The Problem with Trading Down.
Posted on 10:13, November 9th, 2010 by Pablo
Jane Kelsey’s latest book on trade, an edited collection titled No Ordinary Deal, was launched last night in Auckland. Other launches will follow in Hamilton, Wellington and Christchurch this week before the road show heads to Australia. As a contributor to the book I attended the launch and enjoyed the speech given by another contributor, Lori Wallach, a trade specialist at the US research institute Public Citizen (founded by Ralph Nader in 1971). Lori, who wrote the chapter on the US domestic agenda and approach to the so-called Trans-Pacific Partnership (TPP) negotiations, noted that the model for the TPP is not the General Agreement on Tarriffs and Trade (GATT) but instead the North American Free Trade Agreement (NAFTA), which essentially is an investor’s guarantee agreement rather than one about free trade per se.
In her chapter and her speech, Lori noted that among many other downsides to the TPP, it would exempt foreign investors from domestic regulations in NZ, and should the investor be made to comply with those regulations by court order, the costs of compliance would be borne by the NZ taxpayers in the form of mandatory compensation. She went on to note how local pharmaceutical regulations and control boards would be circumvented in favour of US drug company standards, and explicated the dumping and market monopolisation efforts of US agri-businesses under this type of trade regime. As a sidebar she noted how NZ dairy exports would not appreciably increase to the US under the agreement, as well as the fact that the recent midterm elections have ridden on a backlash against trade because of presumed US job losses tied to it, which means that the possibility of the US ratifying the TPP in the next two years under the new congressional leadership (even if negotiations are concluded, which itself is unlikely) are improbable at best. Her basic premise was that she would not object to the TPP if it were about free trading of goods and services as per the Ricardian ideal. What she objects to is the use of free market rhetoric to cloak cross-border commercial arrangements that are less than free or fair and which contain pernicious costs for smaller national partners and wage labour-dependent consumers in general.
The bottom line is that the TPP is fraught and the public need to be aware of the very large downside to it. It is not a genuine “free trade” agreement in the proper sense of the term. Instead, it is a US-centric investor’s agreement skewed in favour of large (mostly foreign) corporate interests rather than consumers and local producers. Among other topics, chapters (there are 19 in all) explore the impact of the TPP on indigenous rights, climate change, intellectual property, cultural exchange and, in my contribution, security. They are well worth reading, and often eye-opening.
The book is designed to promote informed debate on the matter by offering a critical counter-point to the received wisdom of the policy elites who attempt to sell it as as “win-win” universal good for all involved. As I have noted previously when writing about asymmetric trade, this is a far cry from the truth and carries with it not only the potential for a loss of economic freedom and sovereign control of strategic assets, but also the very real danger of increasing both physical and emotional insecurity in the smaller partners involved in such agreements. Since insecurity breeds fear (be it fear of job loss, fear of environmental harm, fear of forced dislocation from one’s land or cultural roots, to say nothing of fear of physical harm by direct or indirect means), and freedom from fear is considered to be an inalienable human right, the downside of the TPP needs to contrasted againt the supposed upsides championed by those who stand the most to benefit from the deal, and who constitute an elite and often unaccountable minority among the constituencies involved.
More publisher information on the book and the launches can be found at www.bwb.co.nz. An information sheet on the book is here:
No Ordinary Deal
None of these arguments stacks up. All nine participant countries except Vietnam are heavily liberalised, deregulated and privatised.* They already have many free trade deals between them. Who really believes that US dairy markets will be thrown open to New Zealand, or that China, India and Japan will sign onto a treaty they had no role in designing?
No Ordinary Deal
Above all, No Ordinary Deal unmasks the fallacies of the TPPA and exposes the contradictions of locking our countries even deeper into a neoliberal model of global free markets – when even political leaders admit that this has failed.
*The US, Australia, New Zealand, Brunei Darussalam, Chile, Peru, Singapore and Vietnam. Malaysia joined in October 2010.
Distributor: HarperCollins, PO Box 1, Shortland Street, Auckland
The Contributors: Jane Kelsey, Bryan Gould, Patricia Ranald, Lori Wallach, Todd Tucker, José Aylwin, Paul Buchanan, John Quiggin, Warwick Murray, Edward Challies, David Adamson, Geoff Bertram, Tom Faunce, Ruth Townsend, Susy Frankel, Jock Given, Ted Murphy, Bill Rosenberg, Nan Seuffert.