WHY LABOUR MIGHT RELUCTANTLY SUPPORT THE TPP

Labour looks unlikely to oppose the Trans Pacific Partnership Agreement.

The Caucus debated the TPP at its Rotorua meeting on Monday and though it has yet to come to a definitive “yes/no” answer the party’s Trade spokesperson, David Parker, believes opposition could be a step too far.

But he is stressing any final decision by the party will depend on the fine print in the agreement.

Labour will not countenance any erosion of the powers of Pharmac but may have to live with an extension out to 70 years on patents which could have an impact in the pharmaceutical area in that it will constrain the development of generic drugs.

And Mr Parker said they would not agree to any agreement which “put you inappropriately at risk of being sued for proper regulation.”

“We would oppose it if limited any future Government’s ability to regulate for environment, public health, safety or competition policy for example,” he said.

However the party’s powerful union affiliates do not share Mr Parker’s views.

Though they don’t publicly say so, union insiders are highly critical of the TPP and argue that it is much more than a traditional trade agreement and imposes too much on New Zealand sovereignty particularly in the intellectual property area.

INVESTOR STATE DISPUTES SETTLEMENTS — THE BIG CHALLENGE FOR THE LEFT

Of course the big obstacle for many on the left is the Investor State Disputes Settlement procedures which would allow corporates from other TPP states to take the New Zealand Government to independent tribunals which could levy huge penalty payments on to the Government as well as stopping it from regulating to control some economic activities.

But when it comes to the crunch it may be that the fear of the ISDS procedure has been hyped a bit much by TPP opponents.

At the recent Fabian Society seminars on forming a Progressive Government Michael Cullen even argued that some New Zealand companies might want to use the procedures themselves.

That’s not to say that Mr Parker is not concerned about the potential loss of New Zealand sovereignty posed by the agreement. He is and particularly with reference to land and property sales.

But his main point is the size of the TPP.

WHY THE TPP IS IMPORTANT

“Forty per cent of the world’s GDP in a trade agreement and if there are tariffs dropping and we’re not in it then not only do you have the opportunity cost of your lost benefit but you face the risk other countries in the TPP who are substitute sources for our products will become more competitive relative to us,” he said.

What worries the unions is not so much the possible loss of traditional jobs as the fear that the TPP’s tough intellectual property provisions could choke off jobs in the “new economy”.

Labour is already exploring these possibilities through Grant Robertson’s year-long Commission into the Future of Work.

That will identify where the new jobs are and how they can be supported by a future Labour Government.

CONTROLS ON LAND SALES TO FOREIGNERS

Another big issue for Labour which has emerged into the public glare this week is the possibility of limitations on the ability of a Government to impose controls on land sales.

Mr Parker says that has happened in the Korea Free Trade Agreement where the only controls that are permitted are those that were in place when the Agreement was signed.

WHY PARKER SAYS STEPHEN FRANKS IS WRONG

But he says the China Free Trade Agreement is different and does permit New Zealand to impose controls on land sales to foreigners.

This is contrast to a reading of the Agreement yesterday by Wellington lawyer Stephen Franks which was quoted on POLITIK yesterday.

Mr Franks argued that Chinese citizens could not be treated any differently to Australians over land sales and Labour would exclude them from its policy to band urban property sales of existing houses to foreigners.

“I was in Cabinet when we checked this before we signed the Agreement,” he said.

“I remember it because I was the one who raised it.

“We delayed Cabinet Policy Committee approval for the agreement to go to Cabinet before we had confirmation on that very point.”

And Article 139 of the Agreement provides that existing trade agreements stand and are not affected by the FTA nor do they affect it.

“Earlier agreements – like CER with Australia – are not affected and do not flow into the China FTA,” he said.

“If NZ wants to further restrict the sale of farmland or residential land to Chinese investors, we can.”

China has imposed further restriction on land sales which apply to New Zealanders since the FTA was signed.

Mr Parker knows that the debate within Labour will be complex and detailed.

And it can’t really happen till they can see the text that has been negotiated by Trade Minister Tim Groser.

For the unions, it will be a test of their lobbying ability and for Mr Little, an indication of how pragmatic he is ready to be on his campaign to occupy the ninth floor of the Beehive.

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