Is the TPPA really in our best interests?

Will the TPPA have an impact on New Zealand’s SME sector? Ashley Balls has concerns.

On the assumption New Zealand has signed the TPPA there is now a two-year period during which the ratification process will take place. Unfortunately, during that time there will be a national road show extolling its virtues and why we have to join this big boys’ club. The same people who negotiated the 6000-page treaty will be selling it to us. Not the best start.

So how did we arrive at the present position? It goes something like this:
Many years ago Tim Groser got a bee in his bonnet about a free trade group in the South West Pacific and started talks with Singapore, Brunei and others. It went reasonably well and made some sense, even though previous free trade agreements (FTAs) have never delivered on their promises. NAFTA is an excellent example of a truly appalling Free Trade Agreement where none of the outcomes was achieved.

Other countries wanted to join in and the numbers expanded. Sadly, the US was invited and the agenda passed from Groser to US multinationals.

Talks became contaminated by around 600 mostly US-based multinationals who insisted they had paid lobbyists and legal draftsmen/women at the negotiating table and that national interest groups and environmentalists were excluded. At this point began the process to give multinationals the opportunity to override pre-existing legislation in the proposed member countries.

The numbers of negotiators became so great and unwieldy that the outcome (free trade) got skewed and Big Business set the new agenda, which was largely self-serving and protectionist. 

The potential agreement was re-cast as a treaty so that in many countries with a Westminster-type government it could be passed without any interference from the local legislature. Treaties are within the remit of the executive under Westminster constitutional systems. That is, Cabinet can take the decision alone, with no debate. At this point began the intentional erosion of national sovereignty which can frustrate the operations of SMEs.

Assuming negotiations followed other large FTAs (now treaties) big money became involved. It is labelled lobbying by the media but essentially is bribery. Hundreds of millions of US Dollars, maybe even a billion are involved. More than US$200 million has already been dispersed to a number of congressmen – this is on record.

The agenda is now almost completely protectionist and despite clauses suggesting special interests may be protected e.g. environmental protection, labour law, intellectual property, local land ownership, indigenous rights etc., they are not. The key objective of the multinationals is to increase profit. The cheapest way this can be achieved is not through domestic productivity increases following investment in new plant etc, but by off-shoring jobs, driving down environmental protection, weakening labour law, extending IP protection and reducing health and safety standards.

Investor-state dispute settlement (ISDS) becomes a central feature together with the notion that secrecy has to be maintained. ISDS can be and has been used to ensure the negative aspects in the paragraph above, occurs. A recent example occurred in Egypt when the passenger railway network increased the very low wages of staff. The French owners, Veolia Transport, used ISDS to reduce the wages back to where they had been and exacted a multi-million penalty on the Egyptian government.

Special interest groups sought protection – e.g. motor manufacturers in Mexico and Canada, without success. In that environment it is not surprising NZ Dairy and Pharmac were largely ignored. In short, unless you have a major economic ‘pressure point’ the multinationals are not interested. 

Now that the treaty has been signed the opportunity for renegotiation is virtually over. From an SME perspective the outcome may well turn out to be a losing exercise in competitiveness where the game is stacked against us. For example, a small town in Wales, Crickhowell, determined that it did not want any big box stores or supermarkets and successfully campaigned to keep a major supermarket out which would have killed SME businesses. In a TPPA world this will not be possible once a major foreign owned chain store decides to open. Foreign owned businesses will be able to ride roughshod over local regulations and environmental considerations. For example, in the US oil companies have already forced through fracking to the point where if the oil companies pollute and/or damage groundwater they are not held responsible for any consequential damage and avoid all requirements for reparations. Is that the kind of future business environment we want?

On the other side of the ledger the TPPA has been touted as an FTA. The rhetoric promises new jobs and a greater volume of exports but no explanation is offered as to how this will happen. This should sound alarm bells. The TPPA is not an FTA and like NAFTA may well result in lower wages and the exporting of jobs.