Is The Government’s TPP “Solution” Too Good To Be True?

"Just one of those things you say in opposition and then forget about when you're in government." - Steve Maharey, former Labour cabinet minister. On the question of whether or not to support the TPP, is the new Trade Minister, David Parker (pictured above addressing an Auckland anti-TPP rally in 2016) preparing to follow in Maharey's philosophical footsteps?

WHAT WORRIES ME MOST about the proposed “No Foreign Buyers” amendment to the Overseas Investment Act (OIA) is its apparent simplicity. Nothing in politics is ever that easy! And isn’t it remarkable, the way the proposal just happens to solve Labour’s primary objection to the Trans-Pacific Partnership (TPP)? It’s almost as if somebody at the Ministry of Foreign Affairs and Trade (MFAT) had the relevant file tucked away in a draw somewhere, ready to be presented to the incoming Trade Minister, David Parker, with a Yes Minister-style flourish, at just the right moment.

Come to think of it, exactly when did the foreign-buyer problem become Labour’s primary objection to the TPP? More importantly, when did it become a more important issue than carving out the Investor/State Dispute Settlement (ISDS) provisions from the agreement? How did that ISDS carve-out end up as a sort of secondary issue? When did it become what Bill English used to call a “Nice To Have”? An outcome the Prime Minister and her Trade Minister will do their utmost to achieve, but not something over which neither of them are willing to offer concessions.

It makes no sense. The ISDS provisions of the TPP are the ones permitting foreign investors (a.k.a huge multinational corporations) to sue the New Zealand Government for imposing legislative and/or regulatory restrictions on their existing or proposed investments. Such litigation to occur not in a New Zealand courtroom, in front of a New Zealand judge, but before an international tribunal staffed and adjudicated by the sort of lawyers more usually to be found working for – you guessed it – “huge multinational corporations”.

How does that work? Well, a government pledged to uphold the provisions of a multilateral trade agreement might decide that, in order to secure its people’s right to access affordable housing, it will legislate to prevent foreign buyers from bidding-up the price of private dwellings beyond their reach.

“Oh no you don’t!”, objects the huge multinational corporation dedicated to acquiring foreign real estate on behalf of its fabulously wealthy international clients. And before that government can say “goodbye national sovereignty”, it finds itself in front of an ISDS tribunal.

I know, I know! The Trade Minister, David Parker, has assured us that providing the OIA is amended before the TPP comes into force, then New Zealand will be protected from the ISDS provisions of the agreement.

To which I offer the following two objections.

My first, is that David Parker’s “solution” logically foresees New Zealand being bound, in all other respects, by the TPP. Why else would he bother using this rather convoluted way of banning foreign property speculators? There must be simpler ways. The only logical answer is: because the new Labour-NZ First-Green Government is committed to signing the TPP – ISDS provisions included – and Parker’s “solution” is the only way it can keep its big election promise to end foreign property speculation.

My second, is that the new Government’s “solution” may prove to be not a solution at all. Even if the OIA is amended prior to the TPP coming into force, I believe that those foreign property investors affected might still have a crack at New Zealand under the ISDS provisions.

They could argue that the legislation banning them amounts to a pre-emptive circumvention of the agreement. The OIA’s original purpose of protecting “sensitive” land was to ensure that sites of environmental, historic and cultural significance remained in New Zealand hands. They could, therefore, argue that the amendment’s redefinition of “sensitive sites” to include private dwellings represents a deliberate perversion of the OIA’s original intention. As the victims of a pre-emptive circumvention of the TPP, they could demand that the ISDS tribunal award them billions of dollars by way of reparation. And what guarantee do we have that the corporate lawyers sitting in judgement of the New Zealand state’s actions wouldn’t find in favour of the plaintiffs?

That’s why I’m so uneasy about this amazing, eleventh-hour “solution”. I can’t help seeing it as too good to be true. Yes, it is acting as a superb distraction from the most dangerous aspect of the TPP – its ISDS provisions – but why? The arguments in favour of refusing to sign the TPP until New Zealand is exempted from those provisions are very easy to make – hell, they’re core NZ First and Green policy! – so why aren’t Jacinda and David making them?

What would make me a whole lot happier, is a rock-solid guarantee from the Prime Minister and her Trade Minister, that a TPP agreement containing ISDS provisions applicable to its own actions will not be entered into by the New Zealand Government.

Aotearoa must not surrender its tino rangatiratanga.

This essay was originally posted on The Daily Blog of Thursday, 2 November 2017.

Passing The TPP Test.

Test Mission: The way in which Prime Minister Ardern and Trade Minister Parker conduct themselves at the TPP-11 discussions in Danang, Vietnam, will have a major bearing on how the new Labour-NZ First-Green Government is perceived by its supporters. To sign the TPP, without first fixing it, would be to "Fail" the first major test of the Coalition's political resolve.

IN JUST NINE DAYS, Prime Minister Ardern, and her Trade Minister, David Parker, will be in Vietnam. At a side-bar gathering to the Apec Conference that summons them, they will meet with the remaining 11 signatories to the Trans-Pacific Partnership (TPP). At that gathering, the New Zealand government will attempt to negotiate a number of minor modifications to the agreement.

Essentially, the Prime Minister and Trade Minister will be asserting their country’s right to prevent foreign speculators from purchasing urban property and farmland within its borders. A right the previous National government, for reasons it never adequately explained, failed to assert. A right reserved by just about every other signatory to the TPP agreement.

The Prime Minister and Trade Minister will also assert New Zealand’s right to renegotiate its predecessors’ acceptance of the Investor/State Dispute Settlement (ISDS) procedures of the TPP. These are the procedures which grant foreign corporations the power to sue the New Zealand Government for legislating in what it believes to be the best interests of its own people. Such litigation will take place in corporate-controlled tribunals, without reference to the New Zealand judiciary. Once again, the previous National government’s failure to defend this, the most fundamental duty of any sovereign state, awaits a convincing explanation.

Presented in this fashion, the mission of the Prime Minister and Trade Minister is not only an important, but also a necessary, act of remediation. In its present form, the TPP should never have been signed by the former National Government. Accordingly, any failure on the part of the remaining 11 signatories to accede to the Labour-NZ First-Green Government’s entirely reasonable requests for minor, country-specific, modifications (President Donald Trump has already pulled the United States out of what he dismissed as “a very bad deal”) should trigger New Zealand’s immediate withdrawal from the agreement.

What a pity, then, that the Prime Minister’s and Trade Minister’s mission is not being presented in this fashion. Ms Ardern and Mr Parker will depart for Danang shrouded in the same obfuscating clouds of free-trade rhetoric that have prevented the New Zealand public from ever being vouchsafed a clear understanding of the TPP agreement.

Rather than allowing an open and informed debate on the pros and cons of the TPP, the free-trade lobby is presenting Ms Ardern’s trip to Apec as a crucial test of her political and economic maturity. Any outcome other than New Zealand’s unequivocal ratification of TPP-11 will be publicly represented as a significant failure.

Even if the Prime Minister and Trade Minister manage to secure their desired modifications to the TPP text, the free-trade fanatics will still insist that the Labour-NZ First-Green Government has fallen at its first hurdle. By displaying hostility to globalism in general, and foreign investment in particular, the new government will be accused of endangering New Zealand’s economic security.

As if that wasn’t reason enough for Ms Ardern and Mr Parker to feel nervous, the opponents of an unmodified TPP are as likely to turn her trip to Vietnam into a critical test of her government’s intentions as its supporters.

The fight to turn Labour away from what its “free-trade-right-or-wrong” position under Helen Clark has been as gruelling as it was long. For those engaged in this fight, persuading the Labour caucus to take a firm position on the critical question of national sovereignty constituted a pivotal victory. Without it, Labour’s relationships with NZ First and the Green Party would have come under enormous strain. Indeed, had Labour not refused to sign-on to the TPP, as negotiated by the National Government, it is difficult to see the formation of a Labour-NZ First-Green government ever becoming a realistic possibility.

Labour’s opposition to TPP was also an important factor in deescalating the vociferous protest movement which reached its crescendo in February 2016. Had all the parties committed to changing the government not been more-or-less on the same page in relation to the inadequacy of the National Party’s TPP, it is debateable whether or not the massive protest demonstrations it was beginning to inspire would have proved so easy to wind down.

To the New Zealanders who feared that TPP would bring with it a permanent loss of their nation’s sovereignty, the following words from Labour were a source of considerable reassurance:

“The TPPA will have ramifications for generations of New Zealanders. For their sake, we should not so lightly enter into an agreement which may exacerbate long-term challenges for our economy, workforce, and society.”

The votes that made the Labour-NZ First-Green government possible were inspired by many factors. That the three parties’ common opposition to the TPP was one of then cannot be disputed.

As Ms Ardern and Mr Parker wing their way to Vietnam, they should consider very carefully whose test of free-trade principles they most wish to pass.

This essay was originally published in The Press of Tuesday, 31 October 2017.

"Fear No Ghosts!": Little, Labour And The TPPA.

Crucial Intervention: Helen Clark's highly controversial endorsement of the TPPA struck the anti-TPPA movement like a torpedo amidships and left it dead in the water. It is now rumoured that another former Labour PM, Mike Moore, will lend his not inconsiderable advocacy skills to the promotion of the TPPA

 

ANDREW LITTLE has failed to make Labour’s response to the Trans-Pacific Partnership Agreement (TPPA) a “leadership issue”. It’s a failure that threatens not only Mr Little’s credibility, but also that of the Labour Party itself. As matters relating to the TPPA unfold over the next few weeks, it will become increasingly clear that much more is at stake here than a trade agreement.

 

In part, Labour’s stance on the TPPA has become a matter of protecting legacies. Labour’s embrace of free markets in the mid-1980s necessarily embraced the dogma of free trade. The 1999-2008 Labour Government’s success in negotiating the China-NZ Free Trade Agreement (China’s first with a recognisably “Western” government) is held up as its most important achievement. Certainly, Helen Clark regards the China-NZ agreement as the jewel in the crown of her political legacy.

 

Just how important Labour’s free trade stance is to Ms Clark became clear on 1 October 2015, in New York, when she stood alongside the National Prime Minister, John Key, and joined him in singing the praises of the TPPA. This endorsement by Ms Clark struck the anti-TPPA movement like a torpedo amidships, leaving it dead in the water.

 

Few New Zealanders grasped the significance of Ms Clark’s intervention. As a senior United Nations’ official, she is bound by the strictest protocols from intervening in the slightest way in the domestic politics of a member state. That she was willing to run the risk of being accused of breaching that protocol speaks volumes about how much personal and political capital she has invested in Labour’s continued adherence to free trade policies.

 

If Ms Clark fails in her attempt to become the United Nation’s first woman Secretary General, her intervention in New Zealand’s domestic TPPA debate may well turn out to be one of the deciding factors.

 

It is possible that Ms Clark may not be the only former Labour Prime Minister to enter into the TPPA debate. Rumours are rife that Mike Moore – indisputably New Zealand’s most fervent free-trade champion – is intending, his health permitting, to stump the country in favour of the TPPA. If the rumours prove to be true, then the anti-TPPA campaigners will be faced with a doughty opponent: Mr Moore’s promotional skills are legendary.

 

Ms Clark’s and Mr Moore’s determination to uphold Labour’s free-trade legacy will find ready allies in Labour’s parliamentary caucus. Phil Goff was this country’s leading FTA negotiator with the Chinese and he will not abandon his legacy without a fight. At his side he will likely count Annette King, Trevor Mallard, Clayton Cosgrove and David Shearer. These are not the sort of politicians a Labour leader alienates without consequences – just ask David Cunliffe!

 

It should be clear, from the above, that even if Mr Little does harbour doubts about the wisdom of supporting the TPPA (and that is by no means certain) he faces some pretty daunting obstacles when it comes to expressing them. He and his team of advisers have made a political fetish out of presenting a unified team to the electorate. An open and, in all likelihood, vituperative debate about the merits of opposing the TPPA runs the risk of reopening a multitude of old wounds. If disunity is death, then courting disunity must surely be political suicide?

 

On the other side of the debate stand those within the Labour caucus and throughout the wider party who regard the TPPA as something much more sinister than a simple trade agreement. In particular, the Investor/State Dispute Settlement Process (ISDP) contained in the agreement is seen by many New Zealanders as a mechanism for preventing the TPPA signatories from introducing economic and social measures inimical to the interests of the large, transnational corporations the TPPA appears to have been set up to serve. Not to put too fine a point upon it: the purpose of ISDP is to prevent Labour-type political parties from ever again behaving like Labour-type political parties.

 

The compromise position Mr Little has thrashed out with his colleagues is to reassure the electorate that a Labour-led government would “defy” the TPPA by passing legislation strictly regulating the circumstances in which New Zealand land may be sold to foreigners. Quite why the caucus has agreed to this we can only speculate, especially when a TPPA exemption to the same effect (which Australia, Malaysia and Singapore have already secured) is, apparently, ours for the asking.

 

The faux radicalism offered up by Mr Little and his colleagues on the question of foreign ownership in no way addresses the profound issues arising out of the TPPA’s imminent ratification  – nor is it likely to appease Labour’s critics.

 

At the site of an earlier rebel army’s defeat, Mao Zedong told his faltering troops to: “Fear no ghosts! The past does not return!”

 

Andrew Little should do the same.

 

This essay was originally published in The Press of Tuesday, 12 January 2016.

Selling The Bigger Picture: Tim Groser Brings Home The TPP.

Adding Perspective: New Zealand's Trade Minister, Tim Groser, interjects during the Atlanta media conference announcing the settlement of the Trans-Pacific Partnership: “Look, long after the details of this negotiation on things like tons of butter have been regarded as a footnote in history, the bigger picture of what we’ve achieved today will be what remains.”

 

ON THE DAY the deal was done, Joseph Stiglitz, winner of the Nobel Prize for Economics, had this to say about the Trans-Pacific Partnership (TPP):

 

“You will hear much about the importance of the TPP for ‘free trade’. The reality is that this is an agreement to manage its members’ trade and investment relations – and to do so on behalf of each country’s most powerful business lobbies. Make no mistake: It is evident from the main outstanding issues, over which the negotiators are still haggling, that the TPP is not about free trade.”

 

Certainly a genuine free trade agreement would have offered New Zealand much more than the TPP. Rather than trying to work up some enthusiasm for a deal that offers staggered tariff reductions over decades, a genuine free trade agreement would have had New Zealanders celebrating their farmers’ full and immediate access to the vast markets of the USA and Japan.

 

Tim Groser, New Zealand’s acerbic Trade Minister, would dismiss such expectations as wholly inappropriate to what he calls the world of power politics. At the media conference marking the negotiations’ successful conclusion, Mr Groser summed-up his view of the TPP with the following interjection:

 

“Look, long after the details of this negotiation on things like tons of butter have been regarded as a footnote in history, the bigger picture of what we’ve achieved today will be what remains.”

 

By which he meant, presumably, that the TPP represents much more than the sum of its thirty (still secret) chapters: that it is in and of itself a positive contribution to the welfare of the human species.

 

And yet, on the basis of what little information has so far been released about the TPP, this is a difficult argument to stand up. What, for example, is positive about the extension of copyright from 50 to 70 years? Or the ability of powerful pharmaceutical companies to extend the life of their patents for an additional three years? Far from freeing-up the commerce of the Pacific Rim, these measures will only restrict it further. Since when was free trade about increasing the monopoly power of huge corporations?

 

“Since forever!”, Noam Chomsky would, waspishly, reply. According to the dissident professor from MIT: “Globalisation [of which the TPP is a classic manifestation] is the result of powerful governments, especially that of the United States, pushing trade deals and other accords down the throats of the world’s people to make it easier for corporations and the wealthy to dominate the economies of nations around the world without having obligations to the peoples of those nations.”

 

If this is, indeed, the “bigger picture” to which the efforts of our Trade Minister and his negotiating team have contributed, then the people of New Zealand could be in trouble.

 

Under the provisions of the TPP, the New Zealand tradition of coming up with creative collective solutions to specific social problems (ACC and Pharmac spring to mind) will no longer be permissible. Henceforth, “solutions” will be the exclusive purview of big (i.e. foreign) corporations. Massive financial compensation will be extracted from any government foolhardy enough to put itself between these corporate predators and their prey. Adjudicated by tribunals composed of three carefully vetted corporate lawyers, “Investor State Dispute Settlement” (ISDS) referrals now constitute a clear and present danger to the sovereignty of all but the most powerful nation states.

 

In the words of Professor Andrew Geddis of the University of Otago, if New Zealand signs up to the TPP “we are going to change how our country is run into something else.”

 

That “something else” may turn out to be a big deal, says Professor Geddis, or it may not. But why put our constitution at risk in the first place? Do we really want to “find ourselves reasonably frequently hanging on the decision of three private individuals who are deciding if we are allowed to have a policy in place without having to pay many millions of dollars to an overseas company.”

 

Very little in the Trade Minister’s “bigger picture”, it seems, is “free”. Nor does “trade” constitute the TPP’s dominant theme. Rather, Mr Groser’s “achievement” is mostly about the application of constant and irresistible pressure to force open the markets of weaker economies to the investors of the stronger.

 

“Managed” trade, indeed – but not by us.

 

This essay was originally published in The Waikato Times, The Taranaki Daily News, The Timaru Herald, The Otago Daily Times and The Greymouth Star of Friday, 9 October 2015.