The Problem with Trading Down.

datePosted 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
Unmasking the Trans-Pacific Partnership Free Trade Agreement
Jane Kelsey
The Trans-Pacific Partnership is no ordinary free trade deal. Billed as an agreement fit for the twenty-first century, no one is sure what that means. For its champions in New Zealand a free trade agreement with the US is a magic bullet – opening closed doors for Fonterra into the US dairy market. President Obama sells it as the key to jobs and economic recovery, while protecting home markets. Australia hails it as a foundation stone for an APEC-wide free trade agreement.

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
Experts from Australia, New Zealand, the US and Chile examine the geopolitical and security context of the negotiations and set out some of the costs for New Zealand and Australia of making trade-offs to the US simply to achieve a deal. ‘Trade’ agreement is a misnomer. The TPPA is not primarily about imports and exports. Its obligations will intrude into core areas of government policy and Parliamentary responsibilities. If the US lobby has its way, the rules will restrict how drug-buying agencies Pharmac (in New Zealand) and the Pharmaceutical Benefits Scheme (in Australia) can operate, and the kind of food standards and intellectual property laws we can have. Foreign investors will be able to sue the government for measures that erode their investment. The TPPA will govern how we regulate the finance industry or other services, along with our capacity to create jobs at home.

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.

  • RRP: $39.99
  • 288 pages
  • 270 x 140 mm
  • ISBN 9781877242502
  • Publication November 2010

Distributor: HarperCollins, PO Box 1, Shortland Street, Auckland
Contact: customerservices@harpercollins.co.nz
Sales Manager: Tony Moores, tony.moores@harpercollins.co.nz
PO Box 12474, Wellington 6144
Phone: 04 473 8128
Email: info@bwb.co.nz
www.bwb.co.nz

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.

6 Responses to “The Problem with Trading Down.”

  1. Quentin on November 9th, 2010 at 11:30

    Now you have me quite intrigued! I will order this one!

  2. DaveW on November 9th, 2010 at 17:26

    Interesting looking book, I will certainly be keen to have a read of it… I couldn’t manage to find a Wellington book launch time and place on the linked website though??

  3. Pablo on November 9th, 2010 at 17:38

    Dave (and anyone else who is interested in the NZ launches and related schedule of events):

    The details are here:

    Wednesday 10 November (Wellington)

    11 am – 1 pm Meeting with NZ Council of Trade Unions

    6.30 – 8.00 pm Formal Launch, Wellington.
    Speakers: Lori Wallach, Chair: Jane Kelsey, Publisher Bridget Williams.
    Location: Rutherford House, Victoria University, mezzanine then RHLT1

    Thursday 11 November (Christchurch)

    7.30-9.30 pm Public meeting Christchurch. Speakers: Lori Wallach, Jane Kelsey, Chair Leigh Cookson. Knox Hall.

    Friday 12 November (Wellington)

    12.30-2 pm Lunchtime address to Greens Sustainable Economy Conference

  4. Lew on November 15th, 2010 at 13:28

    Great endorsement for Kelsey and fellow contributors to this book on Radio NZ National’s Nine to Noon this morning from Matthew Hooton.

    That is to say, Hooton was extremely disparaging about the project and Kelsey in particular which, from such as him, is as good an endorsement as one might hope for.

    L

  5. Pablo on November 15th, 2010 at 13:48

    Excellent. Hooten is the guy known in the press gallery as “the commie” because he dared to write that the market does not clear without regulation. He must be therefore be trying to re-establish his capitalist roder bonafides.

  6. Pablo on November 15th, 2010 at 19:02

    Update:

    Jane was stopped and questioned at OZ immigration as she attempted to enter OZ for the scheduled book launches (even though she has entered Ozzie 8 times previously since her last passport renewal in 2008 without incident).

    According to the Ozzie immigration authorities it apparently had something to do with her conviction stemming from the anti-apartheid protests, which some would think to be a badge of honour rather than a reason for exclusion and which should be irrelevant for current security purposes anyway.

    There are several explanations as to why Jane was stopped, but among them it would be very disappointing, from a democratic perspective, to learn that National allowed NZ security authorities to flag Jane as a risk to Ozzie security just at the time her book questioning the conventional wisdom about supposedly “free” trade is published in both countries.

    That, in blunt terms, is called intimidation of dissent, which is something only authoritarians (in heart or in practice) think to do.

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