Barry Coates: Trade, treaties and the need for transparency
OPINION: Those of us who take an interest in trade have known for some time that the Trans-Pacific Partnership Agreement (TPPA) was dead, but this week US President-elect Donald Trump officially buried it.
For weeks the New Zealand Government has been saying that Trump might change his mind, but in reality the TPPA was rejected long ago. As was the case in New Zealand, the US public was strongly against the TPPA, seeing it as an agreement primarily in the interests of major corporations rather than for the benefit of most people. Opposition was bipartisan – the TPPA was also opposed by Hillary Clinton. The TPPA has now gone and can't be revived. So what now?
There will be calls for trade protectionism in the wake of the TPPA's demise. This is the wrong response, but so is business as usual, ignoring the calls for reform. As noted by leading economists Joseph Stiglitz and Dani Rodrik, it would be reckless and misguided to continue with the TPPA model that is dominated by deregulation and rights for foreign investors, rather than core trade issues.
This is an opportunity to rethink trade agreements and focus on the issues that are in New Zealand's interests. For example, free trade agreements typically ignore some of the most serious threats to New Zealand's agricultural exports, which come from agricultural subsidies. Under the US Farm Bill 2014, these can be up to 40 per cent of the cost of dairy production. They were not part of the TPPA negotiations and the only credible forum to reduce these is in the World Trade Organisation (WTO).
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New Zealand trade policy needs to focus more on getting countries back to the table in the WTO rather than chasing more bilateral deals. The outcome is a 'noodle bowl' of complex rules, but also an increasingly desperate attempt for deals at any cost, as we saw in the Middle East, where our Government paid a Saudi company $11.5 million to try to secure a trade deal.
New Zealand's interests are also not served by packing non-trade issues into trade deals, creating costs and risks to our society – a point made recently by Crawford Falconer, a former New Zealand ambassador to the WTO. The TPPA and some other trade agreements include the right for foreign corporations to sue the host government in an international tribunal if their profits are adversely affected by government policy changes or regulation. The problem with these Investor State Dispute Settlement (ISDS) provisions is not only that these tribunals sit above Parliament and our judiciary, but they also have poor judicial processes with no right of appeal, rampant conflicts of interest and little transparency.
The cases affect the rights of government to regulate in the public interest. Two-thirds of the 696 cases filed so far demand compensation for foreign investors in response to environmental regulations. Other cases challenge workers' rights, or financial regulation or public health, such as Phillip Morris challenging Australia's plain packaging of cigarettes. There is growing opposition to ISDS from the EU as well as major developing nations.
It is time to drop ISDS and other measures that undermine legitimate government regulation from future treaties, and re-negotiate our existing treaties. At a time when international business is often competing unfairly and failing to pay its fair share of tax, we need to re-balance these treaties to support small business and our local economies.
We need trade and investment agreements fit for the 21st century. These should support our exports, and particularly our need to add value to our agricultural commodities, while respecting broader social aims. Treaties must support rather than undermine action on climate change, environmental protection, public health, te Tiriti rights and human rights. And they need to balance rights and responsibilities for international investors.
We also need more democratic processes. Currently agreements like the TPPA have used secretive negotiations to avoid public debate and proper accountability. There is no reason they should not be held to the same standards of transparency as other international treaties and negotiations in the WTO.
Similarly, there needs to be proper parliamentary scrutiny of negotiating proposals and the final draft agreement. International treaties are increasingly important to all of society, not only narrow interest groups. This is the time to align our trade and investment treaties with the interests of New Zealand society as a whole.
Barry Coates is a Green Party MP and former executive director of Oxfam.
- The Dominion Post