Status of the TPPA

The old agreement will be annexed to the small new one. The book of the original TPPA was waived around to say it wasn’t secret.

There are four items that need to be finalised. The most problematic is with Canada. The NZ government has no idea what Canada is doing.

Parker hopes the revised deal can be signed in the first quarter of 2018.

The idea is to expand the agreement, South Korea, Colombia and Thailand have expressed interest. There is a mechanism for APEC members to join and an open accession for non-APEC countries. (There was something like this in the original TPPA).

They have changed the number of countries that need to ratify for the agreement to enter into force. It is now 6, whereas before the US and Japan had a veto.

NZ Parliamentary process will begin after the agreement is signed. The officials would like there to be no new NIA, just an adaptation of the old one. The Minister seems to recognise there were some problems with the previous NIA (eg. a lack of proper assessment of health impacts etc), and he did acknowledge that governments had oversold the benefits of FTAs. But Parker didn’t commit to an independent process or a new economic analysis.

Suspension looked to send a message to the US that there are some provisions that may never return (there are very mixed messages here about the desire to keep them on the books but only suspended, versus wanting them out of the agreement). The likelihood of the US rejoining TPPA soon is remote. The officials said the assumption was that US would expect reinstatement of what is suspended as a minimum. Minister said but it needs to be negotiated and consensus and that might not be achieved on some issues. (The reality that the US would ask more was not addressed).

They argue this was the only way to get an FTA with Japan, which wasn’t interested in a bilateral and Australia had an advantage, eg. the fall in NZ frozen beef exports compared to Australia when Japan imposed safeguards and the tariff of 27.5% on Australian beef compared to 38.5% on NZ beef.

Labour’s action post-election

Parker said 500 invitations had been sent out to the meeting (but few civil society activists received them).

Parker started by saying the globalisation isn’t serving the interest of everyone and the last government wasn’t open enough about responding to concerns. He highlighted that the new government will oppose ISDS in future trade negotiations (but didn’t say whether or not that would be a bottom line for agreement).

Parker justified the deal on the basis of the 5 positions identified by the Labour caucus:  ‘protects right to regulate for legitimate public policy; protects the Pharmac process (a clarification not in their original list);  the  Treaty of Waitangi exception, whose wording is presented as a non-negotiable demand by NZ, which is why they can’t fiddle with it to make it better; mitigate the risk of ISDS (actually they didn’t refer to ISDS in the 5 points, only to the foreign investment in residential property).

There were 2 main areas NZ sought to suspend: ISDS and IPRs.  (At one stage the Minister referred to the ‘exclusion’ rather than ‘suspension’ of some parts of the old agreement  – that slippage can be confusing).

Parker acknowledged criticism for his focus on foreign ownership of land but said it was personally and symbolically very important and had been achieved if done prior to the agreement coming into force (which was the situation anyway, just National said they couldn’t, and a future government still (probably) can’t change the categories after the agreement comes into force).

Parker argued they didn’t get all they wanted on ISDS (mainly excluding government contracts), but 4.5 out of 5 of the caucus red lines was pretty good. NZ’s change of position on ISDS did not please some counterparts who objected to this issue so late in the piece, and there were very vigorous discussions,  (It’s interesting that ISDS was not a big issue flagged by Labour previously – it has become much more so after the election, possibly because of better understanding and recognition it is a major trigger for opposition, and through the influence of NZF).

Labour and environment standards, introduced in 2001 trade policy, now have enforcement mechanisms. You can argue about their effectiveness but it is the (NZs?) first agreement where they are enforceable.

Officials believe the agreement protects the right to regulate, some risk still  on issues in ISDS, but think a claim wouldn’t succeed. (that ignores the chilling effect of threats and the costs of defence, as Australia found in plain packaging)

Economic arguments

Parker didn’t address the other issues in the Select committee report, especially the lack of economic rationale for the original agreement.

MFAT officials defended the NIA.

Support for the deal came from a beef and dairy farmer, exporter of medical devices, and Business NZ, who described it as transformative and business needed to shout it from the rooftops. We live in a democracy and if parliament votes for it to go ahead, that’s democracy.

The exporters seem to want everyone else to understand how important their exports are, but aren’t interested in balancing those against the other impacts. It’s very much a one-way street.

The business sector basically want business as usual, and are reassured by the approach of the government. There is no sign that they intended to engage in any rethink of the export model based on low value-added products and the need to consider the broader economic issues of jobs, distribution, support for local businesses (raised by steel workers).

Consultation

What is the purpose of this consultation if government has already decided to sign and says no changes can be made? Minister says if the parliamentary process shows it is not in NZ’s interests then the government would not ratify.

Officials are taking note of questions to elucidate the issues and narrow controversy. The Minister said they would invite questions and officials would answer them in blocks. But there was no process for making advice contestable.

Despite wrong advice given to the government on foreign land sales, and on water, the Minister would not commit to disclosing officials’ analysis to allow it to be challenged, where officials give advice on grey areas.

Review of trade policy

Parker repeated his position that the unpopularity of these agreements is born of fact that globalisation is not serving all. There are various new challenges, including China and IT. Aspects such as the investment protocols that go beyond core trade elements are causing disquiet. TPPA-11 is not as bad as others but not perfect. He recognises that the WTO is the better place for trade agreements but it is stuck at present and under attack (he didn’t say by which countries).

‘We need a new way to start the conversation about these agreements’ and input through various mechanisms.

Todd McClay started that outreach. (the Trade Policy Refresh????). Need to discuss the risks and tradeoffs. So far had engagement with FOMA, iwi leaders, health sector, unions, some businesses.

The government is developing a ‘new and inclusive trade agenda’ over the coming months, apparently along with Canada – make trade and investment work for small business, Maori, women, and address climate change and regional development. There is no process yet, as the government has just come to this view and MFAT is waiting to know how the new government wants to do this.

The new agenda will address right to regulate (including no ISDS), climate change, environment, gender, indigenous peoples/Maori, micro-small and medium enterprises (MSMEs) NZ and Canada are going to be working on this. (the problem is that these are usually add-on chapters that don’t address the systemic impacts of the other chapters on these sectors and issues)

An example progressive and modernised agreement is the trade and gender chapter in the Chile-Canada FTA. This approach means weak separate chapters full of nice words that don’t address the systemic issues in the other chapters.

MFAT officials job is to tell the government what is realistically achievable and the need to weigh up costs and benefits.

Vangelis said no-one wants to negotiate with NZ because we are too much trouble, especially over agriculture (that is a bad thing as it closes access to markets)

Future negotiations

Treaty of Waitangi clause has ‘merit’, provides adequate protection. Officials say it is very good and would put it at risk if we sought to renegotiate it. (The point was made that MFAT needs a broader perspective from Maori than iwi leaders, who do not represent people on the ground.)

(There was a hui earlier in the day with strong Maori demands for a genuine process where all views are heard, listened to and taken on board)

Labour has reset the negotiating mandate of MFAT, especially on ISDS, instructing officials to oppose it in all agreements (‘negotiating hard against those clauses’). Parker said there are some benefits to NZ firms operating in countries with poor legal systems but none has used it (compared to the argument the officials still used at the hui earlier in the day that NZ has never been sued so not a problem).

With the EU will agree to discuss the investment court but worried about the costs if it is just in bilaterals (does this mean NZ would support a multilateral investment court, which means basically a return of the MAI that was defeated in the late 1990s).

When he was talking about the need for a different approach, he said there is a case for countervailing tariffs (via a border tax adjustment) on goods that are from countries not implementing international agreements like Paris Agreement on climate change. He gave the example that NZ produces steel and aluminium using renewable energy competing with products that have a high carbon footprint (he wasn’t right about NZ Steel – they have relatively high emissions). Apparently, this may be discussed in the EU FTA.

Existing negotiations

Parker said he didn’t want to continue the ‘notches in the belt’ approach to signing as many agreements as possible, but it doesn’t appear that any of those underway are being discontinued.

They are continuing to negotiate the existing agreements in parallel with the review of a future approach.

Cabinet is in the process of refreshing the mandate for existing negotiations, on an ad hoc basis.

The EU Council is taking longer to make the final decision to launch negotiations than MFAT hoped. It has been delayed while they are rethinking their architecture, including issues of competence of the EU level and member states. There will be difficult issues, agriculture, intellectual property rights. MFAT hopes for a decision early next year.

RCEP parties have been told that NZ does not want ISDS. RCEP is moving very slowly and NZ would walk away if it remained as at present.

There is a broader renegotiation of the Singapore agreement (unclear what that involves).

Pacific Alliance agreement already exists and includes ISDS. NZ has begun talks to join it. The talks aim to ‘take the best parts’ from many agreements (presumably the TPPA).

PACER+ was described as a ‘development’ agreement.

He said he is aware of NZ’s advocacy for the inclusion of necessity tests under domestic regulation provisions in WTO negotiations coming up next week – this means adopting the neoliberal pro-market light-handed approach to regulation that Labour has rejected. He hinted he would be doing something about it, but that it would be a bargaining chip in the negotiating process.