No Ordinary Deal: Unmasking the Trans-Pacific Partnership free trade agreement
Jane Kelsey (ed.)
Bridget Williams Books, 2010
Reviewed by Mike Kay, Auckland member of Workers Party and member of The Spark editorial board
This collection of essays brings together a number of different perspectives on the Trans Pacific Partnership Agreement (TPPA), a Free Trade Agreement (FTA) currently being negotiated behind closed doors between Australia, Brunei Darussalam, Chile, New Zealand, Peru, Singapore and the United States. The policy framework is still largely neo-liberal, despite that economic model’s credibility taking a knock since the Global Financial Crisis.
Recent US-brokered trade deals, such as its December 2005 agreement with Peru, contain clauses to prohibit “expropriation and measures ‘tantamount to expropriation’, with the exception of a ‘public purpose’ (which carries a right to full compensation), and provides investors with due process protection and the right to receive a fair market value for property in the event of expropriation.” (p.74) This could have far-reaching consequences for any future socialist or progressive government.
But will the TPPA lead to a more liberal immigration policy with respect to the US’s TPP partners? Lori Wallach and Todd Tucker comment: “on a bipartisan basis, leaders of the congressional committee that sets immigration policy… have repeatedly insisted that no future trade pacts provisions may contain visa or other immigration policies. A TPPA with immigration provision would be dead on arrival in Congress.” (p.67)
The effects of recent FTAs are most brutal in poor countries, particularly for indigenous populations. The traditional territories of the Mapuche people in the south of Chile have been ravaged by intensive forestry, fishing and the building of hydro dams, which have expanded massively since the US-Chile FTA, effective from January 2004. Indigenous people, and particularly Mapuche, reacted with social protest against the consequences of investments in which they had no say or participation. Three Mapuche activists have been killed by police agents in the last decade. While the killers have escaped justice, thousands of indigenous activists have been prosecuted by the state, including under widespread use of anti-terrorism laws. (p. 77)
José Aylwin notes that while opposition to FTAs is nearly universal among indigenous peoples, some New Zealand Māori organisations buck the trend. This he attributes on the one hand to the inclusion of Māori entities in activities such as fisheries, forestry and the geothermal industry as a result of Treaty settlements; and on the other hand to the Government’s inclusion of Māori representatives in the negotiation of such agreements, “even if it is for pro-corporate reasons”. (p. 81)
The US’s motivation for the TPPA goes beyond trade, according to Paul G. Buchanan. The agreement “would provide the US with a trade-based counterbalance to Chinese ambitions as well as address the current soft power imbalance that favours the Chinese in the South Western Pacific.” (p. 89) In a similar vein, Jock Given argues that “at a time when Washington Consensus capitalist countries have found themselves uneasily dependent on the economies of nation states choosing different ideological routes to economic growth, the TPPA provides an opportunity to lay some political bedrock beneath the trading practices of the Asia-Pacific region - a ‘Western’ Far Eastern bloc.” (p. 188)
Another aspect of such deals, known as “issue linkage” is the assumption that partners to trade and security deals develop stronger mutual dependencies compared to those who are not trade or security partners. Buchanan explains how the degree of integration between imperialist countries influences trade talks:
The fifth Labour government’s reluctance to join the invasion of Iraq was partially attributed to the lack of progress in getting the US to reciprocate New Zealand’s interest in negotiating a bilateral FTA, while both Labour’s and National’s deployment of Special Air Services troops to Afghanistan is seen as an inducement for US consideration of a bilateral agreement. For the Australians, issue linkage is a given, which is why the bilateral FTA with the US that entered into force in 2005 is explicitly seen as a reward for Australian military support of the US invasion of Iraq and its ongoing operations in Afghanistan. Conversely, slow progress on a US-New Zealand bilateral FTA was attributed, again in part, to US displeasure with New Zealand’s reluctance to join the ‘coalition of the willing’ in Iraq. [p. 90]
John Quiggin notes that when Australia-US FTA came into effect in 2005, enthusiasm for neo-liberalism was already in decline. “Rather than using the provisions of the AUSFTA to advance an agenda of privatisation and deregulation, as was widely expected, the Howard government adhered to the letter of the agreement, but was not, in practice much constrained by its provisions.” (p. 108) Public pressure forced a number of U-turns on privatisations, and changes to the Pharmaceutical Benefits Scheme.
The dispute between the tobacco companies and the Australian government over the adoption of plain packaging for cigarettes is still on-going. Tobacco giant Phillip Morris lodged a submission with the USTR complaining that the measure “would amount to expropriation of its intellectual property rights in its trade mark, as well as ‘limit the freedom of commercial free speech, significantly restrict competition and breach Australia’s obligations under [an existing FTA]” (p. 158-9) Furthermore, they lobbied for “an investor-state settlement provision that would allow the company to sue governments for introducing tobacco regulation that it believed reduced the commercial value of its investment.”
Bill Rosenberg questions whether the investment provisions of the TPPA would be in New Zealand’s “national interest” - a concept that is largely a fiction in such a radically class-divided society as ours. Restrictions on Foreign Direct Investment (FDI) currently mainly apply to land and fishing quota. However, as Rosenberg points out, “the largest part of FDI by value is… business investment - such as ownership of banks, telecommunication, media, supermarkets, elderly care facilities and transport firms”, which is minimally regulated.
Thus some of the major recent controversies around overseas ownership have centred around acquisition of land. Rosenberg cites the case of a Chinese shareholding bid for sixteen (mainly dairy) farms owned by the Crafar family after it went into receivership. “Fonterra chairman Henry van der Heyden, for example, expressed concern that ‘New Zealand’s economic future could, in fact, be in jeopardy if we allow our dairy industry to slip from our control’, and Prime Minister John Key warned that New Zealanders could ‘become tenants in our own country.’” (p. 202)
What Rosenberg fails to note is that the whole campaign was designed to protect some of the richest special interest groups in Aotearoa, served up with a good dose of “yellow peril” racism. (After all, the single purchase of Otago farmland by Canadian singer Shania Twain six years ago was four times the size of the 16 Crafar farms, and there was no national scandal then.)
So, should we ever support protectionist measures for domestic industries? Bryan Gould points to the examples of Japan and Korea, and latterly China and India, “which have all been developing economies over relatively recent times, we can see they all chose to protect their industries behind tariff walls and other obstacles to free trade, so that their less-than-competitive industries had a chance to develop and gain strength. Once they had done that, they were increasingly able to free up their economies to free trade.” (p. 38) So far, so reasonable. Gould then goes on to argue: “It would be helpful for New Zealand to identify itself correctly, not as a developed country and only perhaps as a developing one, and to frame its economic policies accordingly.” Such are the contortions Social Democrats must go through in order to support protectionism in an advanced capitalist country!
There are many good reasons to oppose the TPPA (the issues around intellectual property are dealt with elsewhere in this issue of The Spark). However, we must be careful to oppose it in the name of a positive alternative - internationalism.
(This article will appear in the June issue of The Spark)