TPP has many dimensions. That complicates any attempt at a cost-benefit analysis.
One dimension is time. The costs and benefits will be different in 15 and 25 years from those on year 1 or 5. Some, particularly some opponents, focus on the near-term impact and some, particularly some supporters, focus on the long-term impact.
A second dimension is the net benefit versus the gross benefit. Some gain and some lose, which will also change over time. In a sense those who lose (some suffering illnesses?) subsidise those who gain (kiwifruit growers). The Australian Productivity Commission is among the sceptics about the overall net benefits.
A third dimension is what gains (and losses) are attributable to the agreement and what would have happened anyway. Tim Groser attributes the greater-than-forecast gains in sales to China since 2008 to the free trade agreement (FTA) when most of them might well — probably would — have happened anyway, given the spike in China’s demand for milk products. (If he is right, then would the fall in the past year also logically have to be attributed to the FTA?)
Related to this is a fourth dimension, better “behind-the-border” access to officials to sort out problems. Some say this is nowadays a more important dimension than border tariffs and quotas and has proved to be so in the China FTA.
That highlights the fifth dimension: membership of the club. Groser says New Zealand has no real choice but to be in the TPP, which implies the costs of staying out would outweigh costs of being in. Membership of the club has been a cornerstone of trade policy since 1984, given New Zealand’s near-zero leverage in getting bilateral free trade agreements with bigger countries unless, like China, they decide it is in their interests. The club used to be the World Trade Organisation. It opened access to markets and set rules and a court to enforce the rules. But the WTO has long been stalled. Regional agreements are seen by advocates as a partial substitute. Others in train are the Trans-Atlantic Trade and Investment Partnership between the United States and the European Union (which its proponents say aims to set regulatory standards for the world) and the China-pushed Regional Comprehensive Economic Partnership.
That underlines that the sixth TPP dimension: that it and similar regional agreements are about regulatory convergence every bit as much as, and arguably more than, about goods trade access. That is why patents and copyright were top of the United States’ list and why opponents bother a lot about patents and copyright costs on businesses and institutions here and about investor-state dispute resolution issues, which do not yet have a global supervisory mechanism such as the WTO’s on trade.
All this is against the backdrop of the seventh dimension which takes us back to the first: hyperglobalisation. The world economy has been meshing for three decades and that meshing is accelerating in the digital era. (One part of that is rising rates of migration.) We are transiting from separate, though increasingly interactive, national economies, to something that looks a bit more like a global economy. This constrains sovereignty even without formal treaties. Groser would argue that is better to be in a club that is setting some rules, even some we don’t like, than to be outside with no redress and zero (as distinct from small) influence. Opponents would argue that we need to be able to make at least some rules for ourselves — so the Labour party is saying it may still legislate on foreign property purchases.
Is there a parallel in our history? Try 1840. Proponents among iwi of the Treaty of Waitangi thought it better to try to get some rules to deal with the influx of foreigners. Opponents wanted to try to keep their rohe under their own rule. The foreigners came anyway.
But does all this lead to an eighth dimension? If national governments’ sovereignty continues to be eroded, might local citizens’ organisations and their councils take up some of the slack?