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Labour and the TPP: Even more stupid?

Nov 10, 2015 Politics

Labour’s shambolic response to the TPP is more juvenile than worrying.

Read Matthew Hooton’s October column on Jacinda Ardern.
Read Jacinda Ardern’s response.

This article was first published in the November 2015 issue of Metro. Photo: Getty. 

Opponents of the Trans-Pacific Partnership (TPP) are right about one thing: there was never any real prospect New Zealand wouldn’t sign. Helen Clark, who was instrumental in getting George W. Bush to join the TPP talks in 2008, put it most succinctly: it would be “unthinkable” for New Zealand to opt out of a new economic partnership representing over 40 per cent of the world economy, including the previously protectionist US and Japan. This is what New Zealand has sought for over 20 years.

Of course, US and Japanese negotiators know this, too, so it’s surprising we get anything out of trade talks. That we do is because trade negotiations don’t follow the cartoonish model anti-globalisation activists believe. Tim Groser doesn’t roll up to the Americans and say, “If you cut ice-cream tariffs we’ll buy more Prozac.” In reality, all countries know that economic integration benefits those who do it rather than those who don’t.

Consequently, trade talks move sector by sector, with countries trying to demonstrate to others how much each will gain from reform, and how to manage their politics. Thus, New Zealand promotes economic studies showing US or Japanese farmers will ultimately gain at least as much as ours from opening their markets to competition, and that reforming agricultural markets is not as much of a political trauma as they fear. When we did it in the 1980s, we remind them, fewer than 1 per cent of our farmers had to stop farming, and the 99 per cent who remained are wealthier than before.

With the TPP, of course, we didn’t get everything we wanted — but we got close. With just two exceptions, it provides for complete free trade in all goods and services for everything New Zealand exports to 40 per cent of the world economy. Did anyone really expect anything so spectacular in their lifetime? All of New Zealand’s lamb, venison, forestry products, fruit, seafood, oil, wine, aluminium, wool, iron, steel and manufactured goods will be exported without any tariffs whatsoever to every country in the TPP region. There will be free trade when we sell holidays, education courses, agri-business expertise, music, movies, art, design, computer software, business consulting and other services to 40 per cent of the world.

The first exception is beef, of which we export some fine cuts but mainly hamburger patties made from old dairy cows. For the first time, the TPP provides New Zealand with complete free trade in beef to all TPP countries except Japan. Across the entire North American continent, every McDonald’s, Burger King and Wendy’s is now a potential customer, and every five-star restaurant, too.

Even in Japan, beef tariffs will be slashed to single figures.

With the TPP, of course, we didn’t get everything we wanted — but we got close.

For dairy, there will be complete free trade for New Zealand exports except for some lines into the US, Japan, Canada and Mexico. The US’s highly protected ice-cream market will be open to New Zealand, with tariffs halved as soon as the TPP comes into force, and abolished altogether after 10 years. Japan will slash its ice-cream tariff to just 7 per cent. Infant formula into the US will become tariff-free over 10 years and into Japan over five. Cheese to Japan will be tariff-free. Every single other dairy tariff will be slashed. Again, did anyone who knows anything about the glacial nature of international diplomacy ever really expect this?

The Labour Party was not prepared for the deal to be as good as it was, but it still had three options when the talks concluded. It could have kicked for touch and said it would wait for the fine print. It could have declared victory, after Groser confirmed all five of Labour’s “bottom lines” had been met. Or it could have played to the far-left and said Labour would withdraw, as any country can do anytime in the future. Any of these options would have involved a certain integrity.

Instead, under a formula first outlined by — who else? — Jacinda Ardern, Labour declared it was unhappy with the deal, but would stay in anyway and just legislate against the bits it didn’t like. The stupidity was stunning. Would Labour really expect others to keep their commitments to us? If China and the US took the same approach in Paris, how on earth could the UN get buy-in for a binding climate-change treaty?

This was once the party of internationalists like Peter Fraser, one of the founders of the UN; of Norman Kirk, who recognised China ahead of Nixon; of David Lange, who took a lead on nuclear non-proliferation; of Helen Clark, who ratified the Kyoto Protocol. Was Ardern announcing some departure from Labour’s historic commitment to international law?

It turned out not. In less than a week, Ardern and Labour “leader” Andrew Little were decisively overruled by Phil Goff. Labour will stay in the TPP and comply with its terms.

Read Matthew Hooton’s October column on Jacinda Ardern.
Read Jacinda Ardern’s response.


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