The Ministry of Foreign Affairs and Trade has simply dismissed claims that some of the economic modelling on the TPP contained a basic arithmetical error.

The report back to Parliament yesterday of the Select Committee considering the TPP does not show any substantial reasoning behind the Ministry’s conclusion.

The error was allegedly contained with the modelling of the economic cost of extending the copyright term on recorded music from 50 to 70 years.

The Ministry’s National Interest Assessment claimed this would cost New Zealand consumers $55 million.

In fact, said an internationally recognised copyright lawyer and economist, Dr George Barker, Director of the Centre for Law and Economics from Australia National University the total cost to New Zealand of the copyright extension term was more likely to be around $250,000.

In his evidence to the committee, Dr Barker said Ministry of Business Innovation and Employment officials who did the calculations for the Ministry of Foreign Affairs had simply guessed how much the cost to New Zealand of extending the copyright term on film and television would be by assuming it would be exactly total figure as for recorded music.

“But, he said when they did that they  did not realise  that  the original calculation supplied by an Australian consultant had seriously  overestimated   the costs for music  by more than 40 times

“The Government officials may have inflated the already overestimated   annual cost of term extension by around  $49 million,” he said.

Ironically the thrust of Dr Barker’s evidence is to make the TPP more attractive to New Zealand since it would lower the estimated cost to consumers of the extension of the copyright term.

But the political significance of the error is much more damaging to the Government.


Labour has argued in its dissenting minority report that the economic modelling as presented “is not sufficient for us to be confident benefits proposed in the National Interest Analysis will eventuate. “

“Flaws in the TPPA National Interest Analysis modelling were brought to the committee’s attention. In one case, value calculations were out by a factor of 300 due to simple arithmetical error. “

But the committee’s report (in effect the report of the Government Committee members) concedes that here was some concern expressed that statements in the National Interest Analysis  about the cost of extensions to the term of copyright were incorrect: “

“In response, the ministry does not consider that there is a substantial arithmetic error in the calculations,” says the report.

The ministry did agree that one figure used in the calculation, the discount rate, could have been adjusted,  resulting in a downwards estimate of the supposed benefit from extending the copyright to $51 million – still well ahead of Dr Barker’s figures.

There is no comment on what the Ministry thought of Dr Barker’s claim that the Australian consultants had simply guestimated some numbers.

— a 7 percent discount rate would have been preferable, resulting in an average cost for copyright extension of $51 million per year, which is $4 million less than the $55 million figure included in the NIA.

Many of the 300 plus submissions received by the Committee opposed the Investor State Dispute Settlement process and the Committee says it has commissioned some research on this.

“The research showed that the TPP quantum of awards is not nearly as high as some critics suggest and that the average amount awarded was less than US$20 million.

“The median amount awarded to an investor in a case involving an OECD state was US$8.3 million while the median amount awarded to an investor in a case involving a non-OECD state was US$11.9 million,” says the report.

The report’s section on the TPP’s controversial extension of the data to protection on biologic drugs is basically a statement of the current situation.

The report does not answer charges from Medicines New Zealand that the Government is trying to be “too clever by half” and is avoiding the demands of the United States “big pharma” companies to offer much tougher protection over the extension period from five to eight years.

Labour, the Greens and NZ First have all issued minority reports attached to the Committee report.

Labour says it will not support ratification of the TPP.

Its minority report says: “The Labour Party wishes to protest in the strongest terms at the Government’s failure to effectively represent the long-term interests of New Zealand in the Trans-Pacific Partnership negotiations.

“As it stands, we cannot support the ratification of the-Trans Pacific Partnership Agreement. “

How that will play out in practice remains to be seen — the Government is introducing legislation next week and Ministers are keen to see Labour forced to vote against the Bill.

That way National will be able to portray Labour as anti-trade and wanting New Zealand to become a closed and insular society.