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A Trojan Horse - Free Trade With Singapore

A TROJAN HORSE:
THE FREE TRADE AGREEMENT WITH SINGAPORE


By Professor Jane Kelsey
April 2000

Why is the government currently negotiating a free trade agreement with Singapore?

There is a major international backlash against the global free market:

- Poor countries say the deals made so far are unfair or not being delivered by rich countries

- There is rampant infighting among the rich countries who dominate these negotiations

- The secrecy of international negotiations under attack from less powerful countries who are basically sidelined from any meaningful role

- Citizens of countries are objecting that international agreements are made without their agreement (or often their knowledge) yet limit what future governments can do

- People are mobilising all over the world against the effect of global free markets: growing inequality within and between countries; colonisation by transnational companies; exploitation of indigenous peoples and resources, workers and the environment; and the subordination of culture, nature and society to the market.

As a result:

- Individual countries have gone cold on reducing their trade barriers without other countries matching them.

- APEC’s goal of free trade and investment regime by 2010 in rich countries and 2020 in poor ones has struck a rock.

- Plans to move the APEC process on through the WTO have so far failed.

- So did the attempts to get a new round of negotiations to extend the WTO at the Seattle meeting late last year.

- The new plan is to kick start the process again by negotiating a lot of smaller agreements which can lock together to achieve their regional and global goals.

Why Singapore?

Singapore is almost as gung-ho on global free markets as NZ. Both governments reckon if they can stitch up an agreement, and extend that gradually to others, they can achieve the APEC goal through a patchwork deal.

When did they hatch this plan?

Around the time of the APEC meeting, when it became clear that APEC wasn’t going anywhere.

That sounds a bit conspiratorial!

Maybe. But it’s basically what NZ’s former chief trade negotiator, and now the head of Asia 2000, told the Institute of Policy Studies in Wellington in mid-March this year. To quote: ‘Stated bluntly, the Singapore/NZ FTA is a Trojan Horse for the real negotiating end-game: a possible new trade bloc encompassing all of South East Asia and Australia and NZ’.

What other negotiations are underway?

There are a number of irons in the fire that we know about, and probably more that we don’t:

- The Prime Minister has announced that she wants to fast track negotiation of a similar agreement with Chile.

- The government has appointed BILL BIRCH to represent NZ on a group of ‘wise men’ to promote a free trade agreement between CER and ASEAN.

- There is talk of a ‘P-5’ agreement between NZ, Australia, Chile, Singapore and the US.

- South Pacific Forum countries are about to sign an agreement amongst themselves, which is intended to extend to include Australia and NZ.

- Research at the Institute of Policy Studies to promote a common currency between NZ and Australia is due to be released at the end of April.

Will these deals actually come off?

Some, like the ‘P-5’ are never likely to happen. There are rumours that the Chile is not nearly as enthusiastic as the Prime Minister suggests for a deal with NZ without the Australians, and that even the Singapore negotiations are hitting major problems. This reflects the general cooling of enthusiasm for free trade agreements internationally.

When is the NZ Singapore Agreement meant to be completed?

The plan was to conclude the negotiations in May, but it is running behind schedule.

What is it intended to cover?

That’s impossible to say because the negotiations are secret. The Minister of Foreign Affairs and Trade (Jim Sutton) has refused to release the document that went to Cabinet setting out the rationale for the agreement and its scope. Other documents suggest it will cover goods, services and investment.

What will it mean for trade in goods?

Apparently the first negotiations aimed to remove barriers to trade in goods. Singapore puts almost no tariffs on imports from NZ, so the gains to NZ would be minimal. NZ’s tariffs are mainly on textiles, which it would promise to reduce/remove. How that fits with the recent decision not to reduce tariffs on textiles and clothing before 2005 isn’t clear; it may not apply to agreements like this. Other ‘non-tariff barriers’, such as product standards, may also be affected.

So what’s the fuss about?

The actual effects of this agreement aren’t the issue. One document which the government did release admits that the actual returns from free trade with Singapore may be minimal. The real purpose is to reinvigorate free trade and investment among members of APEC and the WTO. It’s also vital to remember that the agreement will also cover services and probably investment, which could have serious consequences.

What is the situation with services?

It seems the next stage is to negotiate the removal of restrictions on ‘trade in services’, especially limits on access to each other’s markets or special treatment for local service providers. There are already some commitments along these lines under the WTO agreement on services (GATS). The plan is to extend these further, beginning with Singapore.

What’s an example of a service that might be affected?

Depending on the wording, it could give Singaporean education providers unlimited access to NZ and the government would not be allowed to give NZ education providers privileged treatment. That could mean Singapore schools or universities operating here have a right to the same level of subsidies, and the government’s new Tertiary Education Advisory Commission couldn’t limit the number of NZ universities in ways that would keep the Singaporeans out.

Is the agreement likely to give Singaporean investors free access to NZ?

Investment is apparently on the agenda, but it’s not clear how far they plan to go. Obviously there’s concern that this could provide a back door entry for elements of the MAI.

Why is Labour promoting this deal?

When Mike Moore was there, Labour was as supportive of free trade and investment as National has been. Their new trade minister Jim Sutton was the Minister of Agriculture during the GATT Uruguay Round and is as evangelical as Mike Moore. Labour’s policy has been to support economic globalisation, provided labour standards and the environment are protected. Recently it has tied further concessions to reciprocal commitments from other countries. Apparently some backbenchers are uncomfortable with this position because they believe free trade and investment has serious downsides. They and others remember that Labour had to make an embarrassing backdown on the MAI. The recent shift from compulsory broadcasting quotas to voluntary ones also reflects the government’s desire to avoid a showdown over the belief that compulsory quotas breach the WTO agreement on services. So they are not rock solid on this.

What is the Alliance’s position?

Publicly they’ve been very quiet. If they decided to do battle with Labour, this would be their first major showdown. That would have political costs. It would have major benefits, too. If the Alliance is seen to cave in on such a central policy plank, it would lose a great deal of credibility.

What about the other parties?

The Greens have been actively seeking information and challenging the free trade philosophy. National fully endorses the negotiations and the wider game plan, which it began. ACT supports the economic agenda, but not the secret process for negotiating these agreements.

What process are these deals meant to follow and when do people get a say?

International economic treaties often bind the hands of future governments in the same way as entrenched legislation, and carry enforcement mechanisms that are meant to deter governments from moving away from a free market line. Yet these treaties are negotiated in secret and are signed off by the Executive, ie. Cabinet. They don’t even have to follow the processes to pass ordinary legislation. There is no guaranteed select committee hearing before the deal is struck, and Parliament has no right to stop it being signed. There is no attempt to recognise any constitutional role for Maori in the treaty-making process.

When do we get to see what’s in the Agreement?

That’s not been made clear. The rules don’t require the details of the Agreement to be released until negotiations are complete and the agreement is signed. It would then be forwarded to the Foreign Affairs, Defence and Trade select committee for consideration, along with a National Interest Analysis drawn up by officials that sets out its implications, the costs and benefits, and who has been consulted along the way. But it is up to that committee to decide whether to call for submissions. Even if it does call for submissions, and even if Parliament then gets to debate the Agreement, MPs will not have any right to amend its provisions or vote against its ratification. This is a matter solely for the Cabinet.

Didn’t Labour promise more transparency about these treaties?

They know there has to be less secrecy; but they don’t want an open debate in case people say no, like they did with the MAI. Apparently there will be some consultation while negotiations are still underway, but it’s not clear how open that will be, who will get a say or when.

Surely this is a backward step after the debate over the MAI?

Indeed! The government needs to be reminded of the precedent set by the MAI when the National government (reluctantly) released:
- The draft text of the MAI while negotiations were still underway
- The briefings to Cabinet and its decisions
- Communications between the Ministry of Foreign Affairs & Trade and other ministries
- Communications between officials in New Zealand and negotiators
- Correspondence with other non-government agencies.

Numerous parliamentary questions were asked, mainly by the Alliance. Over time, officials were forced to concede that concerns that they originally dismissed might be justified.

A series of hui were held around the country where Maori debated the issues and came out against the MAI.

The Maori Affairs and Foreign Affairs, Defence and Trade select committees sought briefings from and questioned officials regarding the implications of the agreement.

In other countries, such as Australia and Canada, select committees sought public submissions and produced interim and final reports on the implications of the Agreement.

This should set the minimum level of openness and participation for the FTA, the WTO and any other international economic treaty. If they won’t, we are entitled to ask what they are trying to hide.


ENDS

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