Foundation for sustainable social dividends

February 10, 2016

John Key's photo.

As a country, we will never get wealthy, build a strong and growing economy, and create jobs but selling to ourselves. Trade is our lifeblood. – Prime Minister John Key.

He is right about why we need trade.

But it’s not just that trade is the way we earn our way in the world, it’s what the money we earn enables us to do – get wealthier as a country so we build a strong and growing economy and create jobs.

Trade is the foundation from which we get sustainable social dividends.

And trade with fewer tariffs and quotas which we will get under the Trans pacific Partnerhsip (TPP) is better than what we have now.


TPPA true & false

February 4, 2016

The National Party has a webpage giving the facts and refuting the myths on the Trans Pacific Partnership Agreement (TPPA) which is being signed in Auckland today.

Don’t believe that?

Chapman Tripp says:

The TPP began life modestly as an initiative between New Zealand and Singapore, but the ambition was that it would evolve into a trans-Pacific agreement.  The first recruits were Chile and Brunei and the net has subsequently extended to Australia, the United States, Canada, Japan, Malaysia, Mexico, Peru and Vietnam.

New Zealand now finds itself in the vanguard of the new wave of economic globalisation.  This is a coincidence of the worldwide focus on FTAs to further integrate economies, the prominence of Asia, and the United States’ and Japan’s renewed interest in the Pacific Rim. 

Some find this uncomfortable.  Many, including the protesters at Seattle, found the birth of the WTO in 1994 similarly uncomfortable.

Difficult as change can be, this is an opportunity which will not come again.  In its final form, the TPP is the biggest free trade deal in a generation and will establish the architecture of Asia Pacific trading relationships for decades to come.  . . 

and concludes

. . . Labour’s frustration is understandable.  The TPP does not appear to include the specific reservation of rights Labour wanted.  New Zealand negotiators could perhaps have sought a more nuanced provision, such as appears in the NZ-Korea FTA, which arguably preserves some scope to expand the OIA screening regime.  It is hard to see that the more absolute language in the relevant TPP annex was a deal breaker for other negotiating parties. 

Negotiating parties tend not to publicly announce their bottom lines in advance to avoid painting themselves into a corner, as Labour has effectively done.  One cannot, of course, sensibly weigh up the overall merits or demerits of a 6000 page 12 party agreement by looking only at one provision.  To attempt this is to miss the wood for the trees. 

None of the signatory countries will be perfectly satisfied with the deal.  Each will have a particular clause or clauses that they would prefer were not there.  The US Republican Senator, Orrin Hatch, for instance is chagrined that the IP chapter grants only five, and not eight, years’ protection to biologics. 

But if support for the deal was premised on perfection, then it would go the way of the Doha Round.  It is no coincidence that TPP opponents play the single issue game.  Conflating whether one gets everything one wants, and whether the deal is acceptable overall, is a classic black hat strategy. 

The art of negotiating involves being able to push hard for one’s positions, then to stand back and work out whether (even if one did not get all one wanted) the deal on the table is better than no deal at all. 

Here, the question is even more stark.  Would New Zealand be better off inside, or outside, the tent?  MFAT’s national interest analysis reaches a firm conclusion, having weighed everything up over 276 pages.  It is respectfully suggested that this conclusion deserves to be afforded more weight than anyone’s position based on a single issue.

Those last two paragraphs nail it.

The deal isn’t perfect but it is better than no deal at all and New Zealand is better inside the tent than outside it.

The usual nonsense at Waitangi purports to be about the TPPA threatening the Treaty but the Federation of Maori Authorities is cautiously supportive:

. . .Chair Traci Houpapa said there were benefits and opportunities for Māori and all New Zealanders.

“We’ve analysed those documents ourselves and while we have a level of comfort we agree with the 12 month consultation process that the signing on the 4th of February triggers.”

Ms Houpapa said the removal of some or most tariffs for exporters would have financial benefits for the federation’s regional members.

“Māori have a predominate footprint in primary sector industries, we are land, water or sea based so our exporters have obvious benefits if the removal of tariffs are in place and TPP provides for that.”

FOMA is happy with the provisions within the agreement that acknowledge the Treaty of Waitangi, which say it must be enshrined, but FOMA recognises further analysis of what that means is required. . . 

“We recognise TPP is a complex trade arrangement which requires time to fully digest and understand. Our members support the trade benefits and want assurance that our national sovereignty and Treaty partnership are maintained. We welcome proper engagement with government and our members on this important matter,” said Ms Houpapa.

Proper engagement will achieve what all the protests prefaced on political agendas won’t.

Charles Finny says the TPPA deserves praise from Maori:

I believe that rather than being inadequate in its protections for Maori, TPP is if anything a taonga in the way it protects the rights of the New Zealand Government to discriminate in favour of Maori. This in turn, I think, adds enormous mana to Maori.

I feel Maori are being poorly advised from some quarters and it is essential that ministers and government officials spend even more time explaining the protections for Maori in the agreement and the trade benefits that will flow to Maori from it. These benefits are substantial.

TPP is an agreement between 12 countries. Pretty much all the 12 jurisdictions are home to indigenous minorities – for example, the First Peoples of the United States, Canada, Mexico, Peru, Chile, the Aboriginal people in Australia, the Malays in Singapore and Malaysia, and the Ainu in Japan.

Yet none of these peoples is mentioned in the main text of the deal and none of their Governments has secured agreement from the other members that they should be allowed to discriminate in favour of them.

In contrast Maori are mentioned, as is the Treaty of Waitangi. Article 29.6 of TPP is actually titled “Treaty of Waitangi”. It says that “provided that such measures are not used as a means of arbitrary or unjustified discrimination against persons of the other parties or as a disguised restriction on trade in goods, trade in services and investment, nothing in this agreement shall preclude the adoption by New Zealand of measures it deems necessary to accord more favourable treatment to Maori in respect of matters covered by this agreement, including in fulfilment of its obligations under the Treaty of Waitangi”.

This is pretty much the same clause that has been included in all free trade agreements (FTAs) New Zealand has negotiated since 2001. It has stood the test of time. It has allowed multiple Treaty settlements to be completed and has not had (as some critics claim will happen under TPP) “a chilling effect” on Government’s ability to adopt policies more favourable to Maori than other New Zealanders or nationals of these FTA partners.

TPP’s protection of the Treaty goes even further than earlier FTAs. It states “the parties agree that the interpretation of the Treaty of Waitangi, including as to the nature of the rights and obligations arising under it, shall not be subject to the dispute settlement provisions of this agreement.” This means it is entirely up to New Zealand to determine if any discrimination has occurred because of the treaty (so long as this is not a disguised restriction on trade).

I am frankly amazed the US and others have agreed to this provision. Our ministers and officials have done a great job achieving this. All Maori should be saying: “Well done!” . . 

He also posts on Facebook:

TPP contains two types of dispute settlement. In the media and political criticism the two are often confused. There is the standard (in WTO and all our FTAs apart from CER – the reason why apples took so long to resolve)provisions which allow parties to the agreement to challenge breaches of the agreement. This is a purely government to government process and applies to the full agreement unless specified (e.g. interpretation of the Treaty of Waitingi the dispute settlement provisions do not apply). Then, in the investment chapter only, there is the investor state dispute settlement mechanism. This allows a company to challenge a government if it believes that government has breached its commitments in the investment chapter only. Many of the critics (who should know better) suggest that governments can be sued for breaches of outside of the investment provisions. This is not possible.

It is important to stress that TPP is worded differently to NAFTA and the Australian investment treaties that were used to challenge plain packaging of cigarettes. The critics often cite these agreements as examples of why we should fear ISDS without noting the fact that TPP has been drafted with the sloppy drafting in earlier agreements in mind.

New Zealand has been agreeing (indeed advocating for ) ISDS provisions in investment treaties and FTAs since the late 1980s (see for example the original China NZ Investment protection agreement). To date the NZ Government has yet to face a challenge.

Put simply I believe these provisions provide useful security for NZ investors offshore. Some of the governments we trade with and have FTAs or investment treaties are far more likely to breach these agreements than we are.

There are multiple exclusions (e.g. our Overseas Investment laws) and multiple acceptances of our right to regulate to protect the environment, to protect human health and safety, to discriminate for Maori under the Treaty of Waitangi etc to ensure that TPP will not have the type of chilling effect on policy making that the critics maintain. And, on top of the above protections, tobacco is completely carved out of the agreement so no worries there.

But is you want to nationalise huge hunks of the economy without compensation – you do have a problem. As you would if you tried to use human health as a justification for a policy if there was no science to justify the policy. Until recently I did not think that future NZ Governments would act in this way. This is why I think we have nothing to fear and that these provisions can only benefit NZ.

Stephen Jacobi wrote an open letter to Labour leader Andrew Little. It’s worth reading in full, I have chosen the extract with most relevance to farming:

. . . I agree that the dairy aspects of TPP are not as good as they could have been and as we had hoped.  But they are in the view of the negotiators and the dairy industry the best that could have been achieved in the circumstances.  Dairy still benefits more than any other sector from tariff cuts in key markets and the establishment of new tariff quotas.  The meat deal – specifically beef to Japan – is a significant market opening about which the industry has welcomed. Without this we will not be able to compete with Australia which already has an FTA with Japan. To call the rest ‘not much’ is a serious under-estimation – tariff reductions and/or elimination for horticultural products including kiwifruit, wine, wood products and seafood cannot so easily be dismissed. Addressing tariff and non-tariff barriers for manufactured products like health technologies and agricultural equipment is also significant.  This will result in the creation of new markets as you suggest. . . 

Duncan Garner says the political consensus on free trade is over:

After decades of supporting free trade, Labour has chosen to veer left into the bosom of New Zealand First and the Greens and oppose the TPP. It’s short-sighted and totally hypocritical, in my view. It looks like the party has had its strings pulled by anti-TPP academic Jane Kelsey.

This is a serious and controversial departure for Labour, and it may yet hurt the party among middle New Zealand voters.

Do these politicians know that our bottled wine can be sold tariff-free in Canada, Japan and the US on day one of the TPP being implemented? Why would you oppose that after we as a country have fought for this for so long? Most fruit and other produce can be exported tariff-free too, as a result of the TPP.

I travelled the world with Labour and National Party ministers for years, watching them fight bloody hard for market access for our exporters. I have seen a block of New Zealand butter selling for $25 in Japan; the same with cheese. Some of these tariffs are so high our exporters are locked out.

I’ve also seen Phil Goff, Helen Clark, John Key, Mike Moore and Tim Groser invest thousands of hours over the years for this sort of deal. Rather than accuse them of selling out, I’d argue they’ve done a great job. . . 

The truth is Labour has taken a massive risk opposing the TPP. I sense the silent majority understands we have to be part of it, despite the noise from the usual suspects.

Labour is divided and bleeding over the TPP. More Labour MPs want to voice their opinions in support but they’ve been silenced.

Ms Clark, Mr Key, Mr Moore, Mr Groser and David Shearer aren’t idiots. They know New Zealand has no choice but to be on board. Foreign investment is crucial into New Zealand too.

My friend runs a hotel in rural Waikato. The Chinese bought it recently. They have invested thousands into doing it up; they employ 33 locals in and around Tirau and Rotorua. Without the Chinese owners it would have closed and 33 Kiwis would be out of work. We have no option but to be international traders. Without it we die, slowly.

I predict the sky won’t fall in. And exporters stand to make billions more in the years ahead.

We won’t get rich buying and selling to each other; we need barriers broken and global doors open.

That’s why we must continue to fight for international trade deals — knowing there will always be a boisterous but small mob who hate the idea, no matter what the facts. 

Brian Easton who is no apologist for the right, asks can we afford not to adopt the TPPA?

. . . While there has been much focus on the TPP deal, there has been hardly any mention of the WTO (World Trade Organisation) agreement in Nairobi which prohibits agricultural export subsidies. Some 30 years ago a trade negotiator commented to me that getting rid of this dumping might be the best single thing we could do for our exporters. Not only would it stop the undercutting of their markets but it would force domestic agricultural reform because the dumping nations could no longer export the surpluses arising from their subsidies. There is not a lot of this subsidising going on at the moment but without an agreement export subsidies are likely to come back – to New Zealand’s detriment.

What was not always mentioned was that the chair of the WTO agricultural committee which negotiated the deal was a New Zealand ambassador, who is the fifth New Zealand chair in succession. This not only reflects the excellence of our Geneva ambassadors and the priority we give to agriculture in the WTO, but that the powerful – most notably the US – trust New Zealand to do a good job. That trust arises from the way we behave in other trade negotiations, including the TPP. The implication is that if we defaulted on the TPPA we would damage that trust and our ability to function effectively in a wide range of other international negotiations we care about, including on climate change.

That puts us in an extremely invidious position over the TPPA. Sure, we could turn it down, losing both its benefits and its downsides. Were we to do so, however, we would compromise the trust our international activity depends upon, especially the possibility of other trade deals which would open up markets currently restricting our exports. . . 

. . . Japan and the US (indeed the whole of the North American bloc) are members of the TPP. We have been struggling for ages to get deals with these two but have been too low on their pecking order to be noticed. So you might think of the TPPA as a means of getting the deals.

That is a positive, but of course the deals have to be favourable to us. Many argue they are not although their vehemence is offset by those who argue the opposite. The truth is that there are positives and negatives and different people balance them differently. In my opinion it is not much use focussing on a subset of the outcomes and ignoring everything else. Deals are about giving and taking.

The logic in this column is that we now do not have much choice about the TPPA. The government is trapped into agreeing to it because rejecting it has implications for other trade deals and our wider international relations. That is probably what our MFAT officials are advising, although no doubt there are many diverse views in there, just as there were with Vietnam. Here is my best guess about what is likely to happen.

There is a signing of the agreement in Auckland this Thursday. The exercise is primarily ceremonial – agreeing to a common text and exhibiting solidarity. I suppose the protests outside are ceremonial and for solidarity too.

The twelve partners then go away and prepare for the implementation of the text. Some things can be done by regulation, some require a change in law. The degree to which each partner has to do this differs according to their constitutional arrangements. . . 

 

By now there are so many imponderables that there is insufficient room in a column to pursue them all in a balanced way. My guess is that, given the way we are trapped by the wider international issues, the cautious advice is to proceed on the path of implementing the legislation for the TPPA, making as much international progress elsewhere. We can then review whether we really want to go ahead with the implementation. Legislation can always be reversed, agreements abrogated, although if the government changes its mind it is better that some other partner pulls the plug. Much of what is due to happen will be less ceremonial than this Thursday.  

And Prime Minister John Key says:

. . . “Opponents claim we’re giving away our sovereignty and that’s completely wrong – the TPP has almost identical provisions to the China free-trade agreement.”

Mr Key said other countries would not be able to write New Zealand laws and the TPP didn’t increase the cost of pharmaceuticals.

“The TPP is our biggest free-trade deal, successive governments have worked to get free trade with countries like the United States, Japan and Canada for 25 years,” he said.

“It will create significant new trade and economic opportunities for New Zealand… it gives our exporters access to 800 million customers in 11 countries across Asia and the Pacific.”

And those new opportunities will create jobs here, increase our GDP and earn us the money we need to pay our way.

The deal isn’t perfect but it’s better than what we’ve got and a long way better than what we’d have if our competitors were in the warmth of the tent and we were left out in the cold.


Which century is this?

February 2, 2016

It’s hard to believe this is happening in the 21st century:

The group Return of Kings – which believes women should be controlled by men – is instructing members to meet in centres around the world including New Zealand.

“Tribal meetings” are being held in 44 international locations on February 6, and Auckland, Wellington and Dunedin are on the list.

American group leader Daryush “Roosh” Valizadeh, reportedly believes rape should be legalised on private property. . . 

On Return of Kings’ website, a list of beliefs includes a woman’s value depends on her fertility and beauty, and their emancipation has destroyed the family unit. . . 

Fortunately:

Prime Minister John Key doesn’t think Mr Valizadeh would even be allowed into New Zealand.

“My view is we have a good character test and he wouldn’t meet that good character test.”

If these people believe women should be controlled by men, how will they cope if Hillary Clinton wins the presidency?.


Want to bet . . . UPDATED

February 2, 2016

. . .  that Northland iwi meeting today will decide to not block Prime Minister John Key from Waitangi’s Te Tii Marae on Friday?

After all if he’s not there they lose the opportunity for media attention which is what they really want.

 

UPDATE:

I’m pleased no-one took my bet – Ngāpuhi have decided to block the PM from Te Tii Marae  on Friday.

 


Positivity beats petty and prevaricating

January 18, 2016

Summer holidays provide what many regard as a merciful break from day to day politics in the news.

That in turn provides an opportunity for an opposition leader who wants to get into the hearts and minds of voters to get noticed.

I came across a couple of news items in which Labour leader Andrew Little was quoted but neither was positive. In one he was petty and in the other he was prevaricating.

In the first he criticised Paula Rebstock’s New Year’s honour as political favouritism:

Ms Rebstock has been made a Dame Companion of the New Zealand Order of Merit for services to the state. . . 

 

He’s trying to make a political point and criticise the government and in doing so is making a slur on a woman who has years  of work in and for  the public service.

This was both petty and personal.

The second story repeated his assertion that Labour would defy the Trans pacific Partnership.

In the interview he is questioned about how he would do this and repeats what he’s said before about any government he leads picking and choosing which bits of the agreement it would keep.

That sounds definite but it is prevaricating because he knows that once an agreement is signed parties to it can’t decide which bits of it they will honour and which they won’t.

Kiwiblog’s poll of polls show National finished the year polling about 5% higher than it was three years ago and  Labour is about 5% lower.

One reason for this is that National’s leader John Key is usually positive which trumps  petty and prevaricating which is how Little often appears.

 

 

 

 


Rural round-up

November 3, 2015

Advertising executive’s shock speech tackles farmer depression – Rachel Thomas:

The final speech of the day was supposed to be a light-hearted talk about city boys working in the country.

Instead, advertising executive Matt Shirtcliffe stood up in front of a conference of roughly 120 farming and business folk and told them his wife was dead. 

“Depression took her life.” . . 

The presentation is here.

Kathryn Ryan interviewed Matt Shirtcliffe here.

India farmers’ ‘seeds of suicide’: 200-year old story behind a modern tragedy – Aneela Mirchandani :

In 1998, a farmer in Warangal, India killed himself after a failed crop by drinking pesticide. His body was found hours later lying amidst his one-acre crop, which was overrun by worms. This suicide was one of many that were reported on at the time; the incidence was particularly high among cotton farmers. It set off much hand-wringing in the press: how was India failing its farmers?

The stated cause of this farmer’s suicide was debt, and many anti-GMO activists have linked a spate of similar tragedies to the introduction of GMO cotton — although the genetically engineered crop was not introduced into India until 2002. But if one looks deeper, one can see the real cause: modern crops and a modern economy abutted against a rural population that had changed little since the nineteenth century. . . 

“We farm!”  Wait…  What?  (Our cows explained) – Uptown Girl:

“What do you do?”  Sometimes I identify myself with a lengthy description of my career in Ag finance, but often I just leave it at, “We farm!”
 
I also find myself using “We farm” as an explanation as to why I am alone so often at gatherings.  But the more people I talk to, the more I realize that not everyone knows what I mean when I say, “We farm”.  So I am going to explain exactly what “farming” means to my family.
 
Our farm consists of our cows, our sheep, and our row crops.  I will cover each of these over the next few posts, but will start with our cows.
 
One of my favorite parts of our farm is our cattle herd.  We have what is commonly called a “Cow/Calf operation” – meaning we maintain a group of cows who will raise a baby calf each year, and then sell the baby at weaning time.  . . 

New regulations to protect oceans:

New Government regulations to manage the waste and pollution within New Zealand’s vast Exclusive Economic Zone (EEZ) come into effect today, Environment Minister Dr Nick Smith says. 

“These new regulations cover discharges of pollutants and waste from offshore installations like oil rigs and ships in the six million square kilometres of ocean in New Zealand’s Exclusive Economic Zone and Continental Shelf. They provide clear rules that protect the ocean environment and are the final stage of implementing the Government’s new environmental law covering the ocean,” Dr Smith says.  . . 

Glerups extends wool contract with NZ Merino through 2017 – Tina Morrison:

(BusinessDesk) – Glerups, the Danish woollen slipper maker, has extended its contract with New Zealand woolgrowers to meet increased demand for its product.

The company inked a 2017 contract through the New Zealand Merino Company for 120 tonnes of wool for about $1.5 million, during a visit to New Zealand this week, and expects to return next year to secure a 2018 contract, said Glerups supply chain manager Jesper Glerup Kristensen, the son of the company founder Nanny Glerup. It also extended its 2016 contract by 20 tonnes to 100 tonnes, up from 80 tonnes this year. . . 

Red Meat Sector welcomes decision to negotiate an EU-NZ Free Trade Agreement:

Beef + Lamb New Zealand (B+LNZ) and the Meat Industry Association (MIA) are delighted that the European Union and New Zealand are set to progress negotiations for a Free Trade Agreement, as announced by Prime Minister John Key in Brussels.

The European Union (EU) is a very significant export market for New Zealand red meat products, worth nearly NZ$1.9 billion for the year ended December 2014. The EU is New Zealand’s largest market by region for sheepmeat exports, and second-largest for chilled beef and wool exports. . . 

Appointment of Independent Director to Fonterra Board:

Fonterra Co-operative Group Limited announced today the appointment of a new Independent Director Clinton Dines who will take up the Board position made vacant when Sir Ralph Norris steps down at the Annual Meeting on 25 November.

Chairman John Wilson said world-class governance is one of the Board’s top priorities, and the Co-operative needed directors with a broad range of talent and depth of business experience.

“The Board welcomes Mr Dines, an Australian, who has outstanding business and governance credentials. . . .

Fonterra Welcomes Progress towards NZ EU FTA:

Fonterra has welcomed today’s announcement in Brussels that Prime Minister John Key will begin discussions on a Free Trade Agreement with the European Union.

“This is an important first step towards a comprehensive and high-quality free trade agreement with the EU. We have free trade agreements with almost all of our other major trading partners, so this really is the missing piece,” said Miles Hurrell, Group Director of Co-operative Affairs. . . 

Wine Industry welcomes prospect of free trade with the EU:

New Zealand Winegrowers welcomes the announcement of a proposed Free Trade Agreement (FTA) between New Zealand and the EU.

Improved access into the EU would be hugely beneficial to industry growth, commented Philip Gregan, New Zealand Winegrowers CEO. ‘An FTA with the EU would be a great outcome for New Zealand’s wine industry. The EU, as a whole, represents our single largest market, with exports totalling over $460 million and representing in excess of 30% of total wine exports. . . 

 


Quote of the day

October 7, 2015

John Key's photo.

Trade is incredibly important to NZ. As a country, we won’t get rich selling things to ourselves. – John Key


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