Jane Kelsey: Trade deal hands US power to rewrite NZ laws

The US basically claims the right to decide what a country's obligations are under a trade and investment agreement. Photo / Thinkstock

"Certification" seems a benign enough word. But it hides an extraordinary power that the United States is expected to assert if the Trans-Pacific Partnership (TPP) is concluded.

The US basically claims the right to decide what a country's obligations are under a trade and investment agreement. It then refuses to bring the agreement into force in relation to the other country until that government has changed its laws, regulations and administrative processes to fit the US expectation of what is needed to comply. This certification process can run on for years.

Communications from the US Congress and the US Trade Representative (USTR) suggest their prime targets for New Zealand would be our copyright and patent laws, the foreign investment vetting regime, the procedures by which Pharmac operates, and Fonterra's "anti-competitive monopoly".

How does certification work? US officials transmit the list of the changes to the other country's domestic laws and regulations that they require before the US allow the pact to go into force. The officials maintain pressure on the government of the other country until they are satisfied.

The certification requirement has existed since the 1980s, but US politicians and corporates were unhappy over deals with Chile and Australia, so there has been more focus in recent years on ensuring their demands are met before the agreement comes into force.

Moves are already under way to apply certification to the TPP. In January, the Bipartisan Trade Priorities Act of 2014 was introduced to Congress to establish a new grant of fast-track authority for the TPP. Fast tracking would mean Congress votes yes or no to the entire agreement (although that is not watertight). The bill contains new obligations on the USTR to consult Congress about whether certification requirements have been met.

In practice, certification has seen US officials become directly involved in drafting another country's relevant laws and regulations to ensure they satisfy US demands. This includes reviewing, amending and approving proposed laws before they are presented to the other country's legislature. The USTR even demanded that Guatemala implement new pharmaceutical laws that were not in the formal text, and which the government had strenuously resisted during negotiations.

Communications within the Office of the USTR over certification of the Peru US Free Trade Agreement were secured under the US Freedom of Information Act. They reveal interference in Peru's legislative and democratic processes. One email said: "We have to redraft the regs and the law - Peru needs to accept them without changes". Another said, " If the Peruvians accept our language as we [USTR] propose it we still have the possibility of wrapping everything up the week of November 10. If the Peruvians try to negotiate then all bets are off".

Similar communications might never be released under New Zealand's Official Information Act, because they involve information entrusted to the Government in confidence from another government. In other words, New Zealanders, including MPs, might never know the US was involved in writing our laws and demanding the right to sign them off before Parliament gets to see them.

Everyone knows the US is driving the TPP. The demands made on behalf of US corporations have dominated negotiations. US officials now chair many of the controversial negotiating groups. The US has even bankrolled ministers' and officials' meetings in other countries.

Certification takes US control to a whole new level.

A final text would not be final until the US had overseen the rewriting of our laws to its satisfaction - "our version of the TPP, or no deal at all".

For documents on US certification click here.

Jane Kelsey is a law professor at the University of Auckland.