Jane Kelsey: Trading sovereignty for short-term advantage

The Trans-Pacific Partnership Agreement would lock us into a model where markets and big businesses rule. Photo / Dean Purcell

On December 6, 2010 New Zealand will host the fourth meeting of negotiators trying to strike a free trade deal known as the Trans-Pacific Partnership Agreement.

This proposed mega free-trade treaty currently spans nine countries: Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam and the US.

Its champions have dubbed it "an agreement for the 21st century". But a trade deal that equips New Zealand for the future needs to address the major challenges that will confront us - financial instability, climate change, energy scarcity, food sovereignty, natural resource wars.

That is not what they mean.

Instead, their TPPA would impose the most far-reaching obligations on New Zealand since the Closer Economic Relations agreement with Australia, deepening our commitment to free market policies that affect our jobs, our social and cultural well-being, and ultimately the sovereignty to make decisions as a nation.

The Government has two main rationales for negotiations.

The first is to secure significant new access for Fonterra to the US markets. That has been dismissed as a pipe dream by informed commentators, including Joseph Stiglitz, because the US agricultural lobby would never allow it.

President Barack Obama's trade representative has insisted that negotiations are structured in a way that keeps dairy access off the table, in line with US dairy industry demands.

Second, the Government believes the TPPA can create a platform that the huge economies of Asia - China, Japan, Korea and maybe India - might join.

The aim of an Apec-wide free trade agreement is a holy grail that New Zealand, Australia and the US have promoted for years. That remote prospect some time in the distant future is used to justify the lack of evidence that the TPPA itself will have any concrete benefits and their failure to examine its downsides.

What a New Zealand government signs now will bind future governments for the next century. Yet very few people have the slightest idea what is at stake. The problem is not just what we might have to do now, but what we might be prevented from doing in the future.

The TPPA would lock us into a model where markets and big businesses rule, ignoring the reality that it has failed.

We are still trying to sort out the mess in leaky buildings, shady finance firms, Telecom's milking of its private monopoly and many other examples of market-based regulation.

The people of New Zealand paid dearly for that, and we will pay again under a TPPA, but this time the price will be higher.

Expect more Warner-style assaults on our labour and environment laws; Australian pension funds enforcing a right to buy our strategic assets; the government having to consult bailed-out financial institutions about regulations designed to rein them in; or big pharmaceuticals dictating drug prices to Pharmac.

Labelling requirements for genetically modified foods and countries of origin could become impossible. So could parallel importing of books and DVDs or requirements for New Zealand content on broadcasting to balance the dominance of US and Australian programmes and advertisements.

The US is likely to demand more punitive actions against internet users to protect its entertainment industry's products.

Ironically, the government may also guarantee rights to foreign firms that it refuses to recognise for Maori under the Treaty of Waitangi.

US firms are demanding even easier foreign investment rules that would be locked in for all time, when opinion polls show New Zealanders want to stop more land falling into foreign hands. Likewise, the idea of stemming currency speculation by introducing a financial transactions tax may be prevented by these "trade" rules.

The agreement could guarantee foreign investors from the US, Australia or Singapore the right to comment on proposed new laws that affect their operations, giving foreign companies more say over our regulations than New Zealand voters.

Worse, foreign corporations could take the government to international arbitration, claiming compensation for new regulations they say have reduced the value of their investment.

Even if New Zealand had a solid defence, the threat of a dispute and a manufactured "crisis of investor confidence" could have a chilling effect so that government backs off - the Hobbit saga and bailouts to unguaranteed investors in South Canterbury Finance writ large. National clearly plans to sell state assets in its next term.

Reversing failed privatisations, as occurred with the Railways, Air New Zealand and Accident Compensation, or establishing another Kiwibank, could become legally difficult, or even impossible, under a TPPA.

Above all, this proposed agreement has constitutional importance for New Zealand because it ties the hands of future governments in ways that no domestic law can do. Yet the Cabinet can negotiate and sign the treaty in secret without first conducting an informed public debate or exposing draft texts to detailed scrutiny.

The Government needs to step back from the current TPPA process and provide the information and space for a rigorous public analysis of its implications.

* Professor Jane Kelsey teaches at the University of Auckland School of Law. She is the editor of No Ordinary Deal: Unmasking the Trans-Pacific partnership Free Trade Agreement published this week.