SMELLIE SNIFFS THE BREEZE: Jumping at trade shadows

Pattrick Smellie

COMMENT

Well, knock me down with a feather.

One set of economic analysis disagrees with another about what the future might hold.

Next we'll be hearing that nobody's quite sure who will win this year's general election! Still, the future's like that.

Such uncertainty is writ large in what passes for debate in New Zealand about the Trans-Pacific Partnership trade treaty, which is wending its way slowly either to resolution in the first half of this year, or the second half, or possibly never. Who knows? It's all a bloody secret.

The way the story's told here, the TPP is a plaything of US corporate interests hell-bent on imposing the very worst of American imperialist views on such important principles as the ownership of patents and copyright, at the expense of supposedly "weak" negotiators like New Zealand.

The implication is that the US political-industrial machine is driving this outcome not just inexorably, but inevitably to a conclusion that will only benefit existing corporate power.

Well, maybe.

But if that's really the case, why is it that hardly a day passes without coverage in the US media of the mounting trouble that US President Barack Obama faces in getting the permission he needs from Congress and the Senate to agree to a TPP-style deal?

If anything, the political dynamic in the US indicates that vast economy is becoming more instinctively protectionist and unwilling to grant the "fast-track" legislation required to allow the US to be a nimble participant in the TPP negotiations. They now involve 13 trading nations around the Pacific Rim, and perhaps a 14th if South Korea is allowed to join too.

In the last fortnight, Obama has lost support for fast-track legislation from the Democrat Leader of the Senate Majority, Harry Reid, but a swathe of other leading Democrats. On the Republican side, where liberal sentiment towards global trade might have been expected to reign, hard-right Tea Party-ites have further eroded support for free trade.

Indeed, no US President has managed to secure fast-track legislation since 2002. Efforts since 2007 by both the George W Bush and Obama administrations to renew fast-track authority have foundered to date.

So if TPP's most ardent critic in New Zealand, University of Auckland law professor Jane Kelsey, is right and the Pacific Rim trade deal is a stitch-up between evil US corporate interests and its puppets on Capitol Hill, then clearly the puppet-masters are doing a pretty crappy job.

The recent Wiki-Leaked documents from TPP negotiations suggest much the same thing. They show the US on the backfoot on many of the most contentious intellectual property and environmental issues.

Recent US media reporting suggests the US is facing opposition to proposed environmental safeguards that developing economies regard as trade barriers dressed up as principle.

If anyone is succeeding on Capitol Hill at present, it would seem to be American trade unions, who would much rather kick TPP negotiations beyond the 2014 mid-term US elections later this year because they fear trade liberalisation will cost the Democrats votes.

Meanwhile, in New Zealand, economist Geoff Bertram and Sustainability Council executive director Simon Terry have published analysis questioning the roughly $5.5 billion benefit the Government claims could come our way from the TPP.

Bertram is perhaps best-known as a critic of electricity reforms and Terry as a critic of climate change and genetic modification policies.

In essence, they suggest that projections of the deal's value by a range of internationally reputable economic consultancies are part of the hand-holding conspiracy going on among global elites to cook up a case for the TPP.

Quite rightly, they say we can't know what the effects of the TPP will be. Without offering their own deep analysis, they suggest the benefits may be as little as a quarter of those projected, and that these haven't been offset against the potential costs of the deal.

However, their 27 page critique ends on a lamentably weak note. The best they can posit is that: "whether there would ultimately be a net gain for the peoples of the TPP partner countries seems doubtful at this stage. A proper accounting will be possible only when a full text is available."

Well, thankfully, there will be such a text available before any of the Parliaments of TPP member countries ratify the treaty, assuming democracies ever allow it to arrive for ratification. Perhaps it will be a fait accompli by then, but don't bet on it. The likelihood is that there will be several years of political wrangling to get an agreed TPP in place.

In the process, exactly what might be gained or lost should become clearer.

But it will still be a guess.

In particular, we will all be able to see whether the much-hyped ability of corporations to sue governments is really quite as powerful as it's being made to sound. Note: suing doesn't mean winning, and governments will still be governments; just as they are now and have been whenever they sign international agreements, which by definition cede a nation's sovereignty.

The criticism is that the TPP negotiations have been too secretive for their own good. That is inescapably true.

The voices in opposition to it have almost free rein in the global media compared to the muted public support it engenders from parties close to the action. They are relying on elite status for progress: a dangerous thing to rely on in uncertain times.

Indeed, it is arguably exactly that secrecy and unwillingness to engage that has allowed much of the paranoia surrounding the TPP proposal to flourish.

(BusinessDesk)

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