With the Auckland round of the TPP negotiations wrapping up this week, many Kiwi nay-sayers in the press have declared it an overall loss for New Zealand (See Gordon Campbell and Jane Kelsey). Yet my talks with almost every New Zealand business dealing in any way with the United States believe the exact opposite. Also, after speaking to members of the New Zealand, US and Canadian negotiating teams, all three are convinced that the issues which are on the table in the negotiations are based on solving real problems that businesses face in doing business overseas. This includes the problems that Kiwi businesses face doing business in the United States and other nations at the negotiation table.
So why the disconnect? Why does Campbell and Co. think that this deal offers nothing positive for New Zealand? While Campbell and company point out many problems with the Trans-Pacific Partnership, they fail to see the enormous benefits that arise from the TPP if the common goals of NZ and the US are reached. Campbell and Co are sticking their heads in the sand with protectionist jingoistic ignorance when they pretend that the TPP is not aimed at solving real problems that New Zealand businesses face. The reality is that the TPP provisions do solve real issues that are causing New Zealand businesses to lose money from their operations in the United States and other TPP countries. The reality is that the investor-state dispute chapter is needed to protect New Zealand businesses doing business in the TPP states and there is an exception being worked on to prevent bad faith challenges to health, safety and environmental laws enacted in New Zealand. A TPP investor state dispute procedures require only that if a law made in New Zealand does expropriate the investment of a foreign investor (i.e., act to rob the foreign investor of their investment), then the New Zealand government has to pay damages. No arbitration panel can change any law in New Zealand.
The reality is that agricultural markets once closed to New Zealand are going to be opened. Will the US open up its market to New Zealand dairy? There is no doubt that this is on the table and that New Zealand is pushing hard for it. But Fonterra has clearly stated that while it wants a dairy in the United States, the actual excess dairy available to ship to the United States market is so small that it will not really have an impact on New Zealand’s dairy business. This issue has been overblown as to its true importance by Campbell and Co since the TPP invited the US into talk.
Will medicine costs go up under the TPP? Probably, as a result of some insistence that the US Pharmacy industry is able to protect its intellectual property in New Zealand. However, and one can’t help but feel a certain fairness about allowing a Pharmaceutical company that spends hundreds of millions on developing a single type of medicine to recoup this investment by having protection over its intellectual property. New Zealand’s current rules allow companies access to information which would allow competitors to reproduce a generic form of the drug earlier than most other countries. While this may provide cheaper medicine to New Zealand in the short run, it very well bites the hand that feeds it. The reality is that New Zealand’s current PHARMAC is indeed unfair to foreign pharmaceutical manufacturers. Does the Average Joe like it? Yes, cheaper drugs does have an enticing sound. If New Zealand refuses to compromise will it end the TPP? Maybe. Does this mean a net loss for other New Zealand businesses? Definitely.
No country ever gets all that it wants in a trade deal. It’s a give-and-take. But it certainly seems that New Zealand business wants the deal. Maybe the disconnect from the likes of Campbell, Kelsey, et al, is that they don’t have anything on the line. They are not employed by businesses dependent on international trade. New Zealand has always been heavily dependent on exporting its goods around the world. The TPP is aimed at improving the mechanisms which surround international trade. New Zealand’s future is not in closing its doors, but in expanding its markets. The TPP is a way forward.