TPP deal lives on with new name
After a fraught 24 hours of talks, when a Canadian boycott of a crucial meeting threatened to scupper the Trans-Pacific Partnership (TPP), it appears to be back on track and could be in place in a matter of months - though sporting a new name.
The so-called TPP-11 – renamed after the United States pulled out of the original 12-nation pact – is now the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP). Canada is also back inside the tent. Prime Minister Jacinda Ardern made it clear on Saturday that concessions won, particularly on controversial investor-state disputes settlement clauses, had cleared the way for New Zealand to sign.
‘‘This is not a perfect agreement but it is a damned sight better than what we had when we started,’ she told reporters after the leaders’ retreat at the Apec summit in Da Nang, Vietnam.
‘‘It is not perfect, no free trade agreement is. But it’s a lot better than where we were three weeks ago.’’
Trade ministers, including New Zealand’s David Parker, issued a statement acknowledging agreement on the core elements of the CPTPP.
They also released a list of ‘‘suspended issues’’, which were essentially those that had been important to the United States.
They can now only be written back into the deal by negotiation – and only by consensus of all the parties – if America seeks to rejoin, perhaps in the era post US President Donald Trump.
That, in theory, means New Zealand can prevent the suspended changes to the ISDS regime from re-entering the agreement.
‘‘If America comes in, it’s not an automatic lifting of those suspended provision ... we worked hard to have lifted,’’ Ardern said.
The agreement would now be taken back to a select committee for the public and Parliament to assess. Ardern said New Zealand negotiators had worked hard on the ISDS clauses, which allow corporations to take legal action against host countries in special tribunals.
They have been narrowed in three areas:
❚ First, they no longer apply to investor screening, so decisions made under the Overseas Investment Act regime, administered by the Overseas Investment office, could not be challenged. Ardern said that was perhaps the most important change.
❚ Second, anyone who takes up a contract with the government would no longer be able to sue through ISDS provisions but must instead use domestic procedures.
❚ The third change related to financial services.
Also, a side-letter with Australia has ruled out the use of ISDS provisions between the two countries, meaning ISDS does not apply to 80 per cent of foreign direct investment from TPP nations.
A ‘‘handful’’ of other countries have agreed in principle to ISDS side-letters. but Ardern said she could not disclose them now.
Ardern said the ISDS provisions in the CPTPP were now similar to previous trade deals New Zealand has signed, such as with China and Malaysia.
New Zealand had wanted to go further but she regarded the progress over just a few weeks since she came to office as ‘‘a good outcome’’.
But New Zealand had now put a line in the sand. ‘‘We will not sign up to future agreements that include those clauses.’’
She said ISDS measures were in their dying days, and there would be a review in three years, also agreed as part of the CPTPP.
New Zealanders always had mixed feelings about the Trans-Pacific Partnership (TPP) trade deal. So much so, that 72,000 of them signed a petition against it and people in towns and cities up and down the country took to the streets in protest.
Among other things, they did not like clauses that seemed to surrender New Zealand sovereignty to big international corporations, and patent extensions that would have pushed up the cost of Pharmac-funded medicines.
On the other hand, New Zealand is dependent on international trade – which in this era means free trade – for its economic survival. Also, the TPP was a way of gaining freer access to the United States market, which we, as a small and frankly quite insignificant nation, could not have hoped to negotiate by ourselves.
Now the TPP has morphed into the CPTPP – the Comprehensive and Progressive Agreement for the TransPacific Partnership. It is a shadow of its former self after barely surviving an almost farcical series of setbacks at the Apec Summit in Vietnam. Its future is still uncertain.
Despite this, Prime Minister Jacinda Ardern says it is a ‘‘damned sight better’’ deal than it was three weeks ago.
The TPP was born during the administration of US President Barack Obama, who saw a trade agreement between 12 Pacific Rim nations as a handy way of countering the growing global influence of China.
One of the first things that Donald Trump, a free-trade sceptic, did as incoming president was to pull the United States out of the deal under his ‘‘America First’’ policy. China, of course, is still ascendant.
To the surprise of many, the remaining 11 nations decided to keep working towards the deal – it turns out that the next largest trader in the bloc, Japan, believed in it as a way to counter China. The TPP11, as it had become, was due to be signed in Da Nang.
A week ago, the TPP11 talks were being seen – perhaps naively – as a test of Prime Minister Jacinda Ardern’s effectiveness on the international stage. If she and the New Zealand team could argue the case at Apec and win concessions, that would have been considered a victory.
It turns out, however, that plenty of other countries were wanting to take something back from the earlier agreement now the over-arching demands of the United States were no longer in the deal. The Americans held the trump cards, until Trump threw them in.
New Zealand was not alone in disliking the investorstate disputes clauses that gave international corporations the right to sue little nation states like ours in special tribunals.
Vietnam wanted longer to meet labour standards, Brunei and Malaysia wanted fewer restrictions on their oil and gas industries and Canada wanted an exemption for its ‘‘cultural interests’’.
The TPP was unusual for Canada in that it did not extend the protections given in its other trade agreements to (for example) subsidise French-language programmes that might end up on Netflix.
Ardern will have learned a useful lesson in international trade relations from her trip to Vietnam. It is that she might head to world summits with specific objectives, only to find herself in the middle of a bunfight.