Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


TPP’s Benefits Less Than a Quarter of Government’s Claim

5 February 2014

TPP’s Benefits Less Than a Quarter of Government’s Claim

The TPP’s economic benefits are less than a quarter of those the government has claimed - and the proposed trade deal would impose serious costs.

The government has repeatedly used estimates from a team of US economists to justify the Trans Pacific Partnership. This team put the economic gains for New Zealand at US$4.5 billion for 2025 (around NZ$5.5 billion) in their latest study for the Peterson Institute.

A detailed review of that study led by Dr Geoff Bertram concludes that a third of the stated benefits should not be counted at all as they are outside established economic theory. The Sustainability Council review also concludes that only a minor part of the remaining gains are justified. The total benefits likely to be available are less than a quarter of the US$4.1 billion of gains Trade Minister Tim Groser told Parliament would result for New Zealand from the TPP. *

In exchange for a small gain in relative terms, New Zealand is being asked to sign away large slabs of its sovereignty. The TPP bundles the small gains from trade with a wide range of non-trade matters that will set privileges for foreign investors. These would impose serious costs in the form of limitations on a government’s ability to protect the public interest.

The most potent element is investor state dispute settlement (ISDS) rights that would allow foreign investors to file a suit against a government in an offshore tribunal if they believed that new regulations would diminish their expected future profits.

ISDS provisions and other TPP proposals that similarly inhibit or prohibit the government from regulating in the public interest are entirely separable from those required to secure gains from trade. But the US insists on bundling them with standard trade gains in order to lock in the US designed template for “a managed trade regime that puts corporate interests first”, as Nobel prize-winning economist Joseph Stiglitz describes it.

More than any previous trade deal, it matters what gains are really available and whether these exceed costs. On the information publicly available, it is doubtful there is a net benefit for New Zealanders from the TPP.

Our conclusion that the gains have been far overstated is consistent with the Australian Productivity Commission’s view that modelling such as that used in the Peterson study “produce[s] overly optimistic expectations of the likely economic effects”.

* The Sustainability Council’s review is titled: Economic Gains and Costs from the TPP. Groser’s written answer estimated the total income gains for 2025 at US$4.1 billion as he was relying on a variation of the modelling work undertaken by the same team of economists.

ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Must Sell 20 Petrol Stations: Z Cleared To Buy Caltex Assets

Z Energy is allowed to buy the Caltex and Challenge! petrol station chains but must sell 19 of its retail sites and one truck-stop, the Commerce Commission has ruled in a split decision that acknowledges possible retail price coordination between fuel retailers occurs in some regions. More>>

ALSO:

Huntly: Genesis Extends Life Of Coal-Fuelled Power Station To 2022

Genesis Energy will keep its two coal and gas-fired units at Huntly Power Station operating until 2022, having previously said they'd be closed by 2018, after wringing a high price from other electricity generators who wanted to keep them as back-up. More>>

ALSO:

Dammed If You Do: Ruataniwha Irrigation Scheme Hits Farmer Uptake Targets

Enough Hawke's Bay farmers have signed up for water from the proposed Ruataniwha Water Storage Scheme for it to go ahead as long as a cornerstone institutional capital investor can be found to back it, its regional council promoter announced. More>>

ALSO:

Reserve Bank: OCR Stays At 2.25%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2.25 percent, in a decision traders had said could go either way, while predicting inflation will pick up as the slump in oil prices washes out of the data and capacity pressures start to build in the economy. More>>

ALSO:

Export Values Down: NZ Posts Biggest Annual Trade Deficit In 7 Years

New Zealand has recorded its biggest annual trade deficit since April 2009, reflecting weaker prices of agricultural commodities such as dairy products, beef and lamb, and increased imports of vehicles and machinery. More>>

ALSO:

Currency Events: NZ's New $5 Note Wins International Banknote Award

New Zealand’s new Brighter Money $5 note has been named Banknote of the Year in a prestigious international competition. The $5 note was awarded the IBNS Banknote of the Year title at the International Bank Note Society’s annual meeting. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news