TPPA Facts

Economic Benefits & Costs

The TPPA is a preferential trade agreement encompassing more than a third of global GDP, 40% of New Zealand's goods exports and 47% of its services exports. It will have economic benefits for New Zealand, but those benefits are minimal, especially given the trade-off. This page digs deeper into the numbers behind the deal.

WHAT GOVERNMENT SAYS WE GET UNDER TPPA: 

➜ According to the Ministry of Foreign Affairs and Trade projection, a 0.9% increase in GDP by 2030 (= $2.7 billion). A different modelling exercise by the World Bank put the potential cumulative boost to GDP at up to 3% by 2030.

➜ Reduced customs clearing times, which would facilitate trade

➜ Removal of Non-Tariff Barriers (regulations and procedures that are burdens on business)

AND WHAT EXPERTS SAY WE GIVE UP:

➜ An alternative modelling approach, that doesn't make the unrealistic assumptions of full employment and constant income distribution, projects only a 0.77% increase in GDP by 2025, a loss of 5,000 jobs, and increased levels of income inequality.

➜ New Zealand could be sued for potentially billions of dollars under the ISDS system, meaning that a loss by the government in any such case would threaten to erase any monetary benefit from the TPPA.

➜ TPPA will likely reinforce our position as a commodity producer and hinder our progress up the value chain where greater economic prosperity lies. For example, large-scale overseas companies with close connections to their consumers will find it easier to tap into our resources than our small companies will find it to develop relationships with overseas consumers.

➜ Innovation and technology are key to the future, but the TPPA guarantees longer and stricter monopoly rights over them to big IT companies, ironically in the name of ‘free trade’.

TPPA will add an extra $2.7 billion to GDP by 2030

(That's a rise of 0.9% )

But hang on a minute, real GDP was already projected to increase by 47% without TPPA. So that's a 47.9% growth rate with TPPA or 47% without it.

Considering the trade-offs in that case, is TPPA really worth it?

In the government's modelling, $1.7 billion of the $2.7 billion projected gains from the TPPA is from loosely-defined and potentially harmful removal of Non-Tariff Barriers (NTBs). Modelling does not explain what constitutes an NTB, or how legitimate regulations (such as environmental or health regulations) that do not exist to limit trade will be protected from elimination.

HOW RELIABLE IS ECONOMIC MODELLING THAT IGNORES THE COSTS?

The models used by MFAT make crude assumptions about the functioning of markets that, if untrue, would drastically impact the validity of the results. 

In addition, the Government has not provided comprehensive information on what costs are associated with the TPPA, including costs from inadequate regulation or from defending cases brought against the Government as a part of the investor-state dispute settlement (ISDS). In fact, the MFAT modelling does not factor in any costs, even where the government has calculated them – such as the extra $55 million per year for 20 years longer copyright protection.

Source: 'The Economics of the TPPA by Barry Coates, Rod Oram, Dr Geoff Bertram and Professor Tim Hazledine'

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New Zealand could be sued for potentially billions of dollars under the ISDS system, meaning that a loss by the government in any such case would threaten to erase any monetary benefit from the TPPA.

USA are currently being sued for $15b under ISDS