Saturday, October 10, 2015

Trans Pacific Partnership TPP and New Zealand

I have not written about New Zealand since last year because I did not find anything important to write about. However, things changed a few days ago. There is some press talk about The Trans Pacific Partnership TPP. It is not published yet. We do not know what's in it. And even if it is published I am sure it would be a boring document written by lawyers. Economists cannot possibly digest all of it. Despite that, some people wrote about what they now about it (leaks perhaps) in the press around the world. What has been written could be true or not, we do not know for sure. The whole thing has been secretive and argued about behind closed doors and definitely inconsistent with democracy.

Here is my quibble with it. It has been reported in the press that dairy products are not included in the partnership. So countries that have been subsidizing dairy products will continue to do so. New Zealand is a dairy exporter, which does not subsidize dairy producers. The question then, what benefits New Zealanders expect from this partnership? Did the New Zealand government calculate the expected gains from TPP? The way I see it is that our dairy producers could not possibly compete more than they do now in Japan or the US or any other country where their dairy products are subsidized, could they? 

A second point is that New Zealand is not an industrial country. We do not have a manufacturing sector that could possibly compete with Japan or the US. So how could we benefit from free trade in manufacturing? Maybe we get cheaper goods and consumers be happy, but there would be no obvious increase in GDP from this type of trade, would it?

I am for free trade, no doubt. But I am sorry I do not see the benefits from this Partnership. I hope that I am wrong and that TPP is worthwhile otherwise New Zealanders have lost a lot already.