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PoliticsMay 23, 2017

Has post-RIP TPP, minus USA, already been OKed by NZ MPs? IMO, No


It seemed Donald Trump had killed the Trans-Pacific Partnership, but it has sprung back to life with Bill English’s visit to Japan. His confidence that the NZ parliament has already approved a TPP11 is misplaced, however, writes Andrew Geddis.

As everybody should very well understand, the primary rule for surviving a horror movie is: “When it appears you have killed the monster, NEVER check to see if it’s really dead.” Because if you do – well, you know what happens next.

So it really ought to be little surprise that, having poked the prone body of the Trans-Pacific Partnership (TPP) with a stick, the National government has discovered that it appears good to go for another few fright scenes yet. You may remember the TPP – a far-reaching trade and investment agreement amongst 12 Asia-Pacific nations – from comprehensive coverage like this from RNZ News.

Before examining the TPP’s reanimation and what that might mean here in New Zealand, let’s recall the circumstances of its apparent death in November of last year. According to Article 30.5.2 of the TPP text, the agreement between the 12 signatory nations could not come into force unless and until the US ratified it.

That was a quite deliberate provision. The US involvement in the TPP – and the trade access to the US market this would deliver – was considered to be so vital that if it wasn’t going to put the agreement into effect, then the other signatory nations didn’t want to be bound by the agreement either. Donald Trump’s election, and subsequent signing of an executive order removing the US from the TPP, thus seemed to doom the measure completely.

Bill English with Japan’s Prime Minister Shinzo Abe last week. Photo: TORU HANAI/AFP/Getty Images

Until, that is, Bill English’s recent trip to Japan uncovered previously unsuspected enthusiasm in that country for bringing the TPP into force without any immediate US involvement. This new proposed arrangement, which seems to have been officially baptised “TPP11”, would keep all the original provisions in place but permit the agreement to enter into force without the US being a part of it (for now, anyway).

But wait – what? Wasn’t the main selling point of the original TPP that it would get us (and the other nations involved) free access to the US market? After all, that is why we agreed to specific US demands to do things like extend our term of copyright protection from 50 to 70 years and grant a longer period of patent protection for biologic drugs. So why would we now want to implement a TPP11 that still gives away all those benefits to US commercial interests, but doesn’t get us the promised free trade access to the US in return?

Well, one argument is that the remaining trade benefits we’ll get with the other 10 nations. In a press release, Trade Minister Todd McLay touted:

Japan’s National Graduate Institute of Policy Studies has estimated that TPP11 will increase New Zealand’s GDP by 3.4% and is worth an additional $2.5 billion to our economy after 10 years.

That prediction seems a little bit odd, given that back in April 2015 MFAT were claiming that the original TPP (including, remember, access to the world’s largest economy, the US) was “estimated to add at least $2.7 billion a year to New Zealand’s GDP by 2030.” One might well ask just how this new, scaled back trade agreement is going to provide us with effectively the same economic benefits as the original deal purportedly offered.

But perhaps trade economists are a bit like lawyers, and for any situation (in John Key’s immortal phrase) “I can provide you with another one that will give you a counterview.”

In any case, there’s a new argument being put forward for the TPP11’s importance. As reported here:

Another benefit of the TPP would be 11 countries committing to regional integration and stability at a time when the rest of the world was troubled by “darkened clouds of protectionism and nationalism”, Mr English said.

So apart from any dollar benefit to us as a nation, the TPP11 can be a standard flown for international free trade; a statement of faith in the fundamental benefits of remaining interconnected and outward looking. In fact, maybe we could update our national flag to reflect that point of view, because that’s an itch that we really haven’t properly scratched, have we now?

But cynical snarkiness aside, these are debates worth having. Does it make sense for New Zealand to give away its bargaining cards with the US now in the hope that the US sees the error of its ways and agrees to join the TPP11 at some later date, or should we hold on to them in the hope we may be able to negotiate some bilateral trade agreement down the line?

Is our future at the front of the global free trade movement, irrespective of any costs to our domestic policy and constitutional arrangements? Should we seek to continue to grow our beef and dairy exports in spite of the deep harm that cows seem to be causing to our land and waterways?  And so on.

We might expect that if and when the TPP11 parties come to an agreement, our elected representatives will be able to sit down and collectively discuss these sorts of matters before binding us to the deal. After all, that’s what they got to do with the TPP itself, when the grand prize of US involvement was on the table. Surely without that benefit on offer, they’ll need to regroup and think whether the remaining benefits justify any domestic costs that we might incur.

Or: maybe not. For during an interview with Susie Ferguson on RNZ’s Morning Report, Bill English had this to say:

SF: [The TPP 11 is] a different beast now, so are you going to have to go back to parliament?

BE: Look, that would depend on whether the content of the agreement had changed significantly … ah, that’s the advice I have …

SF: Is it not a big enough change in itself with the US, the biggest individual partner, pulling out?

BE: My advice is that’s not necessarily the case, it would only involve some technical changes in accession to the agreement.

At which point the constitutional lawyer in me gets all “what you talkin’ ’bout, Binglish?” Here’s why.

Treaties with other countries get negotiated and signed by the executive government under what is called the “prerogative power”. It is only after such agreements have been negotiated that parliament gets to scruntinise them in two ways.

Under parliamentary standing orders, any important treaty must be presented to the House of Representatives for examination. This examination is conducted by the Foreign Affairs, Defence and Trade Committee.

In the interview above, Bill English seems to be saying he’s received advice that because the original TPP has undergone this scrutiny and been reported on, there’s no need for a new TPP11 to go through the process again. That strikes me as formalistic nonsense.

Yes, the aim appears to be for the TPP11 to contain all the same substantive provisions as the original TPP. But these provisions were examined against the background expectation that the agreement would deliver us a long sought after free trade deal with the US. All the cost-benefit analysis in the select committee’s report proceeded on this basic assumption.

Donald Trump displays the executive order withdrawing the US from the Trans-Pacific Partnership. Photo: SAUL LOEB/AFP/Getty

So to now say, “oh – parliament already has looked at this deal and decided it is OK, so there’s no need to go back again” when the very basis of the deal on offer has fundamentally changed is flat out constitutionally wrong. It would fundamentally undermine the already limited role that parliament plays in holding to account the executive government’s use of its foreign relations prerogative.

The second form of parliamentary scrutiny is that when the executive government tells treaty partners that New Zealand’s domestic laws will be amended, parliament must enact any legislation needed to make those changes. And so the Trans-Pacific Partnership Amendment Act 2016 was passed to do just that in relation to the original TPP by extending the period of copyright protection, giving greater patent protection for biologic drugs, and the like.

Therefore, if the TPP11 simply replicates the original agreement’s terms, parliament already has passed all the legislative changes it would require. However, these amendments do not yet have legal force, as section 2 of the Act states:

(1) This Act comes into force on a date appointed by the Governor-General by Order in Council.

(2) That date must be the date on which the Trans-Pacific Partnership Agreement, done at Auckland on 4 February 2016, enters into force for New Zealand.

Now, here’s the issue. Can the Governor-General appoint the date that some future TPP11 enters into force to bring the Trans-Pacific Partnership Amendment Act 2016 into force, therefore meeting New Zealand’s treaty obligations under that TPP11?

Well, that depends on whether the TPP11 can be deemed to be the same thing as s2(2)’s “Trans-Pacific Partnership Agreement, done at Auckland on 4 February 2016”. And I’ve previously argued that there’s very good reason to say that it cannot be; so any attempt to bring the amending legislation into force without first getting Parliament to change the commencement section would be unlawful.

Which sets things up rather interestingly. The Trans-Pacific Partnership Amendment Act 2016 only passed into law by a single vote, with National, ACT and United Future together agreeing to it. What odds that this governing arrangement will exist following September’s general election to make the necessary amendments to the commencement section? Or might the legislative change needed to bring the TPP11 into force depend instead on the support of some other governing partner – such as Winston Peters and the NZ First Party?

For despite the advice that Bill English may have received, I think parliament will again have to have its say on this matter – whomever that may be.

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