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Economic Bulletin – Feb 16 “TPPA: The Economic Case”

The Transpacific Partnership Agreement (TPPA) will be signed by the trade ministers of 12 countries in Auckland on 4 February. So this is a good time to look at the economic evaluations of the agreement. Politicians and lobbyists use these to find large-sounding numbers to throw around. Turn on the garbage filter you use when a door–to–door salesman knocks.

The identifiable gains are tiny. For New Zealand, the gains that have a robust case are 0.2 percent of GDP. They are puffed up to something bigger by including deregulation (removal of “non-tariff measures”) as positive. That risks removing some of the protections for health, safety, financial security, quality services and so on is counted as a gain on the basis that it creates more commercial opportunities.

MFAT commissioned a model that estimated a 1.4 percent gain by 2030 which it reduced to 0.9 percent because of concerns about the way these non-tariff measures are modelled. This would mean that the economy would grow by 47.9 percent by 2030 instead of 47 percent – a difference on the margins of being able to be reliably measured.

It is as if your employer came to you and said “I’ll give you a 0.9 percent pay rise in 15 years time on condition I have a lot more control over your life from now on.”

Even these numbers are based on assumptions including no change in employment and no change in inequality – assuming away some of the most important questions about these deals. A model which does not make these assumptions finds increased inequality and reduced employment. All the gains go to investors and workers receive a reduced share of the income their work generates. It finds a reduction in employment, and reduced government expenditure – making it more difficult to help people through job losses and support higher value industry strategies.

Neither do these models include costs such as higher prices of medicines, recordings and books affected by longer copyright periods and more stringent patent conditions – the anti-free trade parts of the agreement. Most importantly, they don’t evaluate the social and environmental costs or the impact on sovereignty and future economic development options.

Download the full bulletin: CTU Economic Bulletin 176 February 2016