In a few hours the Key government will take the next step to railroad through the legislation to implement the Trans-Pacific Partnership Agreement (TPPA). There were relatively few submissions, reflecting people’s disgust with how the hearings on the agreement itself were conducted. The select committee’s draft report shows an attempt by the select committee office to provide a true record of submissions exposing the deep flaws in the TPPA. The final report stripped out any critique aside from the short minority reports from the opposition parties.
We can expect the same for this legislation. They were so intent on meeting the November timeframe so they could show willing to the US Congress that I couldn’t present my own submission orally, not that it would have made any difference. The second reading of the legislation takes place at 3.00 to 4.30 today and the bill will then be rammed through. Doubtless new Green MP Barry Coates, among others, will trounce them on the floor.
Activists are also continuing to voice opposition to the deal, with a rally planned by TPP Free Wellington at Parliament on Saturday 5 November at noon. ItsOurFuture Christchurch has maintained their amazing commitment with a hikoi to Wellington that began on 15 October, led by Rachel Thomas and her children, which will be received at Parliament today just before the bill’s second reading.
The timeline is designed purely to send a message to Washington that NZ is committed to the deal.
With all eyes on next week’s election, speculation abounds about the prospects for a successful vote on the TPPA during the ‘lame duck’ period before the new President takes office. The shift in US sentiment and promises made by returning legislators on the campaign trail means Obama can’t rely on the votes that pushed through the Fast Track law last year. Democrats face the choice of supporting Obama or the Clinton position that the deal needs to be renegotiated. The Black Lives Matter movement recently came out against the TPPA, putting several black Democrat votes in question. Obama also needs to make up lost Republican votes from tobacco growing states who had supported the fast track legislation and oppose the TPPA because of the carveout for tobacco control policies from investor-state enforcement.
The prospects of a vote after the election for at least two years are pretty much nil. Even though there can only be one shot at a vote under fast track, meaning Congress cannot pick apart the deal, Obama is expected to go for it. He has to get past three barriers. We should not assume he can’t do this, so we need to keep up the pressure on all these fronts.
The first and biggest is satisfying demands by Big Pharma’s man in the Senate, Orrin Hatch, who as chair of the Senate Finance Committee is the gatekeeper to the upper house. Hatch is demanding the marketing monopoly on new generation biologics medicines goes beyond the controversial compromise of 8 years or 5 years plus processes that provide comparable protection, and wants a 12-year monopoly. In other words, rewriting the text to agree to what has been rejected, but without rewriting the text.
Reports suggest this is close to occurring. Hatch’s people have reportedly been travelling around TPPA countries seeking assurances that, in practice, biologics do not make it to the market for at least 12 years. The exact form of those assurances is unclear, nor is the basis for calculation, but they are likely seek some assurances in writing that may be firmed up during the ‘certification’ process before the US takes the final steps to bring the TPPA into force.
Tim Groser, now our ambassador to Washington, has said in repeated speeches that New Zealand’s period is never less than 20 years – something the Doctors for Healthy Trade strongly dispute. They have shown that a ‘biosimilar’ – the generic form of biologics – can come onto the NZ market within 6 years of the original biologic. If Groser is really committing us to that position it will cost many billions of dollars in the long term that goes straight from us as taxpayers into Pharma’s pockets or means more people complaining that Pharmac won’t provide them with super expensive life-saving medicines. If they are agreeing to something else with Hatch then we have a right to know now!
Getting past the second obstacle also requires something that was not in the ‘final’ TPPA text. There is a dangerous provision in the e-commerce chapter that says a country cannot require firms to use or locate local computer facilities inside that country as a condition of doing business (not including business conducted for the government). This means they can hold information in the ‘cloud’, which really means servers inside the US. It is then subject to its non-existent privacy protections and its deeply intrusive security laws, and to being on-sold as a lucrative sideline. There is no effective protection for privacy in the TPPA.
That ‘prohibition on data localisation’ has already been agreed. But it did not apply in the TPPA to financial data, because the US Treasury had objected – apparently because of problems obtaining the data from another country in the face of a banking collapse or systemic financial meltdown so it could take urgent action.
Wall St kicked back and got its people in Congress to demand the anti-localisation rule was extended to financial data. Again this needs to be done without reopening the TPPA text. The solution was to get most of the TPPA countries to agree to it in the current negotiations for the Trade in Services Agreement (TiSA). The rest (Vietnam, Singapore, Malaysia, Brunei) would provide side-letters agreeing to this new obligation.
That fix has hit an unexpected rock. The Europeans view privacy as a fundamental constitutional right. There is an internal conflict between the trade and justice sections of the European Commission and they have not been able to reach a position. It was meant to be tabled last week but it now won’t happen this year. That means it has no position on the financial data localisation issue either and there can be no assurance it will be in a final TiSA.
The third obstacle is the reluctance of most countries – sadly not NZ – to introduce or pass their own legislation until they see what happens in the US. It is not clear how important this may be in the Congress. Many will not want to support the deal until they see what other countries have implemented. Vietnam was expected to debate and pass their law this legislative session, but have delayed it until next year. That reflects a change of leadership, a new warming to China, and the enormity of what they are asked to so regarding medicines, SOEs, investment and much more. Similarly, the Canadian parliament has not debated the agreement, let alone implementing laws pending the outcome in the US. The Australian Senate, which the government doesn’t control, has convened its own committee hearings; that will push out a vote until 2017. Chile’s government faces a corruption scandal and is reluctant to add to the heat by adding TPPA to the mix. It will have noted the anti-TPPA riots in Peru as the government there tries to advance the legislation. There is opposition within the government in Mexico.
That leaves Malaysia, which ratified back in February, and Singapore and Brunei, whose processes are opaque but we presume are proceeding. Japan and NZ have assumed the role of cheerleaders on behalf of the Obama administration, rushing through our own legislation and warning the US will lose its leadership role in the world if Congress is unable to pass the TPPA.
Like ours, the Japanese government is running roughshod over any opposition. I was in Tokyo earlier this week as the opposition intensifies the pressure pending a vote in the lower house, now due tomorrow. Protestors have been holding a vigil outside the parliament for several weeks, led by the former agriculture minister Yamada. The Abe government has the numbers, but it is not having an easy ride with a scandal about the rice importing scheme, strong concerns about the impacts on food safety, and boasts from the agriculture minister about railroading the deal through. The upper house has 30 days to approve the bill; but if there is a filibuster it would become law by default. As I warned them, the current bill will not be the final deal, as the US will undoubtedly seek to unravel many of Japan’s carefully crafted safeguards.
It is important to remember that, even if Obama gets the legislation, through there are still opportunities for exit. The deal can’t come into force before February 2018 unless all countries have adopted it and the US is happy with what they have done. The fall-back of 6 countries with 85% of the GDP of the 12 TPPA countries is the more likely option, and on current count they could reach that by the end of this year, provided the US Congress was happy with what Japan, New Zealand, Malaysia, Singapore and Brunei have done. But that is after the NZ election, putting Labour in the hot seat of having to declare that it would withdraw NZ’s ratification. In that worst case scenario, there is still plenty of work for us to do.