6 Oct 2015

TPP fight continues after deal signed

8:15 pm on 6 October 2015

A Trans-Pacific Partnership deal may be done, but that doesn't mean the fight is over.

Demonstrators protest against the Trans Pacific Partnership trade agreement outside the Senate office buildings on Capitol Hill June 23, 2015 in Washington, DC. Chip Somodevilla/Getty Images/AFP

Demonstrators protest against the Trans-Pacific Partnership at Capitol Hill Photo: AFP

The government has pointed to the trade gains for New Zealand's food producers, saying it's too good a deal not to sign up for, despite falling short on dairy.

Yet TPP opponents argue the gains from the secret agreement favour big business at the expense of workers and consumers.

Boost to trade and jobs?

The economics of the deal appear compelling, particularly as New Zealand joins a club that accounts for 40 percent of the world economy.

Based on current trade volumes, the deal amounts to tariff savings of $259 million a year once the TPP is fully implemented.

In return, New Zealand will have to remove $20 million a year of tariffs on imports.

Prime Minister John Key hailed the deal.

"This agreement will give our exporters much better access to a market of more than 800 million customers in 11 countries across Asia and the Pacific, and help Kiwi firms do business overseas," Mr Key said.

John Key during bridge run 25/08/15

Prime Minister John Key is keen to play up the TPP's positives Photo: RNZ / Alexander Robertson

The TPP will eliminate tariffs on 93 percent of New Zealand's exports to the United States, Japan, Canada, Mexico, and Peru.

The government estimates the agreement will be worth at least $2.7 billion a year by 2030 for New Zealand.

TPP supporters argue that's likely to be on the light side once trade barriers start being eliminated, if previous trade deals are any guide.

Tariffs on beef exports to TPP countries will be eliminated, except Japan, where tariffs fall from 38.5 percent to nine percent.

Other exports, including fruit and vegetables, sheep meat, forestry products, seafood, wine and industrial products, will see tariffs eliminated.

Dairy disappointment

Yet the deal is not the high quality and comprehensive one that Mr Key and his Trade Minister Tim Groser had promised initially.

Both had already lowered expectations for dairy, and that proved the case in the end.

Dairy cow close up generic

Photo: 123rf.com

While there were gains such as the removal of tariffs on some cheeses and infant formula in the United States within 10 years, whole milk powder improvements remained elusive.

Canada offered only limited new access, with just an extra 3.25 percent for dairy on top of the country's annual production.

Mr Key expressed disappointment the agreement didn't eliminate all tariffs for the country's biggest export earner, and Fonterra chair John Wilson said the outcome was far from perfect.

"The entrenched protectionism demonstrated by the US dairy industry in particular had ensured that the deal on dairy failed to reach its potential," Mr Wilson said.

Book, film and music lovers will also have to fork out more over time.

New Zealand's copyright period has been extended from 50 to 70 years, which will increase gradually over 20 years and average about $55 million a a year over the very long term.

Doctors yet to be convinced

Senior doctors are demanding to see the fine print on the TPP before they decide if it is acceptable.

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Photo: 123rf.com

The government is downplaying fears about higher drug prices, saying consumers will not pay more for subsidised medicines under the deal, and access to the latest medicines will be unchanged.

But some administrative changes will make drug-buying agency Pharmac more transparent, which has raised concerns from the senior doctors' union.

It said it was suspicious that the changes to Pharmac's processes may help drug firms to contest its decisions.

Erik Monasterio of the Doctors for Healthy Trade group said an independent health impact assessment was still needed before the deal was ratified.

National sovereignty

The government also insists fears about investors suing over smokefree laws are unfounded.

There will also be no change to the Pharmac model.

But TPP opponents dispute that.

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Opponents of the TPP claim Pharmac will be a casualty Photo: afp

Simon Terry of the Sustainability Council said the government has used the trade benefits to mask the fishhooks that are not yet apparent in the secret deal.

Mr Terry said national sovereignty had been handed over to foreign investors in order to sell a bit more butter and beef.

"And these include giving rights to sue to foreign entities in offshore tribunals if they believe they have a loss of future profits. It's about agreeing to restraints on what state-owned enterprises can do. It's about never favouring local producers. And it's about agreeing to waive the right to impose new controls on foreign purchasers of New Zealand land."

Treaty to be protected under TPP

The government said the TPP would protect the rights of Maori under the Treaty of Waitangi.

In a memo to the Waitangi Tribunal, Crown counsel say a Treaty of Waitangi clause is included in the trade agreement and the government was planning roadshows to inform Maori and the general public about the benefits of the deal.

The tribunal's had eight claims representing groups from around New Zealand who are worried the TPP will undermine their rangatiratanga and their intellectual property rights.

It has held off on an urgent hearing because the outcome of the trade negotiations was imminent.

The Crown said the government expects the historic agreement would promote economic growth, support higher paying jobs, raise living standards and reduce poverty in New Zealand.

It said a public outreach programme was planned to explain what's in the deal and how it protects the Crown's ability to meet its Treaty of Waitangi obligations.

The lawyers say that will enable Maori to engage in discussions around New Zealand, before the TPP is ratified.

Copyright concerns

A lawyer says the new copyright rules under the TPP deal will cost consumers millions of dollars and most of the benefits will likely go to big overseas companies.

One concession made by the New Zealand government was the copyright extension on books, films and music, from the current 50-year term to 70 years, estimated to cost an average $55 million a year.

Simpson Grierson lawyer Earl Gray said the pressure for that had come from one source.

"It's probably the film and music industry in the US that has driven that because they would, I expect, be the major beneficiaries of that extended period."

Mr Gray said New Zealand traded the extension for a better deal in other parts of the TPP.

Details, details

Another TPP skeptic, Professor Jane Kelsey, is demanding the release of the text to assess the merits or otherwise of the deal.

"The government is bound to spin the benefits like crazy, knowing that we won't get to see the real deal for another month. The Minister needs to release the full details immediately."

Professor Jane Kelsey at her home

Professor Jane Kelsey Photo: RNZ / Philippa Tolley

The government hasn't finalised when the details will be released.

Yet there is already confusion over the patent protection period for new generation biological drugs.

Trade Minister Groser insisted five years remained the norm.

But in some cases that may be extended to eight years.

Ms Kelsey said if that proved to be the case, health economists estimate that could cost New Zealand up to $75-$150 million more to the country's health bill - based on just seven biologics.

A former United States Trade Representative, Clayton Yeutter, said the vagueness reflected the difficulties in reaching agreement in Atlanta.

"This is one of the ambiguities of this agreement because that was such a difficult negotiation, so I suspect what will happen here is that some countries will interpret this as requiring five years," Mr Yeutter said. "The US will interpret this as protection for eight years."

Where to now?

In New Zealand, as in other countries, the TPP will be scrutinised by a parliamentary select committee with public input. Some in the US are claiming the deal won't pass Congress.

Critics argue the New Zealand parliamentary process is a smokescreen, and won't result in improving a bad situation.

As it stands the deal itself can't be modified unilaterally.

The government expects the TPP will come into force within two years.

Estimated annual tariff savings from TPP, at the current level of exports.

The New Zealand government's estimate of annual tariff savings from TPP, at the current level of exports. Graphic: MFAT