Why all the Fuss? The Trans-Pacific Partnership Agreement

Professor Jane Kelsey, School of Law, The University of Auckland

Focus of this presentation

The big picture

The scope of the negotiations

The secrecy issue

‘Behind the border’

Specific issues

What is the Trans Pacific Partnership?

‘Agreement for 21st century’ - aims to reach

further behind the border than any other FTA

11 countries: Australia, Brunei, Chile, Malaysia,

New Zealand, Peru, Singapore, US, Vietnam, plus

Canada & Mexico from Dec

Effectively US + 10 countries as any deal must be

approved by US Congress, ie US has a veto

NZ’s rationale for a TPPA

1. Commercial gains - claim $1.7 billion welfare gains by 2025, discredited methodology- reality check, US Congress will never agree to market access

2. Closer relationship to US- US sees TPP as counter to China in region- Groser said NZ would walk away from TPP if anti-China

3. Free Trade Area of Asia Pacific- US-led FTA model consistently rejected - ASEAN+6 (China,Korea,Japan,Aust,NZ,India) launched August 2012

Scope of a 21st century agreement

29 working groups

market access: most current parties are already highly

liberalised & have many FTAs.

Stricter rules than WTO/FTAs for goods, agriculture, non-

tariff barriers, services, investment, intellectual property

Rules go further behind the border than any previous

agreement

The Secrecy Issue

No documents released unless all parties agree

They have agreed that:

No text will be released until the final text is signed

No background documents or draft text will be

released until 4 years after TPPA comes into force

Countries can apply their domestic consultative

process, ie US advisory committees

Acceding countries can’t see draft texts until they join

TPPA Targets ‘Behind the Border’

This is not about ‘trade’.

TPP aims to reach further behind the border than any previous free trade and investment treaty through enforceable constraints on the

(a) content; and (b) processes

of domestic law and policy.

But draft texts & proposals are secret until signed

What does ‘behind the border’ mean?

Leaked texts, existing FTAs, info from (non-NZ) negotiators show potential constraints on domestic policy and regulation in chapters on:

Investment Government procurement Intellectual propertyState enterprisesCross border servicesSupply chainsRegulatory coherenceTransparency

Investment, eg.

• Pressure to remove restrictions on foreign ownership of strategic assets (eg privatisations)

• Not make new regulations that significantly impact on a foreign investment (eg tobacco, alcohol, gambling policies, zoning, building code)

• Investor right to enforce directly in private offshore tribunal (ISDS), ave $8m cost, duration 4 years, aims to chill policy decisions

Government procurement, eg.

No local preferences or offsets (threshold unclear)

Complex bidding & review processes

Contracts become protected investments, eg

•IT and technology infrastructure

•PPP roads, sports facilities, sewage plants

•Water concessions

•Local government bonds

Enforceable by foreign investors through ISDS

Intellectual Property, eg

US demands on copyright term extension, temporary copies, circumvention of TPMs will mean:

•adverse impact on R&D and innovation;

•massive cost increase for libraries, education institutions, museums, etc;

•restrict compatibility of IT systems & software;

•parallel imports are illegal;

•major cost increases for businesses.

State enterprises

US-promoted chapter, all governments are worried

Not just SOEs and Crown companies, but scope of definition is unclear

Disciplines would apply if state entity receives any perceived benefits, incl

•implied government guarantees,

•use of public land or facilities,

•monopoly rights,

•access to subsidies, grants, financing.

Regulatory coherence & transparency

Skews decision making process in favour of commercial interests & criteria, through•specified procedures, disclosures, notifications;•preferential rights of affected economic interests to participate in decisions; •publishing reasons, assessment of evidence, responses to submissions, with appeal/review;•requiring flawed RIS cost-benefit analysis & criteria.

Process & documentation feeds into chilling effect & use in investor-state disputes

In summary

• Secret treaty making and politically motivated tradeoffs are

anti-democratic;

• There is no balance of social, economic, Treaty,

environmental, cultural interests;

• Rights are vested in foreign interests that can hold elected

councils to ransom;

• The result is bad law that is almost impossible to undo.

For more information see

www.itsourfuture.org.nz and www.fairdeal.net.nz