Jane Kelsey & Lori Wallach
29 Nov 2012 – TPPA Special
Prologue – Some Context
Right-wing NZ Herald columnist, Fran O’Sullivan, had this to say about Jane Kelsey and the anti-TPPA movement,
Academics who understand liberalisation are not often quoted publicly to provide a contrasting voice.
A university as dominant in New Zealand’s intellectual life as the University of Auckland should surely be ensuring a counter-balance to Kelsey’s activism. Here’s a question for University of Auckland vice-chancellor Stuart McCutcheon. Why don’t you encourage some of your expert business academics to take an open stance on trade liberalisation instead of allowing debate to simply be dominated by law professor Jane Kelsey and her NGO mates?
Kelsey has joined up with other anti-trade activists such as Lori Wallach, from Public Citizen, and Sanya Reid Smith, from the Third World Network, to host media seminars in Wellington today and tomorrow in Auckland.
The media seminars – no photographs please – are to hear from “International Experts in New Zealand for the 15th round of TPPA Negotiations”.
Others who will front include Burcu Kilic (Global Access to Medicines Programme, Public Citizen) and union leaders.A range of other NGO players will take part in various public events next week designed to question the TPP process and shine a light on some potentially negative outcomes.
Don’t get me wrong, I have a lot of respect for Kelsey.
I have debated with her over the years and shared an occasional single malt in five star hotels elsewhere in the Asia-Pacific on the sidelines of international forums such as Apec. Regular readers of this column know I am in the pro-trade camp (with provisos) and – declaration right upfront here – have actively promoted New Zealand’s engagement in free trade agreement negotiations with nations such as the US and China.
There are plenty of others in this pro-trade camp – businesses, academics, farmers, politicians and foreign affairs officials.
But for some reason academics who are deeply across the major market liberalisation moves in the Asia-Pacific – such as the Trans-Pacific Strategic Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP) – are not often quoted publicly to provide a contrasting voice to the anti-trade lobby.
Kelsey – who, according to the latest bunch of publicity, is also now associate dean (research) – talks a good game.
But I’ve yet to read any Kelsey works that support open markets or come up with concrete suggestions about how New Zealand can deal with the impact of trade diversion if it stays out of the negotiations, which will result in deeper economic integration in the Asia-Pacific.
A university as dominant in New Zealand’s intellectual life as the University of Auckland should surely be ensuring a counter-balance to Kelsey’s activism. Particularly if it cherishes its reputation.
The university does employ highly-experienced academics such as Rob Scollay (long-time head of the Apec Study Centre) and Hugh Whittaker, from the Business School, who has studied in some depth the impact of global supply chains on international trade.
But they should merely be the nucleus of a big bunch of academics who are sufficiently versed in New Zealand’s trade agreement platforms and right across our myriad agreements, to be seen as “go-to” commentators on trade issues.
It is a fundamental problem because there are issues relating to the TPP which do need to be debated.
The Prime Minister has said New Zealand won’t sign up to the Trans-Pacific Partnership free trade deal unless it includes an agreement to progressively abolish tariffs on agricultural products exported to North America.
Key also told his post-Cabinet press conference on Monday that it would not be a “good look” if New Zealand made concessions that undermined the status of its drug-buying agency, Pharmac. It’s highly unlikely that New Zealand would concede these areas in the first place.
It would make a nonsense of its history of mainly signing up to top-quality, comprehensive bilateral free trade agreements, or regional trade deals, if New Zealand allowed itself to be pushed about on this score.
The negotiations will be tough when it comes to reducing high agricultural tariffs.
Canada’s dairy tariffs are as high as 300 per cent. Canada will argue – yet again and falsely – that Fonterra is a state trading enterprise.
The agricultural upside will be considerable if the TPP goes through and tariffs are removed over lengthy phase-in periods.
But the real issue – which is not adequately debated – is the intellectual property component of the TPP.
New Zealand’s concentration on agricultural liberalisation might be blinding negotiators to the potential impact of adopting the US IP platform. The US – like Singapore before it – wants to set the rules for what is in effect a major economic integration of the Asia-Pacific.
Our companies in the ICT and high-tech manufacturing space have mixed views on what is proposed.
First problem is they don’t know enough of the TPP detail.
Second problem is an emerging sense that not enough intellectual thought has gone into studying the upsides and downsides of the proposed IP framework or into exactly what platform New Zealand should be pushing to enable its own companies to thrive in 21st century trade regimes.
This is important.
Victoria University has done some work in this area.
But I would argue that this is fruitful territory for the University of Auckland.
Key said on Monday that for New Zealand to do a deal, “It has to be a deal on our terms”.
Trouble is, not enough open work has gone into determining what those terms should be for industries other than the agricultural sector.
Let’s face it: Fonterra has not taken advantage of all the concessions New Zealand scored for dairy in the China FTA (such as for infant milk formula).
But the dominant business voices on trade are mainly from agriculture.
It is not too late to ensure NZ’s interests on the IP front are advanced. Stuart McCutcheon take note.
Source: Anti-trade camp running debate
Which puts the following into proper context…
Citizen A – TPPA Special
Issue 1: Why should NZers be concerned with signing up to the TPPA?
Issue 2: Why would our Government agree to a deal that didn’t benefit NZ interests?
and issue 3: How much is the TPPA a manifestation of the American-Chinese new cold war in the Pacific?
Re-published with kind permission from Tumeke
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This week has been a busy one for Dear Leader…
Trans Pacific Partnership Agreement
Perhaps the most far-ranging trade agreement that New Zealand has been involved with, since CER with Australia took effect in 1983, the TPPA (Trans Pacific Partnership Agreement) is currently under negotiation between eleven nations (including New Zealand).
Negotiations are being held in absolute secrecy, with no Parliamentary or public oversight. Quite simply, New Zealanders have no idea what National is signing up to, until the deed is done and we are committed to god-knows-what.
There are suggestions that part of the TPPA may contain,
(1) The right of corporations to sue governments for “loss of profits”. This is no better illustrated than the recent attempt by tobacco companies to force the Australian government to back down over plans to introduce plain-packaging in that country. (See: Tobacco packaging: cigarette companies lose Australian court case)
Tobacco manufacturer, Philip Morris, moved it’s subsidiary shares from Australia to Hong Kong so as to exploit a 1993 trade agreement between the two jurisdictions and was thus able to sue the Australian government. (See: Smoke signals: plans of Big Tobacco plain to see)
This barely-concealed attempt to exploit an obscure trade agreement should serve as a sign of things to come.
(2) Stricter intellectual property rights that may undermine Pharmac’s ability to buy cheaper, generic medicines, after patents have expired.
It is by this process that PHARMAC can purchase cheaper drugs from overseas and pass those savings on to all New Zealanders. The US pharmaceutical industry recognises the threat that PHARMAC poses to their profits – especially if the PHARMAC-model is adopted by other nations.
More of what pharmaceutical corporations are demanding can be found in this article, by Keira Stephenson; TPPA could ‘gut’ Pharmac, say critics.
John Key recently stated,
“We’re not prepared to see dairy excluded. And in terms of abolition, yeah, I mean that’s the aim. There might be a time frame under which clearly there’ll be a phase out. But in the end New Zealand can’t sign up to the TPP if it excludes our biggest export.”
Key also said it would “not a good look” if concessions undermined the status of Pharmac.
Unfortunately, we have good reason to be concerned. If past experience is anything to go by, John Key’s reassurances are mostly meaningless and more changeable than our weather. Key has changed his position on matters such as,
- not raising GST (See: Key denies ‘flip flop’ over GST increase)
- not implementing youth rates (See: Govt reintroduces youth wage)
- not selling state assets (See: Highlights from Key’s 2008 ‘no job cuts’ speech)
- Capping state sector workers, and not cutting numbers (See: Highlights from Key’s 2008 ‘no job cuts’ speech)
- To create 170,000 new jobs (See: Unemployment up to 7.3pc – a 13 year high)
- To implement a nationwide food-in-schools programme (See: National launches its Food in Schools programme, Key in poverty ‘la la land’)
- Implementing tax cuts in 2009 and 2010, and assuring the public that they were “appropriate for the current economic and fiscal conditions” (See: National Party Tax Policy 2008, John Key: Address to the CEO Summit, APEC Business Advisory Council)
- Double standards over sale of farmland to overseas investors (See: Investors should not have to live here, Key says)
- And statements in 2010 and this year, that taxpayers would not be giving subsidies to Warner Bros, as inducements to keep “The Hobbit” in New Zealand. Then gave extra tax breaks an cash subsidies to Warner Bros. (See: PM: I’m not going to write cheques NZ can’t afford, PM’s ‘special’ movie studio meeting, Key on Hobbit deal: ‘It was commercial reality. We did the business.’)
If there is one thing we’ve come to expect from John Key – he can flip-flop on his promises and committments with all the ease of a Nigerian scammer.
So when Dear Leader says he is committed to…
“We’re not prepared to see dairy excluded. And in terms of abolition, yeah, I mean that’s the aim. There might be a time frame under which clearly there’ll be a phase out. But in the end New Zealand can’t sign up to the TPP if it excludes our biggest export “…
And, it would “not a good look” if concessions undermined the status of Pharmac…
We should immediately be concerned.
The man is simply not to be trusted.
In October 2010, Key categorically rejected spending taxpayers money on corporate welfare for the movie industry,
Mr Key reiterated that the Government was prepared to move at the margins when it came to money but it did not have an open chequebook.
He said Warner Bros were asking for “lots and we’re not offering lots”.
“If it’s just simply a matter of dollars and cents, I’m just not going to write out cheques that New Zealand can’t afford.”
Two years later, and our Prime Minister is dishing out taxpayers money to the movie industry like it’s growing on trees,
The Government wants to offer better incentives to get more foreign TV shows filmed in New Zealand.
Prime Minister John Key, in Matamata yesterday for the opening of the Green Dragon Pub at the Hobbiton Movie Set Tours, said attracting television series was the next step to aiding the creative industry after movie work such as Sir Peter Jackson’s The Hobbit.
“Blockbuster movies are very, very large … but they have big peaks and troughs and during the troughs that’s really difficult for people working in that field, so we can fill those gaps with television,” Mr Key said.
Under Mr Key’s lead the Ministry of Business, Innovation and Employment, the Film Commission and the Inland Revenue Department are jointly reviewing the incentives offered to overseas producers to film TV series in New Zealand.
And yet, on 16 September this year, Key specifically rejected all suggestions of subsidies to other industries – especially exporters – to help save jobs,
“But there will always be job losses, Shane. There will always be parts of the economy where, for whatever reason, there’s a change in pattern. So years ago, we all did different things from what we’re doing today. The point for New Zealand is if we’re going to sell more to the world than we buy from the world, if we’re going to earn our way in the world and not spend more than we earn, then we have to have a highly focused, competitive economy. And we need to have three things: access to capital, access to markets and access to skilled labour.
If I just take you back to your point, many of the countries you are pointing to that are paying out these levels of subsidies are backed up by governments that are hugely indebted. So the whole problem in Europe, the whole reason why you’re seeing countries like Spain, like Greece and right through Southern Europe in the sort of mess they are is they have huge levels of government debt. So the answer in New Zealand is not necessarily coming up with a make-work scheme funded off taxpayers’ taxes. It comes off New Zealand having a competitive industry, making sure that we have flexible labour markets, making sure that we are investing in things that will make the economy go faster, like science and innovation.”
When it comes to holding two diametrically opposed beliefs, simultaneously, (aka ‘doublethink‘) John Key excels.
I cannot recall any politician in the last forty years who can flip-flop so easily on any given issue.
Statistics & John Key
When the Household Labourforce survey was made public on 8 November, the data showed a dramatic leap in unemployment from 6.8% to 7.3%. (See: Unemployment up to 7.3pc – a 13 year high) There are now at least 175,000 people without work in this country.
Dear Leader’s response?
He rejected the figures outright, in this Fairfax story,
” In the end these things bounce around quite a bit… it’s at odds with what most of the economists thought would happen. Like a lot of surveys, from time to time, it can produced usual data, let’s see what happens in the next one. But it’s not going to make the Government change tack. These are challenging international conditions … but I don’t think we should change course I think we’re on the right track. “
On TVNZ’s Q+A, on 25 November, Key was just as reluctant to accept the HLFS results,
” The Household Labour Force Survey is a survey. It’s a survey of 15,000 people. It has a quite significant margin of error and it bounces around a lot. Quite a number of the bank economists, in their review of the last number, said it’s notoriously volatile. So I can’t tell you whether it might go up a little bit or go down a little bit. What I can tell you is that’s not the relevant point. The relevant point is is the government doing everything it can to create an environment to allow businesses to create jobs? “
Which makes it even stranger and more comical when – having trashed the reliability of the Household Labour Force Survey over the last month – he suddenly invokes the very same Household Labour Force Survey to back up his position (which depends on what day it is),
” There’s always a range of different data series. QS [Quarterly Survey?] is one. That’s obviously another. Household Labour Force is another. All I can tell you is we’ve looked at [garbled gibberish] … The concensus view and that was the previous government’s view as well, is that HLFS was the best measure of the economy. Sometimes it produces numbers I don’t like. But if you look at their data series what they are saying is, in broad terms, over the last four years, the number of jobs in manufacturing is roughly about the same.” – John Key, 27 November 2012
It is fairly obvious to the ordinary bloke and blokette in the street that relying on John Key’s word will generally result in disappointment.
Back to Pharmac, the TPPA, and John Key’s “reassurances”
Last year, on 13 June, Fairfax reporter Nikki MacDonald wrote an excellent piece on how TPPA negotiations may impact on Pharmac’s drug-buying policies,
Pharmac was established in 1993, to rein in rocketing drug costs and distance the government from drug-buying decisions. Its task is to spend its $710 million annual budget to achieve the best health gains for Kiwis.
Broadly, Pharmac works by referring drug-company funding applications to the Pharmacology and Therapeutics Advisory Committee, made up of senior doctors and pharmacists, to examine whether or not the drug is effective, and whether it is significantly better than anything else already on offer.
The committee then gives the drug a low, medium or high funding priority and Pharmac’s board decides whether or not its benefits justify the price tag.
Pharmac’s cost-benefit analysis, which takes into account average patient age and the number of good-quality years gained by the treatment (called quality adjusted life years, or QALYs), is similar to that in Australia’s scheme.
The major difference is that Australia funds everything meeting a given cost-effectiveness threshold.
New Zealand, on the other hand, has a fixed budget, so has to decide whether it can afford to fund a drug in any given year. Pharmac must also consider the opportunity cost of a funding decision – what do you sacrifice to spend $20 million on the latest cancer drug?
Pharmac uses various bargaining strategies so it can buy more for its drug dollar. These include:
Reference pricing: Where a newer, patented drug has similar benefits to a cheaper generic drug, Pharmac might subsidise the newer drug only to the same level as the lower-cost alternative. The drug company then either drops its drug price to the subsidy level, or the consumer pays the difference.
Sole-supply tenders: When a drug patent expires, Pharmac tenders to get the best price for a generic replacement. Drug companies can offer much cheaper deals because they’re assured of a large market share.
A 2004 price comparison found Australia paid up to 20 times more than New Zealand for some generic drugs, because it did not use tenders. (Legislation has now bridged some of that difference, by enforcing staged price drops for generic drugs.) A Canadian study found generic drugs were up to 93 per cent, and on average 58 per cent, cheaper in New Zealand.
Package deals: A costly new drug that works well but is not cost-effective can be funded by negotiating cheaper prices for other drugs made by the same pharmaceutical company. Glivec was funded using this method.
Negotiated contracts. On the numbers Pharmac has been spectacularly successful. In 1985, a basket of commonly prescribed drugs cost 37 per cent more in New Zealand than in Australia. Between 1993 and 2006 New Zealand’s drug spending grew by 11 per cent, while Australia’s soared by 212 per cent. Pharmac estimates its aggressive pricing policies save almost $1 billion a year.
Most New Zealands either have no idea what the potential impact on Pharmac may be, if US pharmaceutical companies get their way through TPPA negotiations – or are too busy watching the latest “Masterchef Botswana”, “X Factor Bolivia”, or gawking at a celebrity’s tits on some vacuous “reality” show.
It is only when Pharmac’s ability to buy cheap drugs is undermined by the full power of pharmaceutical companies, levied through the TPPA, and the costs for medicines suddenly doubles, trebles, quadruples, will New Zealanders wake up to the fact that we’ve been rorted.
And it all happened on the watch of our smiling, waving, Prime Minister – that ever so-nice Mr Key.
By then it will be too late.
So when Key reassures New Zealanders that,
“…it would “not a good look” if New Zealand made concessions that undermined the status of its drug-buying agency, Pharmac.”
… it is time to be worried.
Like all his other assurances, pledges, promises, and committments that have been broken or backtracked, our Prime Minister is not a man who stands by his word.
When it comes to the health of our economy, he has failed.
Let’s not allow him to do the same to our own health.
US free-trade deal suspect (19 Dec 2010)
Pharmac: The politics of playing god (13 June 2011)
Pharmac faces trade ‘threat’ (26 Oct 2011)
No TPP deal unless dairy and Pharmac are in – Key (26 Nov 2012)
TPPA could ‘gut’ Pharmac, say critics (29 Nov 2012)
Navigating the choppy waters of the TPP (1 Dec 2012)
Right Wing Reaction
Anti-trade camp running debate (28 Nov 2012)
The Standard: TPP Negotiations Auckland next week
Gordon Campbell: Gordon Campbell on the NZ Herald’s attack on Jane Kelsey
Idle Thoughts of an Idle Fellow: TPP in crisis?
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