Speeches and Articles
TPP - Something new in the making
Stephen Jacobi
Dominion Post, 06 December 2010
In trade negotiations it is easy for the rhetoric to get ahead of the reality. The same may yet prove to be the case with negotiations to expand the Trans Pacific Partnership (TPP).So far at any rate TPP is exceeding expectations. TPP is being intentionally positioned as a new generation agreement. To be at all credible in the eyes of public stakeholders it must represent a new way of doing things.
At APEC in Yokohama last month TPP partners expanded to nine, beyond its current four members (New Zealand, Brunei, Chile and Singapore) with Viet Nam confirmed as a full member and Malaysia now joining Australia, Peru and the United States. APEC Leaders confirmed TPP as one of several viable pathways towards the Free Trade Area of the Asia Pacific (FTAAP). Several other economies including Canada, Japan and the Philippines are engaged in domestic consultations aimed at determining whether they could join the nine and in particular ascribe to the parties’ high level of ambition for this negotiation.
Why is it that free trade is on the move again? First and foremost the financial and economic crisis has focused the mind of governments. Asia is leading the global recovery but the situation remains fragile and the upward trend could be reversed by currency wars or returning protectionism.
Trade agreements are not the whole solution but they are certainly part of it. Trade agreements can remove cost from the supply chain, improve the ease of doing business and promote best practice in regulation. These were the sorts of issues raised by business at a TPP seminar organised by the NZ US Council in Yokohama and which will be repeated in Auckland. They reflect a significant shift in the way business is being done in the region through increasingly complex regional value chains. Making these value chains more efficient has significant benefits for workers and consumers, leading to lower prices, new business and new jobs. Little wonder governments are interested.
New jobs do not grow on trees. Jobs flow from innovation, efficiency or trade. They are created by businesses large and small making a decision to invest. Some important new sectors could be opened up through the TPP process. The Japanese Government sees TPP as a means if fostering the efficiency and competitiveness of Japanese agriculture. Other sectors, like environmental goods and services or medical technologies, are also ripe for expansion.
Some commentators fear that TPP will oblige New Zealand to adopt American-style policies with regard to investment, pharmaceuticals or intellectual property. The Government is certainly well aware that it has to balance a range of interests in this negotiation which has the potential to go far deeper into domestic policy settings than any other agreement since CER.
New Zealand needs foreign investment to grow the economy and New Zealand investors offshore also need protection from actions by foreign governments in changing the rules of the game after an investment decision has been made. Modern investor state dispute settlement provisions of the type seen in our existing FTAs protect New Zealand investors against discriminatory actions of foreign states while upholding explicitly the right of states to take action to protect the environment.
Pharmac has some obvious benefits for New Zealand yet still attracts criticism from time to time from patient advocacy groups, clinicians and the pharmaceutical industry. Pharmaceutical companies are in fact less concerned with removing Pharmac than improving the way it operates.
Intellectual property is more complex but in a pluri-lateral negotiation like TPP the United States is not the only participant with a view on how the future intellectual property regime should operate.
When TPP negotiators gather in Auckland this week the public will have an opportunity to participate in a stakeholder programme co-ordinated by the Ministry of Foreign Affairs and Trade. This too is new. Trade negotiations have often been unfairly criticised for being conducted in secret. The stakeholder programme represents an attempt to increase the transparency around the negotiation.
TPP is still an agreement in the making. We are still at the start of a complex and possibly lengthy process. Leaders want to see some deliverables from the negotiation by the time of the APEC summit in Honolulu in November 2011. For that to happen reality will have to match the rhetoric if something new and significant for the APEC region is to be forged.
