Key on TPP

November 20th, 2012 at 12:00 pm by David Farrar

Andrea Vance at Stuff reports:

Prime Minister John Key will play ‘wing man’ to US president Barack Obama this morning, as the pair push for a Pacific trade pact to be completed. …

Obama will lead the meeting this morning and then look to New Zealand to make an ”intervention,” Key explained.

“Our message [is] there’s a real opportunity to complete the Trans Pacific Partnership. It won’t happen without goodwill, give and take and shove from the leaders.

“This is our opportunity to get it over the line… there’s a lot to be gained.”

Sticking points include intellectual property rights and agriculture.

”It’s easy to identify the big issues…but then there is potentially a pathway through. I don;t think it has to become a lose lose situation. In the end New Zealand would never sign a deal unless it was in our best interests. We might have to give a little bit on one or two of those areas.”

I would love our exporters and especially our dairy sector to get US trade barriers lifted against them.

I don’t want NZ to agree to anything which changes our intellectual property laws – they already reflect a hard fought balance and compromise. I also want NZ to reject effective trade barriers such as bans on parallel  importing.

I understand to get a deal that compromise is needed. But that doesn’t mean any compromise is a good compromise. The Internet is hugely important to our future, as a geographically isolated nation. Agreeing to something which would introduce greater liability and uncertainty to Internet providers and publishers is not in our best interests.

The US needs the TPP to occur more than NZ does. It is of strategic importance to the US. With NZ, it is more a “very nice to have” in terms of trade access. We already have trade deals with China, Australia and many countries in Asia. Don’t get me wrong – I’d like a TPP which lowers trade barriers with the US, and other signatories. But I am skeptical of the US track record on meaningful concessions on trade barriers (The US-AU FTA was disappointingly weak) and a TPP along the lines of the US and Aus FTA would not be worth doing.

The Herald reports:

Trade Negotiations Minister Tim Groser, who is also in Cambodia, described the launch of the RCEP as “a wonderful symmetry between the two” for New Zealand.

While there was the chance of tension between the two deals, it had not been set up like that, he said.

“Our policy is we will dance with anybody provided they are prepared to engage in a high-quality FTA.

“It’s not like a cunning ploy but you can see quite clearly the possibility of creative tension.

“If RCEP just goes round in circles and TPP goes forward, it will put pressure on RCEP – equally the other way round.”

I like the way Groser thinks. While the timing is not deliberate, we can use the RCEP negotiations to put pressure on the US to be more flexible on the IP chapter of TPP. All NZ has to do is stay firm on its current negotiating position, while the US sees RCEP making progress. I’m confident they’ll then see the merits of a less dogmatic IP chapter and then we get a high quality TPP – a win win.

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27 Responses to “Key on TPP”

  1. barry (1,317 comments) says:

    I doubt parallel importing will be stopped – but it will be treated like a license and thus parallel importers will need to pay a fee or commission to the owner of the IP. That usually runs in the 3 – 5% range.

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  2. hinamanu (2,352 comments) says:

    Does this mean we will get access to US products. oh oh, Twinkies just closed down.

    Monsanto GE unlabelled food that causes cancers to rats and causes Indian farmers to commit mass suicide is also waiting

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  3. barry (1,317 comments) says:

    hinamanu – Is that right re the suicide in India?

    If it is, Ill start a campaign to raise money to send even more GE food to india…………….I didnt know GE food was so effective at population control

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  4. Elaycee (4,392 comments) says:

    DPF:

    I also want NZ to reject effective trade barriers such as bans on parallel importing.

    I’m not so sure. If warranty and after sales obligations for a brand are to remain the responsibility of the local importer, then care needs to be exercised in this area…

    For example, if I purchase a Samsung Galaxy S III in Dubai (different spec to the NZ version), why should Samsung NZ be expected to carry parts (and offer technical support) for my phone, here in NZ?

    And whilst the Toyota agent in NZ has an obligation to support the Toyota vehicles they sell with parts and service expertise, why should they be expected to (for example) carry spare door panels, guards and glass for a 2003 Toyota [insert model name], simply because they were made and sold in Japan and a NZ car dealer has decided to import and sell some here?

    It doesn’t fly…

    [DPF: Of course if you don't buy from a local supplier, then they don't have to service you. But if people want to import from overseas and resell here, they should be able to. ]

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  5. hinamanu (2,352 comments) says:

    @Barry

    Well, labelling on GE food has just been overcome in California. apparently Californians don’t care what goes into their bodies

    you think so??

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  6. hinamanu (2,352 comments) says:

    Prop 37 demanding food labeling was overturned recently. NZ and Oz are also shying away from proper food labeling people can clearly understand. This is in remembering the tax on takeaway food was stood down. If the govt is powerless against McDonald’s you can bet your house they are far more powerless against a huge monopoly like Monsanto and can’t even think of engaging them. Certainly the fuel companies get around Easter hours. In fact it should be obvious they are a law unto themselves.

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  7. scrubone (3,099 comments) says:

    Yes, if the government can’t stand up against a company that has a market cap of 85.38B, what possible hope can it have against one that’s worth 47.22B.

    Or perhaps by contrasting the smaller company as a “huge monopoly” you meant something else?

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  8. hinamanu (2,352 comments) says:

    @ scrubone

    Just watch the monopolies amalgamate more. When was the last time you saw the courts intervene against monopolies such as Microsoft. How far back was that ?

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  9. PaulL (5,981 comments) says:

    @barry, @Elaycee: there is an option that you seem to be ignoring. That Samsung (or Toyota) could just not carry spares and support for parallel imported phones. That’s their business decision.

    The big thing I see here is that NZ as a market has much higher costs than overseas markets such as USA. To the extent that you can buy products retail off Amazon cheaper than you can buy them wholesale in NZ. Much of that difference goes to middlemen. They all have great reasons why it’s good value for money – spare parts and service being one of them.

    But why shouldn’t I have that choice? I can have an expensive one with spare parts and service and a local warranty, or a cheap one without those things.

    Further than that, why can’t retailers in NZ have that choice. If they can buy from Amazon and then on-sell in NZ cheaper than if they buy from the wholesaler, why shouldn’t they be allowed to, so long as they label as parallel import?

    Bottom line to me is that much of the NZ retail sector is going to go out of business, they aren’t competitive with online sales from the USA. It’s going to have to change. I’d rather we allow our retail sector to adapt and stay in business, rather than legislatively forcing a business model that results in them going broke.

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  10. BigFish (132 comments) says:

    Elaycee – you misunderstand. For parallel imported goods (in fact for ALL goods) the dealer who sells you the goods, the company who presents you the invoice for the goods, carries the responsibility to ensure that warranties and obligations under the consumer guarantees act, sale of goods act, etc are honored.
    The official local agent is not a party to the sale and is not liable or responsible.
    Likewise for official imported goods, the retailer carries this liability, they cannot defer to a manufacturers decision as a way of refusing a reasonable claim from a customer.

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  11. scrubone (3,099 comments) says:

    Just watch the monopolies amalgamate more. When was the last time you saw the courts intervene against monopolies such as Microsoft. How far back was that ?

    If your point is that the courts take a long time, no one argues with that. If your point is that goverments can’t win against large multinationals, you’re as full of it as when you implied that Monsanto was far larger than a company which is over a third bigger.

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  12. barry (1,317 comments) says:

    @PaulL

    Its not about parts and service and all that. Its about intellectual property.

    If a company is going to develop and manufacture a product – at some cost – it will be expecting to be able to set up a programme to promote the product around the world – or in some countries at least – if they dont want the world.

    Now in those countries they appoint an agent or distributor to promote the product AND THE BRAND. But if anyone can import the product then whats the incentive for the local agent to spend money on promoting the product AND THE BRAND.
    And if there is no incentive to promote – then whats the incentive to develop new products – and thus new sales.

    US and Japanese and Korean companies especially (these being possibly part of the TPP) have a big interest in promoting brands, thus they have a big interest in having profitable local agents.
    They dont like parallel importing because it ruins the value of a local distributor.

    And anyway, if the TPP goes ahead and I P laws are sort of bought into line, then the rules that apply to patents and copyright will apply – and they impose commissions on anyone who wants to use the IP of the originating company – such as parallel importers

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  13. hinamanu (2,352 comments) says:

    “If your point is that goverments can’t win against large multinationals”

    When was the last time you heard of the govt speaking out against oil companies. Jim Anderton tried once…way back in the 90’s and then never again.

    Look at how Kiwibank pulled their ad against Australian banks when they complained. Where’s the sovereignty there?

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  14. scrubone (3,099 comments) says:

    When was the last time you heard of the govt speaking out against oil companies.

    Friday I think – might have been thursday.

    Your problem is that you are so deep in the “multinationals are evil” mindset that you don’t even bother to do simple checks when you make claims. Like checking the size of McDonalds vs Monsanto.

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  15. hinamanu (2,352 comments) says:

    You mean the govt made a public statement against the oil companies????

    I didn’t compare McDonald’s to Monsanto . Don’t sound like a leftist who goes out of context. Please

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  16. scrubone (3,099 comments) says:

    If the govt is powerless against McDonald’s you can bet your house they are far more powerless against a huge monopoly like Monsanto and can’t even think of engaging them.

    Yes, you did. Your exact words:

    If the govt is powerless against McDonald’s you can bet your house they are far more powerless against a huge monopoly like Monsanto and can’t even think of engaging them.

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  17. annie (539 comments) says:

    NZ needs to be extremely careful. The danger with the US is that we will make concessions the US wants, and they will make concessions that won’t, in reality, be realistically implemented. Non-tariff trade barriers blocking the sale of NZ produce has been problem in the past when NZ agricultureal imports to the US have looked like reaching non-boutique quantities, and they’ll be a problem again.

    We could end up looking bloody sad indeed over this trade agreement.

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  18. scrubone (3,099 comments) says:

    You mean the govt made a public statement against the oil companies????

    Sorry, I misread you. I thought you said “a” goverment.

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  19. PaulL (5,981 comments) says:

    @barry: I don’t see it as an intellectual property issue. The company that makes the goods still sold them. What they don’t get to control is who you can onsell them too. It’s like me selling you a car and then saying “but you can’t sell that car to anybody in Wellington, this is an Auckland only car.” Even if cars are worth a lot more in Wellington.

    In doing that, they are raising prices for consumers (i.e. you and me), and are splitting that excess profit between themselves and the importer. The result of that is that goods in NZ cost much more than, say, USA, where there are no barriers on trade between the US states.

    If the answer is that it’s all about local presence, why is a wholesaler in New York allowed to sell to people in Alabama? Same argument surely, what’s the incentive to promote in Alabama, and have a spare parts network?

    I really just don’t buy it as an argument, it smacks of the kind of argument that a protectionist would make, and it doesn’t really make logical sense to me.

    If your argument is correct, then in the new world that includes parallel importing, then the importer will get paid much less, and will no longer be accountable for marketing. The company that makes the product will do all the global marketing to the extent that they deem desirable. That may mean some brands are less known in NZ than they might be overseas, but surely the internet is a mechanism that resolves that?

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  20. wat dabney (3,756 comments) says:

    As ever in this debate it needs to be stated quite clearly that a country is better off (and its people permitted more freedom) by unilaterally abolishing import restrictions. It’s not a matter of “making concessions.”

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  21. hinamanu (2,352 comments) says:

    “Sorry, I misread you. I thought you said “a” goverment.”

    all gud.. you certainly had my eyes like saucers

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  22. Elaycee (4,392 comments) says:

    @BigFish / PaulL:

    It appears you’re both OK with a scenario such as this:

    A company has owned the rights to market a product in NZ for decades / they have spent large on an ongoing marketing campaign / they have created and generated brand awareness etc. Then someone comes along / parallel imports the same brand and then sells it here – by backing into the local importer’s marketing campaign.

    Because, if you are saying this is OK in principle, it means that no importer would ever pay the International owner of a brand a single cent for the ‘rights’ to import and sell their brand in NZ again.

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  23. Wayne Mapp (66 comments) says:

    David,

    You can’t be serious. Simply saying the US needs us more than we need them is not a viable strategy. We are going to have to give something if TPP is to happen, and that will be IP. All negotiations have tradeoffs. The agriculture opportunity is big enough for us to give something in return.

    The fact that John is going into bat with Obama, should show he has worked out what we have to give.

    [DPF: If it was a bilateral negotiation, we would be in a very bad negotiating position. But this is multi-lateral and pretty much every other country is also against the US IP chapter. I see no need for us to compromise.

    The concessions we should give the US is tariff free access to every single NZ market.

    If there are compromises on the IP chapter, then the agricultural and dairy access should be spectacular. If it is no more than what Australia got, then not worth it]

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  24. Tautaioleua (304 comments) says:

    I wouldn’t trust US made. And most certainly wouldn’t buy.

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  25. wat dabney (3,756 comments) says:

    I wouldn’t trust US made. And most certainly wouldn’t buy.

    The beauty of Capitalism (peaceful free trade) is true Consumer sovereignty. You can buy from whoever you wish, and can equally decline to trade with anyone for any reason.

    Import tariffs and restrictions impinge on this freedom: you are left having to deal with thugs who have organised themselves politically, so you have to buy a worse product at a higher price from them. It’s no different to how the New York mafia controls garbage collection.

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  26. Sam Buchanan (501 comments) says:

    I went to a meeting about the TPPA a while back, and the official from the negotiating team said there was little to be gained from increased access to the US market – he reckoned access was already about as much as we could possibly use. His only justification for the TPPA was that it might provide a model for future agreements that could bring some advantage to New Zealand. This seemed pretty weak.

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  27. PaulL (5,981 comments) says:

    @Elaycee: correct. I’d be quite OK with that. Basically that means instead of an importer paying for a license to charge over-the-odds prices from consumers (i.e. protected monopoly giving the right to extract money from you and I), any importer that can buy the product will be able to import it. And all importers will be able to compete on a semi-level playing field with Amazon.

    Remember that today there are parallel imports, as I can just buy directly from the USA. If we continue to try to hold NZ prices higher than the USA, then Amazon gets all the business. Under my suggestion, the NZ importer at least has a chance.

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