What is the Trans-Pacific Partnership Agreement (TPPA)?

The TPPA is an international agreement to change the rules of international trade and investment — and even national laws — in a way that favours big business and undermines the public interest.

There are twelve countries involved in the TPPA, but the agreement it has mostly been driven by the United States.  Although initial agreement was reached between the TPPA countries in February 2016, there is a long way to go before it comes into force (if ever).

In a nutshell, the countries that have signed up to the TPPA have agreed to either change or freeze national laws to suit the interests of overseas investors from the other TPPA countries (the US, Canada, Mexico, Japan etc).  This means locking in light-handed regulation, limiting restrictions on overseas investment, and making it harder for governments to respond to both the future needs of their citizens and the natural environment.  If the TPPA becomes final, it will be very hard for future New Zealand governments to pull out of the agreement.

The Trojan Horse

The government talks about the TPPA as if it is a “free trade agreement” (FTA).  This is misleading.  Traditionally FTAs are about reducing tariffs (i.e. border taxes) on goods (like cars, butter or cellphones) which are traded between countries.  The basic idea behind FTAs is that if all the countries who sign up to an FTA reduce their tariffs, there will be more trade between those countries and their economies will grow.  Whether this is true or not is up for debate.  Either way, the TPPA is about much more than trade in goods and is very different from a traditional FTA.

What the TPPA is mostly about is trade in “services” (such as education, banking or construction) and in providing new rights for overseas corporations to set up business outside of their home countries.  The TPPA also contains requirements for countries such as New Zealand to change its laws  to better suit the interests of corporations from the other TPPA countries. What this all amounts to is governments agreeing to limit their right to regulate so that overseas corporations are able to make more profit.  Where previous trade agreements involved countries bargaining to drop tariffs in goods, the TPPA is an agreement by governments to give up their rights to regulate in the hope of achieving drops in tariffs.

What’s at stake?

We would lose sovereignty.  Under the TPPA overseas corporations would have the right to directly sue the New Zealand government if new laws or regulations passed in New Zealand hurt their profits.  Not only that, but these law suits will be decided in unaccountable international tribunals rather than in national courts.  The judgments of these international tribunals would be enforceable and would take precedence over our decisions of our Parliament and our courts.  This process is called Investor State Dispute Settlement (ISDS).

Other countries have previously signed up to ISDS in international agreements and have been forced to pay compensation to overseas companies where regulation designed to protect the environment or the public good have undermined corporate profit.  Even where countries have successfully defended ISDS challenges, it has cost them tens of millions of dollars to do so and has delayed the implementation of government initiatives.  A good example of this is where the Australian government was significantly delayed in introducing plain packaging of cigarettes because of an ISDS challenge by tobacco giant Phillip Morris.  Further analysis on the implications of ISDS is available here.

Environmental protection would be undermined.  Around two thirds of the 696 ISDS cases under similar agreements have challenged environmental laws, such as mining, fracking, oil and gas production, toxic chemicals, waste dumping and renewable energy. Action on climate change would also be undermined. KEY FACTS: Environment

Te Tiriti o Waitangi would be undermined.  The TPPA creates new constraints on the ways that the New Zealand govenrment can honour Te Tiriti obligations, affecting Māori tino rangitiratanga, culture, indigenous knowledge, biodiversity and opportunities for economic development. KEY FACTS: te Tiriti

Medicines will become more expensive as big pharmaceutical companies gain more influence over PHARMAC, and restrictions are placed on generic (i.e. off-brand) medicines.

Copyright laws will be extended from 50 years to 70 years and more harshly enforced, restricting internet freedom and access to information, costing libraries, schools, and businesses, and stifling innovation. KEY FACTS: IP and IT

Privatisation of state assets would be effectively locked in, and the formation of new state enterprises (as we did with Kiwibank) would effectively be ruled out.

Regulation of business would be undermined by the threat of foreign investor challenges. The threat of legal cases, and the high costs of defending cases, would make government reluctant to regulate. KEY FACTS: Economics

Local business would lose out in competition with large multinationals, that are already able to get away with avoiding paying taxes and competing unfairly.  The TPPA makes it harder for governments to support local business development and the local economy. KEY FACTS: Local Government

Workers lose out. Economic analysis predicts that the TPPA would mean 5,000 fewer jobs in New Zealand and increased inequality.  ISDS cases have been used to challenge social protection and the minimum wage.  ISDS could potentially also be used to undermine new laws designed to strengthen workers’ rights.

Financial stability would be threatened. Foreign banks, insurance companies and money traders will gain more powers to challenge laws designed to prevent another financial crisis.  Under the TPPA the Government would not be allowed to tackle property speculation and the housing bubble through a ban on foreigners purchasing residential homes.

A bad deal

New Zealand’s main aim in the TPPA was to achieve drops in tariffs on its exports on dairy and beef, mostly to the United States.  We got a bad deal, with the TPPA preserving continuing tariffs and quotas in these sectors for years to come.  In exchange for very minor gains, the New Zealand has agreed to undermine its right to regulate in the public interest.

It’s not over!  

The TPPA was signed in February 2016, but it cannot come into force unless it is ratified by enough of the countries involved to make up 85% of the GDP covered by the agreement.  This threshold cannot be achieved without the inclusion of the United States, where there has been a huge public backlash against the TPPA.  Even though the agreement was negotiated with the interests of United States corporations in mind, the deal is unpopular with the US public and both Hillary Clinton and Donald Trump have come out against ratifying the TPPA.

In New Zealand, the government has yet to pass the changes to New Zealand law required for the TPPA to come into force. Read more about the treaty-making process and its democratic deficit here:  KEY FACTS: process

Even if the TPPA countries all do ratify the TPPA, it won’t come into force until early 2018.  By then, we will have had an election and, with enough public pressure, a new government may choose to walk away from this agreement.

So it’s not over. We can and will defeat the TPPA!

Useful resources  

  • A succinct point-by-point rebuttal of the arguments for the TPPA here.
  • Key Issues in the TPPA, an overview document on the effects of the TPPA prepared by Professor Jane Kelsey and former Green Party MP Barry Coates.
  • Up-to-date list of ISDS cases.
  • Fact sheets on the TPPA prepared by our friends at ActionStation.

For more information, read the peer-reviewed critical research on the TPPA.