Economist warns Free Trade Agreements can be “job killers”
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Nobel Prize winning economist warns Free Trade Agreements can be “job killers”
In an interview recorded for an upcoming documentary by award-winning filmmaker Bryan Bruce, Nobel Prize Winning economist Professor Joseph Stiglitz says, “New Zealand should have taken much more time over getting into the Comprehensive And Progressive Agreement For Trans-Pacific Partnership (CPTPP), to shape a fairer agreement now that the USA has gone.”
He also says the idea being promoted by the government that if our exporters make more profits it will improve the lives of all New Zealanders is “a version of the discredited trickle-down theory,” and that he would be very sceptical about economic growth claims.
In general, Stiglitz says, free trade agreements can be “job killing” in the poorer countries who sign up to such agreements, and exert a downward pressure on wages even in advanced countries.
The theme of job losses and job creation as a result of Free Trade Agreements is one Bruce says he will develop in his upcoming documentary, but for the moment is simply scathing of the thin six-page report on the (CPTPP) recently issued by The Foreign Affairs, Defence and Trade Committee.
“Take for example the submission by the Council of Trade Unions on the lowering of wages that might well result from this agreement. They pointed to New Zealand research in its submission that shows workers who lose their jobs earn 20-25% less in the year following their displacement and are still 8-12% lower five years later, than where they would have been had they not lost their job. The issue doesn’t get a mention in the committee’s summary,” says Bruce.
Bruce also said, “We don’t know how many jobs will be gained or lost by signing this agreement. What we do know is that the future will be challenging for Kiwis who lose their jobs because of CPTPP. One would have expected some acknowledgement of this fact by the Select Committee, and perhaps suggestions for what might be done to ease the transition of workers into new work in a post-CPTPP economy”.
Also glossed over in the six-page select committee report Bruce says, is the fact that three of the major economies in the agreement – Japan, Canada, Mexico – and Chile have all refused to sign side letters preventing investors from their countries suing in Investment State Dispute Settlement tribunals, which are not courts and against which there is no appeal.
When told by Bruce that the New Zealand government believed the risk of being sued in these tribunals was minimal, Stiglitz said, “The notion that there is nothing to fear is wrong. Canada has lost something like 19 cases in these private ISDS suits . . . There are also issues of Justice. Why should foreign investors be treated better than domestic investors?”
During the 30-minute interview Stiglitz unpacks how ‘big corporates’ and ‘financial elites’ benefit hugely from these agreements at the expense of ordinary citizens.
Speaking from an American perspective he says, “they do it by lobbying and through campaign contributions” and New Zealand should avoid being bullied by them.
When asked by Bruce to say what he would advise our government to do if he was hired as a consultant by them on Free Trade Agreements Stiglitz said, “I would tell them to talk to the other countries to try to understand better how one can get a truly progressive trade agreement . . . I think that now the United States is out of the picture there needed to be a longer period of negotiation, where you could say ‘This agreement was really shaped by the United States ‘big businesses for American big businesses.’ Now that they are out of the scene, let’s try to do an agreement that is fair for the other 11 countries.”
Bruce says he has approached Minister of Trade David Parker twice for an on- camera interview about some of the issues raised by his research. Both he and NZ First spokesperson on Trade, Fletcher Tabateau, have refused.