TPP signatories on the right side of history
The world has come to a crossroads this week, one road leads to a trade war, the other is now lit more brightly by the Comprehensive and Progressive Trans-Pacific Partnership signed in Chile yesterday.
Those who don’t pay much attention may need reminding how historic this moment is and what an important part New Zealand has played in it. The words “comprehensive” and “progressive” were added to the TPP last November by newcomers such as Justin Trudeau and Jacinda Ardern to reassure their young constituencies but it has always deserved those descriptions.
It is comprehensive because it covers more than barriers at national borders. It writes some international law for the way governments will regulate employment, the environment, investment, intellectual property and much else that has a bearing on commerce and its competition. And it is progressive because the world has been trying to make progress like this for a very long time.
The TPP is a big step towards fulfilling one of the dreams of those who founded the United Nations in the wreckage of World War II. They believed lasting peace could be found in international co-operation, especially in trade because unfair treatment in that sphere was often a reason nations cited for going to war.
But while UN visionaries set up a number of subsidiary bodies for cooperation in subjects such as health (World Health Organisation), science and refugees, they could not agree on a world trade organisation. They were still living in the shadow of the Depression and believed national economic protection provided social security.
They settled for a General Agreement on Tariffs and Trade (Gatt) under which exemptions to protection would be grudgingly conceded as reciprocal favours in fiercely protective negotiating rounds. That thinking prevailed for 30 years and can still be heard from the likes of Winston Peters and Donald Trump. But in the late 1970s and 1980s, when economies had grown pretty sick and depressed under protective government controls, policy makers in leading economies decided to open their markets to global competition.
In the 1990s, a Gatt round finally gave birth to the World Trade Organisation envisaged 35 years earlier. The WTO quickly attracted more than 150 member states, many from the disintegrated communist bloc and the third world. Preparations for another round of trade liberalisation began almost immediately. It would range far beyond tariff reductions and aim for progress on all the subjects now included in the TPP.
The WTO’s “millennium round” was launched at Doha, Qatar, by our own Mike Moore as WTO directorgeneral, but its enlarged membership and unanimity requirements eventually proved too unwieldy.
Countries promoting the WTO ideal recognised they would need to advance on several fronts. If global agreement was elusive, progress might be made with regional agreements open to all comers. That was the thinking in New Zealand and Singapore when we hosted Apec in 1999. Jenny Shipley and her Singaporean counterpart sounded out other leaders on the idea of a Pacific-wide trade pact.
New Zealand and Singapore did the initial deal in 2001. Within a couple of years Chile had joined, and tiny Brunei. It became the “P4”. By then Labour was in power here and Helen Clark was no less enthusiastic than Shipley to bring others into it.
The United States was the big target. Bill Clinton had not followed by the interest he expressed (at least to the press) at Apec. George W. Bush was interested in trade pacts only as strategic agreements against terrorism. But Barack Obama was keen to “pivot” US foreign relations towards Asia and the Pacific.
When the US joined the effort to negotiate a Trans-Pacific Partnership, as the P4 then became, so did Australia, Peru, Malaysia, Vietnam and before long, Mexico and Canada too. When Japan came in a little later, the prospective pact embraced two of the three largest economies in the world, though New Zealand did not exactly welcome the latest recruit. Free trade was never in Japan’s DNA.
Donald Trump has done wonders for the TPP. By withdrawing the US for the time being he has turned countries such as Japan, Australia and Canada into champions of the cause. As with climate change and much else, Trump is so wrong-headed that he illuminates the right path.
With its strong internationalist tradition, the Labour Party should be celebrating the signing of the TPP on its watch. Its future members could look back on this moment with the same pride earlier generations have for Prime Minister Peter Fraser’s role in the UN’s creation. Instead, when they check what today’s Prime Minister was doing this week, they will read that she was touring the Pacific talking aid, not trade.
They will also read what Trump was doing. Let’s hope the TPP is the road sign we followed.