it whatever week it is finalised. The Government has far too much skin in the game to walk away.

When ministers say they would reject the TPP if it is not in New Zealand's best interests, unless there is a good deal on dairy, unless, unless, unless ... there is only really one response. Yeah, right.

It is inconceivable it would walk away from a 12-nation free-trade deal that includes Japan and the United States - the holy grail for free-trade negotiators since before this country's anti- nuclear policy turned it into a pawn of trade diplomacy.

When Key made it clear a few weeks ago that the TPP would deliver a net benefit to New Zealand if the clock stopped on talks now - even though the dairy deal was not as good as hoped - the game was up. At that point there was no more bluffing - we were signing.

Against that background - and in the absence of the necessary detail to form a view on where the talks are going - Labour has come under pressure to take a stand against the TPP. And in the past week it has... though not without some very fuzzy edges.

Labour's angst goes back to its 2013 annual conference in Christchurch where internal divisions were "kicked down the road".

One group, led by Phil Goff was strongly in favour of TPP, believing it would bring broad benefits. Another group argued it surrendered too much sovereignty.

To paper over the cracks, Labour built a halfway house: Withhold support until the text was released and it was clearly shown to be in the broad national interest to sign up.

Last week's statement was a step away from that - while being loose enough to keep the cracks firmly under wraps.

It set five non-negotiable bottom lines for Labour's support.

They were that the centralised drug agency Pharmac must be protected, corporations would not be able to "successfully" sue the Government for regulating in the public interest, meaningful gains were made for farmers on tariff reductions and market access, the Treaty must be upheld and - the biggie - New Zealand must retain the right to restrict sales of farm land and housing to non-resident foreign buyers.

In doing so it brought together two strands; public unease over the TPP (contrasted with the radical opposition to free trade that would never be satisfied with Labour short of a complete rejection of the TPP) and the party's "wedge" argument against foreign house purchases.

The link to its campaign against foreign (Chinese) resident buyers of Auckland houses is complex, given China is not yet part of the TPP.

The argument runs that through the "most favoured nation" clauses in the China FTA, negotiated by Labour, China must be offered the same investment rights as other subsequent trade deals.

So while the pre-existing Closer Economic Realtions (CER) deal with Australia would not trigger that clause, the TPP would.

But it gets more complex still.

When it signed up to the recent trade deal with South Korean the Government failed to secure the right to add new categories of land - such as residential houses - to existing restrictions. That now flows backwards to the China deal.

(It says a lot for John Key's chutzpah that he is prepared to blame Labour's free-trade deal with China, with its most favoured nation clause, for the fact that the current deal with Korea will flow back into the China deal. But that's politics, folks.)

A similar approach to the TPP only exacerbates the problem. Fast forward to some future time when Labour is in Government and tries to tries to renegotiate the TPP to allow a ban on foreign house buyers.

It is unlikely Japan and the United States would be overly concerned, but the principle of a renegotiation would be a major hurdle.

And if a future Labour Government was successful then the new TPP would be out of step with the South Korean deal.

Yet there may not be an actual - as opposed to theoretical or in-principle - problem here anyway.

If New Zealand did restrict foreign buyers in future and it was in breach of a free-trade deal, then a lawsuit would be extremely unlikely, given the cost to a property investor and the difficulty of proving loss.

If, at this point, your head hurts you are not alone.

But, the simple point is that Labour wants to highlight what it sees as the Government's failure to preserve "New Zealand for New Zealanders".

It is by far the most politically potent of Labour's "bottom line" non-negotiable positions, despite the furore around Pharmac this week.

Key's admission that the TPP would likely extend patent protection for medicines, pushing up the cost to New Zealand and Pharmac, drew a quick response from Little.

Labour, he said, had pledged to oppose the TPP if Pharmac, and its model of purchasing, were not protected.

"Extending the patents does not protect Pharmac's purchasing model."

That sounded unequivocal enough, though arguable.

But it also risks pulling the wallpaper off one of the deepest fissures in the caucus, where some see an extension of patents as inevitable... and quite acceptable.

TPP talks stumbling on dairy hurdle

Dairy is a big hurdle of TPP discussions, with New Zealand seen as a threat to other dairy-producing countries.
29 July, 2015

Dairy is proving to be a difficult hurdle at Trans-Pacific Partnership (TPP) discussions in Hawaii this week, with some countries cautious about New Zealand's competitive dairy industry.

Reuters has reported a major sticking point in the talks is dairy, with Mexico under pressure to give Australia and New Zealand more access to its markets. However, Canada was resisting demands to open up its protected local industry.

ASB rural economist Nathan Penny said based on information about the TPP talks, it seemed the United States, Canada and Japan were all resistant to opening up their agricultural sectors to foreign competition.

He said Japan's dairy industry does not produce enough for the country's needs, but they have yet to reduce barriers to trade.

From New Zealand's point of view, Japan would be a good market due to its size, lack of competition, the older farming population and the shortage in some dairy products, Penny said.

"We are much more efficient than Japanese producers. It would be a huge opportunity for us, hence Japanese producers in part are heavily lobbying their own government to ensure that protection remains in place. Their industry would go through a structural change if opened up to competition," he said.

New Zealand Trade Minister Tim Groser told TV3's The Nation that he was looking for "commercially meaningful access" for New Zealand's dairy industry into other markets.

"I'm not going to be dogmatic about how to define that, but there's nothing on the table yet that allows me to recommend to the cabinet that we should sign this deal at this point," he said.

The Canadian dairy industry was also highly protected - the Business News Network in Canada reported dairy was protected from foreign competition by tariffs that can run as high as 246 per cent.

Without a quid pro quo from Canada, the US was also unlikely to open up, Penny said.

"We're reliant on two deals to get one."

Without knowing the details of the agreement, Penny said it was difficult to determine how much the New Zealand dairy industry would affect those of other countries.

"For us, from an opportunity point of view, dairy is a big one. If we don't get a good deal on agriculture, then it's not really doing the job for us."

A better dairy deal was essential for New Zealand dairy industry representatives, with chairmen of the Dairy Companies Association of New Zealand (DCANZ) and DairyNZ urging TPP governments to give dairy as good an outcome as that of other goods.

DairyNZ chairman Hon John Luxton said there was no good reason for dairy to be left behind.

"I urge ministers to remember that this is an agreement to grow trade and support economic prosperity. Not one to maintain protection and distortion," he said.

"We are a small country, of four million people, where dairy is very important to our economic wellbeing. But we are not asking for a handout, our farmers are not subsidised, we do not protect our market. We just want a level playing field."

The "Saudi Arabia of milk"

The Wall Street Journal dubbed New Zealand the "Saudi Arabia of milk" in 2008, likening its dairy industry to the oil industry in Saudi Arabia, and it is a title that has stuck.

New Zealand is a giant in the dairy industry, with Fonterra the world's largest global milk processor and dairy exporter.

New Zealand's exports of milk powder, butter and cheese were worth about $12 billion in the 12 months to June 30, down 24 per cent on the previous June year.

Penny said New Zealand was still the one producer of dairy products that could influence global prices.

"The world prices of milk powders in particular, we're probably the dominant exporter in that sense. Where our production goes prices do tend to follow," he said.

Jane Kelsey was interviewed on Radio NZ this morning, She's about the only spokeperson talking sense. Winston Peters is another.

AUDIO: More bad news to come on the TPPA - opponent

Listen to Jane Kelsey on Radio Live HERE

Here is the latest from Wikileaks

Secret Trans-Pacific Partnership Agreement (TPP) Treaty: State-Owned Enterprises (SOE) Issues for Ministerial Guidance

Today, 29 July 2015, WikiLeaks releases a secret letter from the Trans-Pacific Partnership Agreement (TPP or TPPA) Ministerial Meeting in December 2013, along with a comprehensive expert analysis of the document.

The letter indicates a wide-ranging privatisation and globalisation strategy within the Agreement which aims to severely restrict "state-owned enterprises" (SOEs). Even an SOE that exists to fulfil a public function neglected by the market or which is a natural monopoly would nevertheless be forced to act "on the basis of commercial considerations" and would be prohibited from discriminating in favour of local businesses in purchases and sales. Foreign companies would be given standing to sue SOEs in domestic courts for perceived departures from the strictures of the TPP, and countries could even be sued by other TPP countries, or by private companies from those countries. Developing countries such as Vietnam, which employs a large number of SOEs as part of its economic infrastructure, would be affected most. SOEs continue to fulfil vital public functions in even the most privatised countries, such as Canada and Australia.
The TPP is the world's largest economic trade agreement and will, if it comes into force, encompass more than 40 per cent of the world's GDP. Despite its wide-ranging effects on the global population, the TPP is currently being negotiated in total secrecy by 12 countries. Few people, even within the negotiating countries' governments, have access to the full text of the draft agreement, and the public – who it will affect most – none at all. Large corporations, however, are able to see portions of the text, generating a powerful lobby to effect changes on behalf of these groups and bringing developing countries reduced force, while the public at large gets no say.
The TPP is part of the TPP-TISA-TTIP mega-treaty package, which together proposes to encompass more than two-thirds of global GDP.
WikiLeaks' editor, Julian Assange, said: "The TPP erects a 'one size fits all' economic system designed to advantage the largest transnational corporations. In this leak we see the radical effects the TPP will have, not only on developing countries, but on states very close to the centre of the Western system. If we are to restructure our societies into an ultra-neoliberal legal and economic block that will last for the next 50 years then this should be said openly and debated."

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