Australia's Arrogant, Irresponsible Trade Minister Rejects Calls For Cost-Benefit Analysis Of TPP

from the would-anyone-run-a-business-like-this? dept

Mike has just written about the way the US public is being short-changed over the promised "debate" that would follow the completion of the TPP negotiations. That broken promise is just part of the general dishonesty surrounding the whole deal. For example, the public was told that it was not possible for it to make its views known during the negotiations, because they had to be secret -- even though many other trade deals aren't -- but that once everything was agreed there would be ample time for a truly democratic debate. Of course, at that point nothing could be changed, so the debate was little more than a token gesture, but now it seems the US public won't even get that.

It will be cold comfort to learn that US citizens are not the only ones being denied the opportunity to engage in a serious discussion with politicians about the merits or otherwise of TPP. Here's what's happening in Australia, as reported by the Guardian:

The trade minister, Andrew Robb, has rejected calls for an independent cost-benefit analysis of the Trans-Pacific Partnership after the World Bank estimated it could lift Australia’s economic output by just 0.7% by 2030.

Robb, who signed the regional trade pact with counterparts from 11 other nations in New Zealand on Thursday, dismissed opponents of the deal as "the usual suspects" who would not be persuaded by a new inquiry.

To dismiss those who want to weigh up the evidence for and against TPP as "the usual suspects" is insulting not just to them, but also to the Australian public, who are effectively being told that if they dare to question the value of TPP, they are just "the usual suspects." This is pretty rich, too:

There’s nothing that they’ve said that convinces me that they’re genuine about this ... I think the community accepts that we've got 25 years of uninterrupted economic growth in Australia, we've got millions of jobs which have come off the back of Australia opening up and participating in these sorts of major agreements around the world with all of our trading partners.

So Robb is saying that those who want a mature debate about TPP must convince him, rather than the other way around. And claiming that Australia's growth is due to trade agreements -- without providing any evidence -- expects people to be naive enough to fall for the old 'correlation implies causation' trick. In any case, it's the details of the deal that are being questioned, many of which are quite antithetical to genuine free trade -- enhanced monopoly protections for copyright and biologics being two examples.

Robb's problem is that the traditional instruments of government persuasion -- econometric models that purport to demonstrate the benefits of signing up to trade agreements -- reveal that TPP is likely to bring Australia vanishingly small economic benefits. As we wrote recently, the World Bank predicts that the annual boost to Australia's GDP thanks to TPP will be around 0.07%. The country's trade minister tries to side-step that awkward fact as follows:

Robb told Sky News there was "a war by modelling" occurring. He pointed to a US Department of Agriculture study that showed Australia's agriculture sector would be the "biggest winner by a country mile".

In other words, don't look at that World Bank study, look at this US Department of Agriculture (USDA) study instead. Techdirt discussed that analysis over a year ago, noting one rather pertinent fact that Robb somehow forgot to mention: the USDA predicted that the total boost to the Australian economy from TPP would be precisely zero, zip, zilch, nada. If Australia's agricultural sector is a big winner from TPP, there must also be some big losers to balance things out.

Those facts probably explains in part why Robb refuses to ask the Australian government's own Productivity Commission for an analysis of TPP, even though its job is precisely to provide "independent research and advice to Government on economic, social and environmental issues affecting the welfare of Australians." The other reason why he won't want them giving an expert opinion is probably because of this comment in the Commission's Trade and Assistance Review 2013-14:

Preferential trade agreements add to the complexity and cost of international trade through substantially different sets of rules of origin, varying coverage of services and potentially costly intellectual property protections and investor-state dispute settlement provisions.

The emerging and growing potential for trade preferences to impose net costs on the community presents a compelling case for the final text of an agreement to be rigorously analysed before signing. Analysis undertaken for the Japan-Australia agreement reveals a wide and concerning gap compared to the Commission's view of rigorous assessment.

Robb's reluctance may be understandable, but it is also unforgivable. The benefits for Australia from TPP are routinely exaggerated, but no account is ever taken of the costs of signing up to the trade agreement -- a situation that is plainly absurd. Any manager that suggested closing an important business deal without carefully weighing up both the benefits and the costs would be rightly dismissed for gross negligence and incompetence. And yet Robb expects 23 million Australians to agree to TPP on precisely that basis, simply because he says it's a good deal. That's not just appallingly arrogant, but also profoundly irresponsible.

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Filed Under: andrew robb, australia, cost benefit, economics, tpp, trade deals