The Trans-Pacific Partnership (TPPA) trade deal explained in... 30 minutes video

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If you don't have time for a half hour of reading on the TPPA, get the skinny here in less than three minutes.

If you don't have 30 minutes, check out our three-minute video above.

You'd have to have been living under a rock to have missed the kerfuffle over the biggest trade deal in history.

But you wouldn't be alone: All Black Liam Messam has only just found out about the decade-long Trans-Pacific Partnership negotiations, and he's worried.

"Ummmm think I've been living under a rock but this TPPA is some BS," he tweeted earlier this month. He didn't elaborate on what it was that concerned him.

With just days until the secretive 12-country free-trade deal is formally signed, in a grand ceremony in Auckland, opponents are making a number of last-gasp efforts to stop the deal.

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* The TPPA explained in 30 seconds
* The TPPA explained in three minutes

Then Prime Minister Helen Clark ushered in a free trade deal with China in 2008. Work on the TPPA ramped up soon after.
NZPA/Ian Llewellyn

Then Prime Minister Helen Clark ushered in a free trade deal with China in 2008. Work on the TPPA ramped up soon after.

 

The reasons behind the opposition have been mixed and, at times, unclear: will we lose access to medicines? Will our property market become a foreigner free-for-all? And is the Treaty of Waitangi going to be chucked in the bin?

The deal will be signed on February 4, so it's timely to ask in these the final days pre-TPPA, do we panic, or relax?

HUMBLE BEGINNINGS

It's coming up 14 years since the first steps down the TPPA path were taken by then-Prime Minister Helen Clark, but it took almost a decade for New Zealanders - and those in other member countries - to care.

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It began as a smaller-scale deal between New Zealand, Singapore and Chile in 2002. Brunei came on board in 2006, and the agreement became known as P4.

From there, the partnership grew and grew, as Australia, Canada, Mexico, Peru, Malaysia and Vietnam signed up.

Leaders of the TPP member states met at Yokohama in November 2010.
Sarah Corbett

Leaders of the TPP member states met at Yokohama in November 2010.

In its later years, the TPPA talks saw two major membership milestones: In 2008, as then-US President George Bush prepared to leave the Oval Office, the United States joined up. And in mid-2013, Japan also climbed aboard the TPPA bus.

From there, talks lagged, with the economic powerhouses holding out on two of the most pertinent issues for New Zealand: Japan's reluctance to abandon agricultural protectionism, and the United States pharmaceutical industry's desire to stop drug-buying agencies, like New Zealand's world-leading Pharmac, from being able to access generic medicines.

Leaked draft texts suggesting the latter was on the cards were the basis for much of the pushback in New Zealand, with concerns the agency would be gutted, and Kiwi patients would be left with skyrocketing prescription bills.

The secrecy that shrouded the talks only compounded concerns.

Eleventh-hour talks helped find an agreeable solution on both dairy and drugs - although no one's over the moon about either result.

WHAT'S IN STORE FOR NZ

There's perhaps only one thing the two sides of the TPPA debate can agree on: what its impact will be on the average New Zealander.

That is, almost nothing, for at least several years.

"Immediately, there will be very little direct impact," says Auckland University law professor Jane Kelsey, the leading New Zealand voice against the deal.

Auckland University law professor Jane Kelsey is New Zealand's leading voice in the opposition to TPPA.
SUNDAY STAR TIMES

Auckland University law professor Jane Kelsey is New Zealand's leading voice in the opposition to TPPA.

For once, Kelsey's pro-TPPA colleague, international relations associate professor Steve Hoadley, agrees with her.

"I don't think the average New Zealander will notice anything - certainly, in the next five years; maybe not in the next 10 years."

That's where their consensus ends. Kelsey says eventually, the public will see negative signs.

"If the government doesn't provide more money to Pharmac, people are going to start seeing those consequences, but they won't happen the day after the signing.

"The regulatory handcuffs on future governments are going to be evident when governments try to resolve problems and they can't because of commitments that have been made in the agreement.

"People will notice it there, but they won't notice it in terms of what they do when they go to the shops."

Protesters outside Parliament during a "Nationwide Week of Action" against the TPPA in August last year.
WARWICK SMITH/FAIRFAX NZ

Protesters outside Parliament during a "Nationwide Week of Action" against the TPPA in August last year.

Hoadley, on the other hand, says the negative consequences of not signing the deal would be more profound for Kiwis.

"If New Zealand did not enter into free-trade agreements, the average New Zealander would definitely notice a decline in lifestyle, a rise in unemployment, a general inability of the government to finance policies, the flight of New Zealand corporations over to Australia or some other country where they can operate more freely in world markets."

TPPA, NO WAY

New Plymouth protesters said no way to TPPA in August last year.
ANDY JACKSON/Fairfax NZ

New Plymouth protesters said no way to TPPA in August last year.

For eight years, Kelsey has led criticism of the deal, regularly commenting on leaked draft texts, and rallying tens of thousands of New Zealanders behind her.

Asked if there's anything about the final deal that she likes, Kelsey gives a simple, but firm, "no".

"It's a 19th-come-20th century agreement. It's all about protecting foreign investors, promoting economic development through zero tariffs, and consolidating supply chains in the way that they did in the old colonial era.

The rain didn't deter thousands from marching on Christchurch's Riccarton Road in August last year.
DEAN KOZANIC/FAIRFAX NZ

The rain didn't deter thousands from marching on Christchurch's Riccarton Road in August last year.

"There is nothing on climate change ... It doesn't deal with financial instability, it's not going to deal with the problems that brought us the [global financial crisis]. It doesn't help poorer countries at all."

Add to that increasing costs for Pharmac under the deal, and the ability of other countries or multinationals to sue our government, and Kelsey says the bad outweighs the good.

Groser last year called Kelsey and other campaigners "politically irrelevant", but she's continuing to stand her ground.

Auckland University associate professor of international relations Steve Hoadley is a pro-TPPA foreign policy analysis ...
AUCKLAND UNIVERSITY

Auckland University associate professor of international relations Steve Hoadley is a pro-TPPA foreign policy analysis expert.

"They have engaged in not just insults at me, but insulting doctors, or the minister saying 'we need to get rid of this childishness and have an adult conversation', and 'we're going to win this war', as if he's at war with the people in the country - that kind of language shows that they know they've lost the battle in being able to present convincing arguments to people," Kelsey says.

"The secrecy has backfired on them, and that's a lesson that they still haven't learnt and won't acknowledge."

But Hoadley - who is admittedly pro-TPPA - says the opponents created a lot of heat, but not much light, on the deal.

"My feeling about the opposition was that it was shrill, it was exaggerated, it was scare-mongering.

"It was not totally illogical - that is, some of the problems, like the investor state dispute resolution issue, the Pharmac issue, the copyright issue.

"Sure, there are some drawbacks to the agreement, but what the opposition didn't look at is: what is the net benefit? Is it better to be in it than out of it?"

On that point, again, the two sides struggle to agree.

COST VS BENEFIT

With 93 per cent of tariffs on Kiwi exports set to be eliminated, the government maintains that the TPPA is a huge net gain for New Zealand - but economists are mixed on whether that's correct.

NZIER's deputy chief executive, economist John Ballingall, is certain the benefits of the deal outweigh the costs.
JOSEPH KELLY/SUPPLIED

NZIER's deputy chief executive, economist John Ballingall, is certain the benefits of the deal outweigh the costs.

The Ministry of Foreign Affairs and Trade estimates the deal will reap an extra $2.7 billion in GDP annually by 2030, through a mix of reduced tariffs and other trade barriers, and a greater slice of markets.

NZIER's deputy chief executive John Ballingall has "absolutely no doubt" the deal's a positive, despite of the costs - including those that can't be quantified.

"To my mind, those costs are undoubtedly smaller than the benefits over time, so this will be a net positive for the New Zealand economy."

Anti-TPPA protesters were arrested after blocking Wellington's Lambton Quay during a rally outside the Ministry of ...
CAMERON BURNELL/FAIRFAX NZ

Anti-TPPA protesters were arrested after blocking Wellington's Lambton Quay during a rally outside the Ministry of Foreign Affairs and Trade in September.

But a group of experts - including economists Rod Oram and Auckland University's Professor Tim Hazledine, Victoria University public policy associate Dr Geoff Bertram, and development expert Barry Coates (who is a former Green Party candidate and strong anti-TPP voice) - has just released a research paper saying the costs may very well outweigh the "modest" benefits.

They believe the government's modelling estimates are exaggerated and rely on inadequate information, and that jobs could actually be lost and the inequality gap widened as a result of the deal.

"The government has not included the costs that are likely to result from the TPPA in its analysis - these are likely to be significant, and may outweigh the economic benefits," the Law Foundation-commissioned paper says.

Police arrest a protester outside the MFAT building in Wellington in September.
DAVID WHITE

Police arrest a protester outside the MFAT building in Wellington in September.

The group urges the government to carry out an independent and comprehensive cost-benefit analysis before ratifying the deal.

A World Bank analysis says New Zealand is among the countries that will benefit most from TPPA.

"The largest gains in GDP are expected in smaller, open member economies, such as Vietnam and Malaysia (10 per cent and 8 per cent, respectively)," it says, followed by Brunei (four per cent) and New Zealand (about three per cent).

More than 100 people - and two Daleks - turned out to protest the TPPA in Canterbury's Little River in November.
SUPPLIED

More than 100 people - and two Daleks - turned out to protest the TPPA in Canterbury's Little River in November.

The United States trails in last place, on a less-than-one per cent gain over the 15-year projection.

Those in favour of the TPPA say the alternative - pulling out of the deal - would have certainly been to New Zealand's detriment.

"To my mind, that's without a shadow of a doubt," Ballingall says.

"To be on the outside of regional economic integration initiatives makes no sense for a small country that needs to export its products to fast-growing markets. If we had done that, we'd have been less competitive to all other countries inside TPP.

"It would be much harder for our exports to compete. That seems, to me, to be a situation that we really wouldn't want to be in."

THE FATE OF PHARMAC AND OUR LAWS

Opponents' concerns were many-faceted, and the final agreement has done little to assuage their fears.

One of the greater financial costs comes from extending copyright from 50 to 70 years.

The cost, in lost savings on books, films, music and other copyrighted works, will rise over 20 years, to about $55 million a year in the long term - a cost set to be footed by the average consumer when they pop out for Lorde's second album or a new book, and by institutions, like schools, libraries and universities.

Dr Pat Neuwelt is an Auckland University public health lecturer, and a leader of anti-TPPA lobby Doctors for Healthy Trade.
AUCKLAND UNIVERSITY

Dr Pat Neuwelt is an Auckland University public health lecturer, and a leader of anti-TPPA lobby Doctors for Healthy Trade.

At the same, however, it ensures artists like Lorde, and their future families, reap the benefits of royalties for longer, Trade Minister Todd McClay says.

The most contentious point from a New Zealand perspective is the fate of Pharmac, which achieved a far better result than leaked draft texts suggested.

US drug giants originally wanted a 12 year exclusivity period on medicine patents; that was negotiated down to eight years, heading into the final round of talks. But a late push by Australia saw it slashed further, to five years.

The cost of buying drugs will still rise, and the result means Pharmac - with an annual budget of $800 million - will find itself increasingly squeezed.

Once TPPA comes into effect, Pharmac faces a one-off $4.5 million bill to make its funding decisions system more "transparent" to Big Pharma, plus $2.2m dollars a year in increased operating costs.

The government's pledged to bridge the gap, covering any drug price rises in its subsidies so patients don't pay more for medicine, but it hasn't said where the money to do so will come from.

McClay says the additional costs are a drop in the ocean of the $15.9 billion health budget, which is expected to increase again this year.

As for the agency's views, a spokesman says: "Just so you're aware, Pharmac won't comment on the TPP."

Again, neither side of the drug debate is happy with the result.

Anti-TPPA lobby group Doctors for Healthy Trade maintains there was a "real threat" to Pharmac, because of its status as the western world's most effective agency at reducing the cost of medicines.

"Pharmaceutical companies have been concerned about the fact that Pharmac is a model for the rest of the world, and for that reason, the pharmaceutical industry has been gunning for Pharmac ever since it was implemented," Dr Pat Neuwalt, an Auckland University public health lecturer, says.

"The average person in New Zealand has no idea what was at stake, and what might have changed at the last minute as a political trade-off."

However, Medicines NZ, which represents the pharmaceutical industry, says it's also been left wanting.

The final deal means hospitals don't have to reveal their drug-funding decisions, including on a "game-changing" melanoma treatment the Government is currently considering funding.

Medicines NZ's general manager, Dr Graeme Jarvis, says "watered down" intellectual property provisions won't improve New Zealand's "poor" access to innovative medicines, including new general biologics, which are set to contribute significantly to Pharmac's costs in future.

Other costs can't easily be quantified: one big concern is the loss of lawmakers' sovereignty, with other governments, and the multinational corporations of their countries, gaining greater powers to sue over each other's laws, known as Investor State Dispute Resolution (ISDR).

An exemption for tobacco laws - such as plain packaging - has been included in TPPA, but that does little to allay the fears of the doctors' lobby.

"If you have to create an exclusion around tobacco, what about all the other harmful substances, like alcohol, fast foods, soda? What about all the other health issues that remain completely unprotected from multinational companies?" Neuwalt says.

"It's very disconcerting. I think there's an awful lot about the ability to regulate, to develop new policy and legislation in future that is at threat here."

To Labour leader Andrew Little, the economic gain of the TPPA, at the expense of potential lawsuits, is "a trade-off that just should simply never happen".

"We are now constrained from passing a law that will fulfil Labour's policy of requiring non-resident foreigners to build a new house here, rather than purchasing an existing house," Little says.

"Once you start putting constraints on the right of a sovereign parliament to make laws in the best interests of its people, then it goes way beyond what a trade agreement should ever allow."

However, Ballingall says there's no guarantee those countries or companies would win.

"In fact, the data suggests the chances of them winning are relatively low, and even if they do win, the amount that they get paid out is usually far, far lower than the amount that they actually ask for."

He points out that the same provisions will work in the favour of New Zealand companies when they look to invest overseas.

For many Maori, both the final agreement - and the process the government followed - are objectionable.

A claim is before the Waitangi Tribunal, backed by well-known names including former Mana Party MP Hone Harawira and lawyer Moana Jackson.

It covers numerous issues, including Maori sovereignty, intellectual property, the Treaty of Waitangi exception clause, and the contentious issue of water rights.

One of the claimants, musician Moana Maniapoto, says the government failed on its Treaty of Waitangi obligation to actively engage with Maori on the deal.

"They ... refused to release information that would allow our experts to conduct a full and independent treaty risk assessment. They wouldn't release the text even confidentially to the Waitangi Tribunal.

"Their idea of engagement is to host a series of PR hui after the fact to explain the benefits."

The TPPA includes a clause which states it will not preclude New Zealand giving favourable treatment to Maori, including under the terms of the Treaty of Waitangi.

THE DEAL WITH DAIRY, AND OTHER EXPORTS

Soon after the talks wrapped up in Atlanta on October 6 (NZ time), then-Trade Minister Tim Groser admitted the final deal on dairy exports fell short of a "gold standard", with the United States, Japan, Mexico and Canada refusing to scrap all dairy tariffs.

"I am very disappointed that the deal falls far short of TPP's original ambition to eliminate all tariffs," Fonterra chairman John Wilson said, but he added there would be "useful gains" in the hold-out countries, and greater benefits as tariffs reduced over the next 20 years.

Andrew Little reckons the economic gains will be far lower than the government has boasted.

He recounted a conversation in Washington DC with US economist and academic, Jeffrey Schott, who had analysed the TPP's likely impacts in-depth, and was currently revising down his projections.

"He pulled me aside and he said 'listen, it's going to be way less for New Zealand'. Because we didn't get what we wanted on dairy, or even close to it, he said it's going to be way less," Little says.

Japan will also retain its tariffs on beef, although they'll be slashed considerably from 38.5 to nine per cent.

If Beef and Lamb New Zealand was at all disappointed, it hasn't shown it: it's one of few bodies that have celebrated the result.

Its senior manager of trade policy and advocacy, Tracey Paterson, says slashing the Japanese tariffs helps New Zealand catch up to Australia, which already has a free-trade deal in place - and a 10 per cent tariff advantage on frozen beef.

"If New Zealand did not pursue these FTAs, then as a country our competitive position would decline over time and that impact would flow back through the supply chain from exporter to processor to producer in terms of the overall return to New Zealand farmers."

What the average farmer will actually see as a result of TPP isn't yet known: for all the talk of GDP growth, there's no specific modelling available on what benefit an individual will notice, or when - as some tariffs will take years, even decades, to be fully removed.

The wine industry, too, is hailing the deal, which sees tariffs immediately scrapped on all wine to Canada, and bottled wine to the United States. Other tariffs will fall over time, "all of which is money in the pockets of our wineries and growers," NZ Winegrowers chief executive Philip Gregan says.

It's not just food producers who'll benefit: wood, wool, manufacturing and agribusiness will also reap the benefits, although not always related to tariffs.

Wayne McNee has worn many hats in the TPPA debate, as current CEO of agribusiness exporter LIC, and a former head of ...
LIC

Wayne McNee has worn many hats in the TPPA debate, as current CEO of agribusiness exporter LIC, and a former head of Pharmac and the Ministry for Primary Industries.

ONE MAN, THREE HATS

Livestock Improvement Company (LIC)'s business is "births, deaths and marriages of cows", from artificial breeding to software and hardware that improve farm productivity.

Currently, it exports only semen within the TPPA bloc to the USA and Chile, with small operations in Japan, and an eye currently on Canada.

Expansion opportunities will "become more attractive as benefits come into effect", chief executive Wayne McNee says.

"We'll look at those markets in a different light, once the TPP's in place, and the customers on the other end will probably look at [us] slightly differently as well."

Although LIC faces few tariff barriers on its exports, it can get tied up with customs and biosecurity processes, and hopes TPP will help cut that red tape.

"We generally find in markets where there are free-trade agreements that non-tariff barriers reduce as well - so you get less customs restrictions, you get less delays, you get less requirements that exist that prevent you selling, or limit your ability to sell product, those get removed over time."

And it'll only be over time that LIC sees gains from the TPP, he says.

"The direct benefits, to be fair, are small. For our business, there's no 'woohoo, this will be great', but there is a general positivity towards it.

"On balance, from what I've seen of it, it looks like a positive deal, but a lot of the benefits will flow in future once the agreement is in place."

McNee's in an unusual position on the TPP, having worn several hats in the debate: until 2006, he was chief executive of Pharmac. He went on to oversee the Ministry for Primary Industries' formation as chief executive there.

From his perspective, the impact of the TPP looks "very manageable" for Pharmac.

"The key in free-trade negotiations is always to make sure the benefits outweigh the costs. From where I sit, it looks very manageable and the benefits definitely look to outweigh the costs to the economy."

And although McNee would have liked to have seen a better deal for dairy, he says from his time close to the negotiations, "we were always very well aware that it was going to be challenging to get more".

He's confident the government made its best push across the board.

Trade Minister Todd McClay is turning his attention to a free trade deal with the European Union.
supplied

Trade Minister Todd McClay is turning his attention to a free trade deal with the European Union.

"You've got 12 parties around a table trying to negotiate a deal, it's a very challenging process, so from what I can see, the government's done as good a job as it could have done.

"If this deal was signed without New Zealand being in it, that would have been pretty terrible from a New Zealand trade perspective."

LESSONS LEARNT

MFAT's now putting the finishing touches on the preparations for next week's signing, before the 11 other trade ministers, and the world's media, converge on Auckland.

McClay is tight-lipped on the details, although it's likely there'll a powhiri welcome, and he's invited his counterparts to stick around and see the sights of New Zealand, if they have time.

Hoadley says hosting the signing is a coup - and it could help the government's campaign to host the TPPA secretariat in New Zealand.

"It is a symbol that New Zealand is small but able, is a free-trade leader and will certainly put NZ on the free-trade map."

But putting pen to paper doesn't remove the final hurdle: each country still has to ratify the deal, and in the US Congress, that could take years - or it could fail, due to politicking.

"It is quite possible it will not get over the line," Hoadley says.

But not all will be lost: If member governments agree, they could "form a coalition of the willing" on a smaller agreement incorporating the substance of the TPPA, "maybe with some side agreements, maybe with some exclusions, carve-outs, longer phase-in periods".

"What we're likely to see is a fairly messy, if you like, start-stop process involving some of the partners and not all of them, and this could go on for some years, even for decades."

McClay's not prepared to talk about what-ifs.

"The US have given us assurances that they will be able to move through their process. I haven't seen or heard anything at the moment that suggests to me that's not the case."

He's already looking ahead to the government's next free-trade frontier: the European Union.

The first steps were only taken in October but McClay says it could be completed in potentially just a couple of years.

He will travel to Europe shortly for talks with EU Trade Commissioner Cecilia Malmstrom, to kickstart the negotiations.

"I think we can make quite a bit of progress this year which allows us to look at the areas of negotiation that will be easier to move through, and where some of the more challenging areas are, and then sort of see a way forward.

"This is the last part of the world that New Zealand has a significant trading partnership with that we don't have a trade agreement in place, it's imperative to the competitiveness of New Zealand business that we make inroads and reach an agreement."

Although it's "very, very early days", McClay's already drawing a line between the way the government conducted its TPPA talks, and how the next deal will be negotiated.

"I think there will be opportunities ... to look for ways to engage with New Zealanders much more - not only around the reason that we think it's so imperative we have a free-trade agreement with the European Union, but ways we can find for them to be more fully involved."

However, with TPPA potentially setting a new precedent for how Kiwis react to free-trade agreements, he admits he won't be able to bring everyone on side.

"I think there's always going to be concern and there's going to be information and misinformation," McClay says.

"There are people out there who have valid concerns about TPP, and we've engaged with them and we'll continue to. There are a lot of people that just don't like trade and probably nothing any government could ever say would change them on that view."

That desire for openness, says Hoadley, should begin now with TPPA.

"The government should come right out front, it should lay down the benefits that it sees, it should tell the public how it's going to deal with the downsides - the extra cost to Pharmac and to copyright consumers, for example, so that the average New Zealander will have a much better feel for what actually has been achieved, that the somewhat fearful predictions of the opposition groups will be allayed and be mitigated."

THE BATTLE CONTINUES

As time runs out, Kiwi opponents aren't giving up hope that the deal might be stopped in its tracks.

The Waitangi Tribunal claim won't be heard until March, and Maniapoto is hopeful of a positive, if belated, outcome - even though she doubts the government would pay much heed to the tribunal's findings.

"Given [the Crown's] marginalisation of Maori during the whole process, I'm not too optimistic that they have our good intentions in mind."

The protesters, too, will make one final stand.

With US trade expert and anti-TPPA campaigner Lori Wallach, Kelsey has just embarked on a nationwide tour, to share with the public the downsides of the deal and help keep the opposition alive.

The two will lead a march down Auckland's Queen Street on February 4, as the trade ministers ready their pens for the agreement.

They have, Kelsey says, one final message to the government: "Don't sign".

 - Stuff

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