Of mountains and molehills

I’ve said it before and I’ll say it again – especially in the current political climate in New Zealand – public debate about trade policy is important.  This website was established to provide a means of explaining the importance of trade from a business perspective.  We try to be as clear as we can about the benefits of trade without minimising any downside risks. We respect the right of others to make their views known but we do not refrain from robust debate or from taking issue with others’ views when we believe they are lacking in substance.

The latest in the war of words about the Trans Pacific Partnership (TPP) concerns “certification”.  The claim is that draft US Trade Promotion Authority (TPA) provides a means to undermine the negotiating process by requiring partners to agree in advance to US negotiating objectives.  This is because TPA would require the Administration, before TPP commitments enter into force, to “certify” to Congress that the other party has done everything necessary to bring its laws and regulations into conformity with the agreement.  A website has been established (www.tppnocertification.org) which reveals all. (Incidentally, unlike TradeWorks, the ownership of this website is not fully disclosed).  The website, and accompanying media commentary, claim that the US Trade Representative’s office worked in this way to amend laws in Peru which were contrary to Peru’s national interest and took further what had been agreed in the negotiation.  There are the usual leaks of emails, which purport to back up this allegation.

It’s hard to accept these claims.  The shared responsibility for trade policy in the US requires the Administration to negotiate treaties and the Congress to regulate commerce.  Hence the need for TPA, which seeks to ensure that negotiated treaties cannot be undone in the ratification process.  It is the absence of TPA, which overhangs the negotiation at present and, some would argue, hinders the US in securing an ambitious outcome.  As Congress maintains oversight of trade policy it is necessary to provide a formal mechanism whereby the Administration, through USTR, confirms to Congress that the matters requiring action arising from the concluded treaty have been concluded so the treaty can enter into effect in the US.  That’s in effect what “certification” is.  It comes after the negotiation and ratification process, not before.  It is about ensuring that undertakings given in the negotiation are in fact being met.

Each negotiating party in TPP has their own legislative processes to follow.  The MFAT website confirms that the Government has the power to ratify treaties after they have been signed and after consultation with Parliament.  Ratification can occur only once any laws requiring amendment by Parliament are duly voted.  “The Government then completes the treaty making process by depositing the appropriate formal instrument with the treaty depositary”.   The treaty does not come into force until other parties have completed the ratification process.  TPP will specify how many parties (some or all) will need to ratify before the agreement enters into force.

As regards the “help” the US might give to other parties during the ratification process, this probably has to do with the lack of capacity in some economies to attend to the required legal processes.  We can’t imagine New Zealand accepting such help from the US or any other economy.

It is interesting to reflect on why those opposed to TPP have chosen to focus on such an innocuous aspect of TPA, apart from the fact that it speaks to the theory that TPP is an underhand conspiracy to undermine economic sovereignty.  We’ve heard that argument before.  In a climate where TPP is grinding on without conclusion, it’s out of such molehills that mountains can be made, and frequently are.

This post was written by Stephen Jacobi.  Henceforth it will be the practice on TradeWorks to identify the author of our blog.  Information on the New Zealand treating making process can be found at http://mfat.govt.nz/Treaties-and-International-Law/03-Treaty-making-process/index.php