Dear Labour Party Conference
Labour caucus’ five non-negotiable bottom lines for the Trans-Pacific Partnership Agreement were pathetic enough, especially when compared to the comprehensive remit from the Party conference in 2012.
Andrew Little, 23 July 2015: “we will not support a TPP agreement that undermines New Zealand’s sovereignty”. Well it does. Even its supporters admit there is a trade-off of sovereignty for what they have been desperately trying to spin as net gains. Labour has therefore already committed to oppose the signing of the TPPA.
Now even the 5 non-negotiable bottom lines have turned to blancmange. I’ve spent the past 36 hours pouring over the massive technical text to understand some of the complexities and what they mean for current and future policy space in Aotearoa New Zealand.
Yet, within a day the Labour leadership seems to have decided the text is fine aside from the narrow issue of the right to restrict sales of residential property to foreign owners. No problems for Pharmac and Treaty of Waitangi is ‘upheld’. Unbelievably, corporations cannot sue the government for regulating in the public interest! And of course there are meaningful market access gains for farmers.
Andrew, you’ve got to be joking! Is this simply what National’s Trade Minister Tim Groser and chief negotiator David Walker, and TPPA-cheerleader Helen Clark told you, and what you desperately want to believe?
Reality check for the Labour Party conference floor. The following is why the TPPA fails to satisfy the other four non-negotiable bottom lines, in addition to the one the caucus concedes..
Bottom line 1: “Pharmac must be protected”. This was always a weasel-worded principle: No one has ever claimed the existence of Pharmac was under threat, just the effectiveness of its purchasing regime.
We have to assume that the caucus was acting in good faith in devising these principles and it really meant that the effectiveness of Pharmac, with its capped budget, was not undermined by higher medicine prices. The threats were two-fold: process and industry monopolies over medicines and medical devices.
Thanks to a massive campaign here and internationally the government had to stand firm on some of the more extreme proposals. But the threats remain.
On process, there is now a review mechanism that will give the Big Pharma companies added leverage to lobby and object to Pharmac’s decisions.
Access to cheaper generics will also take longer under various changes to the patent regime. Most significantly the new generation biologic medicines remain at high risk of being subject to longer monopolies, dragging out access to generics as these become the most effective – and most expensive – medicines.
Australian health academic Deb Gleeson has written a compelling technical explanation about how that is likely to happen there, which is basically the same as NZ. She concludes: “The provisions relating to biologics are problematic and ambiguous. They appear to commit countries to providing either eight years of clinical trial data protection, or five years of clinical trial data protection along with other measures to deliver comparable outcomes. While the Australian Government has said that the regime for biologics in Australia will not change, the language leaves room for continued pressure by the United States to ensure that TPP countries prevent biosimilars from entering the market for eight years. The definition of biologics is very broad and likely to limit countries’ flexibility in determining the scope of the obligation. A review by the TPP Commission of both the length and scope of protection after ten years provides a further mechanism for US pressure to expand and extend monopolies on expensive biologics.”
Bottom line 2: “The Treaty of Waitangi is ‘upheld’.” Presumably Labour thinks all is well because National has included the Treaty of Waitangi exception Labour developed for the Singapore NZ FTA in the face of massive Maori criticism. I have always said it is inadequate. The exception requires
(a) the government to think there is a Treaty issue or another issue that impacts particularly on Maori (plenty of examples where that hasn’t happened even when the Waitangi Tribunal says there is);
(b) the government to be prepared to act on the issue (ditto);
(c) the action to be to provide preferential treatment, rather than changing a generic law (such as mining);
(d) the government’s interpretation of the Treaty of Waitangi cannot be challenged, but the action can still be contested in a state-state or before an investor-state tribunal as being a means of ‘arbitrary or unjustified discrimination’ against persons of another TPPA country (an Italian mining company challenged the post-apartheid black empowerment rules as unjustified discrimination and the South African government settled). Maori have no right to participate in any dispute, just as they have been excluded from the process of negotiating the TPPA itself; they would have to seek permission to provide an amicus curiae brief.
The Crown has implicitly conceded the exception provides less than full protection by adding a last minute special exception in the TPPA intellectual property chapter to a requirement that it adopt a plant varieties treaty that Maori have heavily criticised and was a major issue in the WAI 262 claim on traditional knowledge.
At the very least Labour’s leaders might have waited for the Waitangi Tribunal’s inquiry into the TPPA, which is now likely to be expedited following the release of the text. An independent expert is expected to analyse the scope and effectiveness of the Treaty exception.
Bottom line 3: Corporations cannot sue the government for regulating in the public interest. This is THE most unbelievable and ignores the compelling international evidence and analysis of a crisis in the investor-state dispute settlement system.
Of course investor-state dispute settlement will be used to sue the government for such measures. That’s what indirect expropriation, minimum standard of treatment, and non-discrimination rules are about.
The general exception rule (which itself has only succeeded as a defence in 1 of 44 disputes in the WTO) does not apply to the investment chapter. In some cases, the special ‘protections’ for public policy in the chapter are weaker than existing NZ agreements and will become available to other countries with which we have FTAs (such as China, Korea and Taiwan). Even the special tobacco exception from ISDS is an opt-out, making it a prime target for industry lobbying (and doesn’t apply to disputes brought by TPPA states to enforce this and other chapters of the TPPA).
The real doozy is Article 9.15 on ‘Environmental, Health and other Regulatory Objectives’ – it says nothing in the chapter stops a government from doing what the chapter allows it to do anyway!
The TPPA text tries to limit the scope of such claims, but the words are vague and investment tribunals have a proved track record of giving them whatever meaning they like, even if they are supposedly bound by the parties’ own interpretation. And that doesn’t stop an investor from threatening to, or bringing, a dispute with the goal of getting government to back off.
In addition, the investment chapter gives investors from TPPA countries a raft of new rights and protections not available to local firms and not in existing NZ agreements. For example, even if a PPP toll road, a privatised water contract, an agreement that allows oil exploration or a damn project requires a dispute to be settled in New Zealand’s courts, the investor can take it through ISDS instead.
There are a few procedural changes that try to give the investment tribunals some more credibility. But the ‘judges’ are still largely practising investment lawyers with no conflict of interest rules (just a promise to develop a code of conduct before the agreement comes into force). The hearings are still ad hoc hearings with no predictable rules or precedents and no right of appeal. Amicus briefs require permission. Hearings will be public, but documents can still be withheld as confidential. Punitive damages can’t be awarded, but there is no limit on compound interest (which at times comprises half the amount awarded). And more …
Bottom line 4: commercially meaningful market access gains for agriculture. Come on – not even Groser is claiming that – just that it will get better as the TPPA bus rolls on. A mere $259 million a year in tariff cuts ‘once it is fully implemented’ – they almost never say that means by 2047! Of course tariff cuts do not simplistically convert into economic gains even if that was the economic model for an advanced, high-innovation economy New Zealand needs for the 21st century.
The government refused to release the economic modelling it relied on when projecting $2.7 billion gains to the economy in twenty years until posting it the night before last. Economists are now decoding the methodology and assumptions, which are always unreal.
David Walker conceded to me the other night that the study does not include quantitative or qualitative costs, such as the expected $55 million p.a. for extended copyright terms, the potential stifling of innovation through new IP and e-commerce rules, exposure to investor-state disputes (Australia has reportedly spent $50 million so far on costs defending plain packaging tobacco and it is not yet at the substantive hearing), damage caused by inability to rein in too big to fail banks and the shadow banking system, and a range of other substantive and regulatory constraints we don’t yet know about.
IN SUM – The Labour causes can’t hide any longer behind the claim it has to wait until it can see the text. The text shows that the TPPA fails all five of the ‘bottom lines’. If these principles are truly ‘non-negotiable’ then the parliamentary Labour party has no option but to oppose If TPPA.
To do otherwise it not only to sell out the Labour party and its principles, but the people of New Zealand who expect it to keep its word and to show it understands the increasingly invasive nature of this form of corporate-led treaty whose function is to block progressive governments making real change