Goodbye, TPP?

The Trans-Pacific-Partnership (TPP), a free trade agreement between 12 Pacific Rim states (New Zealand, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, Singapore, the US and Viet Nam) that has been heavily promoted by the New Zealand government, is in danger of being put on ice. The deal has already been signed in Auckland on 4 February 2016, but has yet to be ratified by each of its member state’s parliaments in order to be implemented. But it has become unlikely for this to happen, now that Trump is president elect. Not only has he opposed the deal sharply and publicly, calling it “another disaster done and pushed by special interests who want to rape our country”, but US congress has also now voiced its determination to refuse a ratification the treaty. As the US has the largest GDP of any TPP member states, the trade deal cannot be implemented without US consent — a clause in the contract ensures this. During this year’s APEC summit (Asia-Pacific Economic Cooperation), other TPP member states rallied against this roadblock and have stated their commitment to do everything in their power to save TPP. New Zealand’s Prime Minister John Key was very clear on that, showing his willingness to make “cosmetic changes” in TPP’s make up to accommodate Trump. He even goes so far as to joke: “The Trump Pacific Partnership for instance, that’d be fine”. This begs the question whether saving TPP at all costs is worth it and what consequences either its implementation or its discontinuation would have on New Zealand’s economy and society.

So let’s look at the benefits of TPP, according to its proponents. One of the main arguments for the trade agreements is economic growth. TPP would create the largest trade zone in the world, with member states that already account for almost 40% of the world’s GDP. New Zealand, which focusses on export, already has many trade agreements with other TPP states, but would gain a much broader access to the two biggest world economies: the US and Japan. In a government press release from 2015, John Key stated: “As a country, we won’t get rich selling things to ourselves. Instead, we need to sell more of our products and services to customers around the world, and TPP helps makes that happen.” For him, TPP is synonymous with “more jobs, higher incomes and a better standard of living for New Zealanders.” The gains from elimination of tariffs for New Zealand is estimated by the government at a minimum of $259 million a year. Another key factor is the protection of investors from member states. This entails treating foreign companies from member states as if they were native companies, thus levelling the field between native and foreign companies for gaining access to public procurement contracts. The trade partners also pledge to protect the assets of private companies, giving investors greater security because they will be protected from unlawfully having their property seized.

However, there are many concerns regarding TPP coming from activists, journalists and economic scientists, many of which stem from reforms in copyright law, specifically the expansion of copyright terms. These would be implemented gradually should TPP take effect. For example, advocates for internet freedom such as the Electronic Frontier Foundation criticised, among other things, a regression from New Zealand’s “innovative copyright law of 2008” to again all out banning circumnavigation of digital locks such as regional codes for films. This would reintroduce unnecessary hurdles in accessing software or multimedia content, including movies, DVDs and video games. TPP also seeks to compel “Internet Service Providers […] to ‘police’ user activity (i.e. police YOU), take down internet content, and cut people off from internet access for common user-generated content” while restricting fair use. It would furthermore only provide feeble protection of digital privacy, and even open up the possibility that a country could be sued for introducing more far reaching protections for citizen’s right for privacy “if [the introduction of a new law] amount[s] to an ‘arbitrary or unjustifiable discrimination or a disguised restriction on trade.’”

An area in which copyright extension seemingly could be avoided is pharmaceuticals. But this only happed after scandal hit in 2013, when Wikileaks published parts of the secret TPP draft. The US aim was to prolong the copyright duration to 12 years. In New Zealand, for example, the current period is five years, in Australia eight. Imposing a longer monopoly on medicines would bar the production of cheap generic treatments — which would bring the pharmaceutical industry great profits while increasing medical costs for health care institutions and, eventually, the public. After civil protests emerged, governments drew a red line for the subject. Copyright periods will not be extended under the current TPP contract. However, the issue can be revisited after 10 years by TPP partners and thus longer monopolies on medicines could be imposed later on. As it is, states have given up the right to define patentability criteria themselves and agreed on numerous back doors with which patents can be prolonged, such as new uses, methods or new processes for a known product. This could lead to an “ever-greening” of monopolies on pharmaceuticals. Not relating to New Zealand but lesser developed Pacific Rim countries, the patent term adjustment provision would also grant pharmaceutical countries to “delay launch of the product in relatively low-priced markets, particularly developing countries” and even after copyright had expired in industrial countries, “the product would retain monopoly status in the developing countries.”

But the largest point of contention must be the possibility for Investor State Dispute Settlements (ISDS) to be issued. With these, “foreign investors gain new rights to sue national governments in binding private arbitration for regulations they see as diminishing the expected profitability of their investments.” The courts dealing with ISDS lawsuits are independent and not accountable to any democratically elected governmental or intergovernmental bodies. There is also no possibility for an appeal, once a verdict has been reached. Posing the threat of fines in the billions of dollars, they may undermine New Zealand’s sovereignty. With this financial threat hanging over lawmaker’s heads, ISDSs may inhibit progressive lawmaking designed to protect the public, instead setting an incentive to introduce “investor friendly” laws, largely to the benefit of large corporations. TPP’s chapter on investor rights could also overrule weak protections installed in the contract to honour the Treaty of Waitangi. Should a state dare to introduce laws protecting civil rights and liberties or the environment at the expense of special interest profits, they run the risk not only of being involved in a costly lawsuit, but also the danger of further hardships because possible investors might take into account whether a country is being sued regularly over ISDS disputes. John Key argues that since New Zealand has many international trade agreements that already make ISDSs possible and the country has incurred no lawsuit as of now, New Zealand’s citizens should not take heed of these worries. The risk of being sued, according to his government, is low because New Zealand already is an investor friendly country and the ISDS system is overall fair. However, not being sued before does not make future lawsuits impossible, and fear of being sued because of laws introduced for the protection of the public is already reflected in TPP. There is a special provision against ISDSs from Tobacco companies, among other factors a result of Australia having been sued in the past because of its push for plain packaging. In addition to this, New Zealand currently has no FTA (free trade agreement), and thus no ISDS provision, with either the US or Canada. These states, according to a study on ISDSs by Rachel Wellhausen , make the top 15 list of home states to companies responsible for ISDS lawsuits, with US companies easily making first place. Investor State Settlement Disputes can be a dangerous international tool in suppressing the public’s and the environment’s interests. New Zealand seemingly allowing trade agreements to include them en masse, not just in TPP, could lead to serious problems. This risk should not be underestimated the way Prime Minister John Key does — with an eye on investment and larger possibilities in trade, but neglecting protection of the public that voted him into office.

TPP would in all likelihood benefit parts of New Zealand’s export based economy. Nobody is arguing against the removal of tariffs posing barriers to free trade. But, as Nobel Prize winning economist Joseph Stiglitz points out in “The Price of Inequality”, Free Trade Agreements as they are being done today are not actually about free trade. If they were, he argues, the contracts could be a couple of pages long, all countries removing said barriers and tariffs, and that would be it. But trade agreements such as TPP or TTIP are in fact enormous tomes, filled with conditions that have nothing to do with free trade or actually run counter equal access to markets. These deals are called “managed trade agreements” by Stiglitz, because “they are managed for the benefit of special interests.” (The Price of Inequality, p. 413) Partly sacrificing national sovereignty and the right to introduce appropriate measures to protect the wellbeing of all of the public, not just a lucky few, does not sound like a sound business strategy in the long run. Ratifying TPP as it is would have severe consequences for democratic values and the promise of equality, which is already feeble in many hyper-capitalist market societies.

So why are civil rights groups lobbying against TPP not currently loudly congratulating themselves, since the US is refusing to ratify TPP, effectively thereby killing the deal? Why are there not the expected outcries of lobbyists and corporate spokespeople rallying against their favourite pet project being killed? Maybe the current calm cannot be trusted. Special interest usually has a way of ensuring that they will have the cake and eat it, too. For major companies to just let this meaty bone be thrown away without more resistance than is currently shown is unlikely. TPP member states, with New Zealand among the most zealous, have already shown that they would be willing to make even larger concessions to the US to save TPP. Companies are probably counting on these states, with their hunger for greater economic growth, to do their dirty work. For Trump to not push the very limits in brokering for exclusive favours benefitting mainly the US is unlikely. Revisiting TPP, making it the “Trump Pacific Partnership” jokingly proposed by Key, could turn into a bitter pill to swallow. This would show that a free nation such as New Zealand can be bullied into submission by the US with its status as economic super power, and that special interests will prevail over the common good. So far, the best outcome for New Zealand might just be foregoing expected revenue on exports. The country has shown remarkable resilience in the past, when basically abandoned by Great Britain in 1973 or facing the wrath of the United States over its Nuclear-free stance. It has proven that it can maintain economic stability even without the protection of international superpower, and without selling out its values. So the most desirable prospect for TPP might just be the untimely demise it is seemingly headed for today — at least from the perspective of a civil society interested in democratic rights, such as New Zealand hopefully remains to be.