Japan and Canada blurring the TPPA victory lines
International Trade Minister Tim Groser once counted the inclusion of Japan and Canada in the TransPacific Partnership Agreement (TPPA) negotiations as a personal triumph.
Japan’s involvement, in particular, gave serious extra heft to what the Government still hopes can be a ‘‘high quality’’ new trade agreement that covers about 40 per cent of the world economy and seeks to cement a new generation of global trade rules.
These days, however, Japan and Canada are two of Groser’s biggest problems.
They’re the leading opponents of a reasonable deal for New Zealand dairy exporters, which the Government has made an unassailable bottom line for this country’s signature on the TPPA.
The United States is quietly happy to see the Japanese and the Canadians carry the flag against freeing up the dairy trade, its competition-fearing dairy farmers apparently oblivious to the fact that the US is about overtake New Zealand as the world’s largest dairy exporter.
What’s clear is that any deal on dairy is going to be incredibly difficult, and that what New Zealand negotiators might count as a win in the white heat of final talks risks looking like a very small hill of beans to the rest of us.
Prime Minister John Key’s comments after the Cabinet meeting this week, where he said that whatever emerged on dairy would be ‘‘at least . . . the very best that we can do’’, sounded a lot like a preparation for defeat.
Groser is not so pessimistic, saying yesterday that ‘‘we are in anything other than capitulation mode’’.
Evidence for that is the fact that while international media are reporting a new round of TPPA negotiations in Atlanta, Georgia, next week, Groser has yet to say he’s even going. The implication is that unless there’s something to negotiate, there’s no point in attending a meeting where he might expect to be trampled in the rush to get negotiations finished.
‘‘The situation is that I and my negotiators can see a very good deal for New Zealand in everything except dairy and I don’t know how to characterise the deal there because it’s not a deal we could accept,’’ he said.
That is the same as his position two months ago, when TPPA talks in Hawaii ended inconclusively.
Since then, it seems there’s been some progress on automobile market access – a major sticking point between the US and Japan – but dairy hasn’t progressed at all and there remain arguments over extending patent life for new generation drugs known as ‘‘biologics’’.
Clear away autos and drug patents, and the fear is that the other 11 nations of the TPPA will force New Zealand into a take it or leave it position on dairy. For that reason, Groser is unwilling to characterise the next two weeks as the endgame for TPPA.
‘‘I’m just not quite sure we’ll get a deal in the next two weeks or the next two months. I’m suggesting to the prime minister we talk about before the end of the year.’’
However, the pressure will be on in the next 10 to 14 days.
Global leaders will be congregating in New York for the annual United Nations General Assembly meeting next week, with John Key indicating TPPA will be at the top of his agenda in any meeting with US President Barack Obama.
Groser will also be in the US for climate change talks next week. He could switch his itinerary and go to Atlanta if he had to.
‘‘It depends whether negotiators are prepared to search for some genuine common ground rather than this game of chicken that’s going on,’’ Groser said.
Intense behind the scenes negotiations continue in the meantime.
The problem for the government is that success or failure for New Zealand in the TPPA negotiations is almost exclusively now framed in terms of a deal on dairy products.
While ministers have been saying for months that whatever emerges for dairy market access ‘‘won’t be goldplated’’, any deal on dairy that does now emerge is likely to be savaged by the TPPA’s vocal opponents.
For many, no amount of market access is worth the compromises that TPPA will impose in areas like the investor state dispute settlement provisions and the overblown fears that have been fanned over the fate of Pharmac.
The drug-buying agency is clearly safe, based on leaked documents from the negotiations, but the belief that it’s not is one of the animating themes of local opposition.
To have to argue that TPPA is still worthwhile without a strong deal on dairy is going to be difficult. It will be a serious test of Labour’s ambivalent stance, where it continues to support free trade in principle, but would perhaps rather not in practice.
Gains on red meat, kiwifruit and other areas of New Zealand’s traditional export trade risk looking like small beer compared to compromises elsewhere.
Of course, New Zealand could walk away from TPPA, which would delight the critics but be a deeply problematic outcome for a country that not only seeks to trade openly with the rest of the world, but was also one of the founder partners in TPPA.
Groser and Key are relying on other TPPA nations not wanting such a walkout, which might allow New Zealand to force the door ajar on dairy market access to four countries – the US, Mexico, Canada, and Japan – where New Zealand has failed over 30 years to negotiate two-way free trade deals.
As Groser puts it: ‘‘Is there a better alternative? With these four giant countries, it’s this or nothing’’.