Just enough wins to take the heat out of FTA issue
Trade Minister David Parker’s sound bite about the widespread benefits from signing up to the CPTPP shows just how far Labour has moved on the issue.
Asked what benefit the average person would see from the signing of the 11-country trade deal, Parker seemed to suggest the spoils would be shared across the nation.
‘‘Their standard of living will improve from the freezing works floor to the farm owner.’’
As much as Parker is stretching the point – measuring the impact of trade deals is a murky science – it is remarkable he was in a position to even say it.
A little over two years ago senior Labour MPs were marching in the street, along with thousands of others, against the Trans Pacific Partnership (TPP), a deal which morphed into the deal that is expected to be signed in early March.
Former Labour leader Andrew Little dismissed the benefits of the deal and the Labour Party voted against the deal in Parliament, signalling an end to what had been a long-running tradition of bipartisan support for trade deals between New Zealand’s two main parties.
But within weeks of signing a coalition agreement with NZ First and the Green Party, which were even more stridently opposed to the original TPP, Labour was indicating that it would sign an agreement which in most respects is the same. The decision came as an enormous relief to many in the business community, which was coming to grips with the end of a National government that had prioritised business confidence above much else.
Yet even as Labour reassures a section of the community which will probably only ever tolerate it, Parker has delivered just enough of a change to the agreement that it seems the heat will come out of the issue.
Anti-free-trade protests will probably return to the fringes.
First and foremost, Parker can (and will, over and over again) point to the fact that the Government has ‘‘found a way’’ to ban foreign buyers of existing homes.
Although the impact of genuine foreigners (as opposed to recent migrants) buying houses is small, it is tangible enough to capture the public’s feeling that it is an issue of sovereignty.
The politics of the issue are especially good for Labour, because National tried very hard to convince the public during the election campaign that banning foreign buyers would jeopardise existing trade deals and damage the economy.
Some of the other changes Labour claimed it won before signing the deal are effectively cosmetic.
Parker has made much of the fact that there is much less scope for New Zealand to be sued in an international court under the investor-state dispute settlement (ISDS) provisions, something Labour in Opposition had argued undermined New Zealand’s sovereignty by constraining public policy options.
As scary as the provisions sound, not only has New Zealand never been sued under the provisions in the past, no New Zealand company has successfully used the provisions, despite ISDS provisions being in other trade deals we have signed up to.
In any case, in some cases foreign companies will still theoretically be able to sue the New Zealand government. On this point, Parker has been left arguing that close enough is good enough.
The benefits of the deal are debatable, as they are with any trade deal. Critic Jane Kelsey argued that the estimated boost to New Zealand’s gross domestic product from the TPP were no bigger than could be delivered from a currency fluctuation.
Since the United States, the world’s largest economy by some margin, dropped out of the deal, the estimated increase to New Zealand’s economy had been cut from at least 1 per cent, to as little as 0.3 per cent.
But Parker rightly points out that once it is fully implemented, New Zealand exporters will save an estimated $222.4 million a year which have been paid in tariffs.
The 2008 China free trade agreement, which has arguably transformed New Zealand’s economy (for good or ill), was estimated to save exporters $115m a year, but in the decade since trade has far outstripped expectations.
Proponents often argue that trade deals are part of a wider endorsement of trade between signatories, making signing up to the CPTPP something like joining a club.
Parker’s claim about everyone from freezing workers to farmers having their lives improved was based around the 38 per cent drop in beef exports to Japan, one of the sector’s major markets, since Japan signed a free trade deal with Australia.
Whatever critics might claim about the impacts of trade deals, deals will inevitably be struck all around New Zealand whether or not we sign up to them.
Labour probably knew this all along, but Parker has deftly managed to find just enough wins to keep New Zealand inside the tent without creating revolt.