 My name is Associate Professor Scott Optigan, if you don't know who I am, I'm here at the Auckland University Faculty of Law. Welcome to a dialogue on the future of the TPP and what now for New Zealand. This is an event hosted and sponsored by the Legal Research Foundation in cooperation with the University of Auckland Faculty of Law. We have two participants today. Our own Professor Jane Kelsey from the University of Auckland Law School. As it says on the flyer for this event, Jane is certainly one of New Zealand's best known critical commentators on issues related to globalization and neoliberalism. She's taught here at Auckland since 1979 specializing in socio-legal studies, law and policy, international economic regulation. She's active internationally as a researcher, analyst, advisor, media commentator and globalization, especially the TPP agreement, trade and services and other investment agreements. She's an active member of a number of international coalitions of academics, trade unionists, NGOs and social movements and a world traveler working for social justice. Our visitor today, Professor Raj Bala, one of my dearest friends for 35 years from the University of Kansas School of Law. He is the Legal Research Foundation Distinguished Visiting Fellow for 2017. Raj is the Associate Dean for International and Comparative Law and the Rice Distinguished Professor at the University of Kansas School of Law in the United States. He practiced at the Federal Reserve Bank in New York City where he twice won the President's Award for Excellence thanks to his service as a delegate to the UN Conference on International Trade Law. He's a Harvard Law School graduate. He completed his master's degrees at LSE and Oxford as a Marshall Scholar and an undergraduate degree at Duke as an Andrew B. Duke Scholar. He's an author of many, many books and a leading textbook in international trade law. The first treatise on GATT in nearly 50 years and a new book on the Trans-Pacific Partnership. He is also the first non-Muslim American scholar to write a textbook on Islamic law and he writes the on-point monthly column for Bloomberg, Quint India. This is his fourth trip to New Zealand, a country that he dearly loves. Those are the introductions. Now remind me of the format for today. Professor Kelsey, then me. Then you. Then we'll have an open dialogue. So about 15 minutes each, right? And then take it from there. Alright, in that case, thanks everyone for coming. We appreciate it and we will turn you over now to Professor Jane Pelson. Kia ora. It's a long time since we had our last dialogue. I think it was in the northern club. Yes. Yes, when Raj and I did a joint course where he very kindly allowed me to do my services bit in the real trade part, in his real trade course. And it's lovely to have you back again and I'm sorry I'm not here for more of your trip. But I'm sure you'll be back. Maybe before I retire. Have to make it quick. And the students who I am sure have had a really stimulating time in your course. As well as some refugees from my old course and some existing students. I'm not going to talk a lot of detail around the Trans Pacific Partnership Agreement. Because you can read that in Raj's book and I'm more interested at present in understanding the dynamics that are surrounding the TPPA and the other mega regional agreements. I've just come back from Beijing on Saturday. Where we've been having discussions around the relationship between some of those big agreements and some of the other ones that are being negotiated within Asia. And those discussions are happening everywhere in the world now. So it's a really turbulent, vibrant and slightly scary time. And so I want to paint a bit of a picture. Some of which will I think coincide with some of what Raj says and some of which won't. Which is what dialogue's about. Having spent seven years dealing with the 200 texts of the Trans Pacific Partnership Agreement. I found it was always important to try to step back and ask what is it that they're trying to achieve here. And as lawyers we can sometimes get a bit lost in the details of the texts. And certainly the poor negotiators find that problem because their KPIs are actually delivering on the text. And even when they feel a bit awkward about some of what they're negotiating, they have a job to do. Our job as academics is to challenge some of what's on paper. Sometimes a bit difficult when the negotiations are secret but helped when they leak like a sieve. In the case of the TPP it was a partial sieve. Another of the negotiations that I'm working on at present that I'll refer to shortly, the Trade and Services Agreement. Everything's getting leaked all of the time. That means that we have two lots of jobs to do. Well three lots actually. One of them is that we have to analyse what is in the actual texts. And it's a quite technical realm that we work in. And especially I work in the non-trendy area of services and e-commerce and so on, which there's much less written about than in the old areas of goods and agriculture and even intellectual property. So part of our job is to analyse the text. Part of our job is also then to translate that to constituencies who need to understand what's being negotiated but don't otherwise have access to the information. But also our role as academics is then to question the broader objectives and put them in a context so people can decide whether in fact this pathway is the one that we want to follow. We all have different ways of doing that and different lenses through which we view these texts. My own is part of the reason why this agreement and several of the other mega-agreements is so interesting to me. Before most of you were born, New Zealand had a major transformation in the 1980s. Sometimes at the time called rogenomics, then called neoliberalism and so on. But it changed the regulatory framework at the same time as changing the economic framework of the country. And that was shared in many other parts of the world. We had it happening with Thatcher, we had it happening in Chile with Pinochet, we had it happening with Reagan in the US, so on. And just as domestically here, the laws and the regulatory frameworks shifted to accommodate the new kind of economic model that we had. So internationally the rules started being rewritten in ways that related to the new mode of capitalism that had taken over from the Keynesian style that we had based on industrial policy inside countries and so on. So the transnationalization of capital followed later by increasing financialization, the way everyone got rich by stock markets and shares and property and so on. New rules were being developed that facilitated that process. And the agreements that we started seeing merge, starting with the Uruguay Round Negotiations that ended up with the World Trade Organization, moved from the old fashioned commodities to a whole lot of new policy and regulatory areas including intellectual property services. And so we started to see an important shift occurring that complimented what was happening in the domestic arena. And that's when I started working on these agreements. What interested me about them was not, I find slabs of butter and motor cars and old fashioned trade stuff quite boring. The more interesting stuff is what is now referred to as the behind the border disciplines on government's policy and regulation. Not tariffs at the border, but the kind of regulatory frameworks that governments were signing up to that would be binding and enforceable outside the country. And so during the Uruguay Round of the GATT we had those emerge, in particular the Trade and Services Agreement, then attempts to expand that further during the Doha Round of the WTO which got stalled, then looking to do it further and further through free trade agreements that were bilateral free trade agreements and then trying to bring them together and push the boundaries further again through what we refer to as the mega regional agreements. And there is a consistency and an accumulation through those processes. But just as we see the economic model that emerged from the 1970s facing problems, the global financial crisis being a classic example of the instabilities and implosions around deeply integrated financial markets, but also the ways that the transnationalization of the economy has created winners and losers. Big winners, quite a lot of losers. Not just in the industrial belt, but for those who read Piketty's materials and other kinds of treatises or even listen to the speeches now from the head of the IMF or more recently even the WTO, a recognition that we have a mode of capitalism that is not inclusive. And so it's not surprising that we see the rules that developed around that economic model also running into strife. And running into more and more strife, the more they are being pushed further and further in the direction that compounds the problems that we see. And so for those of us who followed the Trans-Pacific Partnership Agreement negotiations, most of the controversy, most of the issues around that was not actually about the old-fashioned commodity trade. What we heard most about in this country was dairy. But dairy actually wasn't, it was one small part of this huge 30-chapter agreement. The real controversies were the intellectual property chapter and the extension of copyright and the digital locks on stuff you buy from offshore and then you put it in your DVD player and you can't actually read it because it says you can only read it in another part of the world. Or of course the pharmaceuticals. And so you had whole communities saying, what's a trade agreement doing telling us how we'd run our libraries, how we'd run our pharmaceutical schemes? Likewise on the investment chapter. Of course the big issue here and other places was tobacco. How can you have companies like Philip Morris suing a government over introducing plain packaging tobacco under the investment chapters of these agreements? Where did they get those rights from? Or other parts of the agreement for those of us who were working on financial regulation, why were they deepening the problems that brought us the financial crisis? Why are they disarming governments' abilities to re-regulate the finance sector? And so there were a whole lot of very serious questions about the contradictions that were being perpetuated in the agreement. And this is one of the reasons why it took six years to negotiate, because these debates kept happening. What we then saw was a real problem being able to sell the agreement internationally. Now here we get told it was all about Trump. Well it wasn't about Trump. The reason why it ended up being in Trump's domain was that President Obama couldn't get it through the US Congress. He needed to rely on Republicans and the Republicans weren't going to support it and the Democrats weren't going to have a bar of it. And so it possibly may never have happened, even without Trump. But not just there. You had a whole lot of other countries. Australia's Senate, which the Liberal government doesn't control, they didn't want to support it. In Vietnam, the Vietnamese government decided that they weren't that certain about it and didn't put it up for a vote until they'd seen what was going to happen with Obama. And you had a whole variety of problems across these countries. And it was about the domestic issues that the agreement raised. So not only was it not just about Trump, it wasn't just about old-fashioned trade. It was about particular models. And if you look at problems elsewhere, you see that it's not just about the Trans-Pacific Partnership Agreement, or the TTIP, the EU-US one that's also fallen over. Brexit was, for all of its weirdness, the same as the US election, was about people feeling alienated from being able to control the rules that would govern their lives. By a Politburo called the European Commission in Brussels, you had the issues in Greece. You had in the work I'm doing at present a number of countries withdrawing from bilateral investment treaties and developing their own alternatives. South Africa because it had a case-challenging post-apartheid redistributions. Brazil developing a quite different model. India because it's facing, amongst other things, challenges to termination of telecoms licenses that were correctly issued. And so we're seeing a whole lot of these eruptions in different places. And we need to get away from simply seeing this as being an issue about Trump and the TPP to see that it's actually a contest over the rules and the paradigms that are going to govern international economic law and domestic regimes in the future. Now I just want to make a couple of other points, keeping an eye on the clock. One is that there is a sense of what in the old days we used to call Tina. There is no alternative. This is a one-way track that just you can't have anything different. It's unthinkable to have anything different. Well actually, historically, there are paradigm shifts that always occur. They tend to be about three or four decades long. And then you have a kind of implosion of the contradictions of that model and a new model is born out of it. We had that after the laissez-faire era in the 1910s, 20s, and the Depression and the 30s that gave birth to a whole new economic regime and set of economic rules that became the GATT that balanced the national and the international. We had it in the 1970s with, again, a shift in the economic model as well as a shift in the rules through the birth of the WTO. We're now seeing what Carl Polanyi called the beginnings of another great transformation or what Antonio Gramsci called the interregnum. The old is dying. The new is yet to be born. We don't know what it's going to look like. But there are lots of morbid symptoms around. And those who want desperately to hold on to what is there now are trying to turn back that tide. So when we saw recently the moves in Hanoi by our Minister of Trade to say the Trans-Pacific Partnership Agreement can be rescued and we don't need to make any changes to it. And everyone's agreed that we can do it by the end of the year. Well, hopefully you'll read in the Herald a column in a few days that explains why that's not the case. Not only are we implementing the agreement without the US actually having to do anything in return. So why on earth would the US want to return to the fold when its corporations are already getting what they want without any price? And if they did return to the fold they would have a long list of additional things that they want us to give. But also the other countries themselves are saying this needs to be renegotiated. The deal was done with the US. The US isn't there anymore. We made concessions. We're not going to keep those concessions if we're not getting the trade-offs. And as Bill English acknowledged the other day, you reopen the text, the TPP won't happen. Why then are they so desperate to rescue it? This is my closing couple of points. The first is short-term domestic political expediency. Rather than saying, oh, we've invested so much for the last X number of years in this and it's come to nothing. We are now having the spin to say it will all be right. And then that the opposition parties who are again saying that are anti-trade and anti-corporate. So part of it is that we have an election in several months' time. And it's the short-term play knowing that the outcome will actually be several years beyond here, if ever. But the second reason is that they can see a model in which they have invested for three decades falling over. The trade and services agreement negotiations that I work on in Geneva are now suspended and may never resume. The EU-US one, no one knows what's happening. The Canada-EU one, there's just been a decision of the European Court of Justice that says that every member state in the EU will get a chance to vote on it because of the investment rules. These mega-agreements are deeply problematic. Even the one with China that is supposed to be the alternative is going very, very slowly. That's why he has to flick the switch. And it's not going to look anything like the gold standard that they claim the TPP is. And so ironically the Trans-Pacific Partnership Agreement, the zombie TPP, is actually the best shot they've got to resurrect these rules. The same chapters we're seeing across all of those agreements, especially the new ones on electronic commas, on state-owned enterprises, on data localization and so on. Even now trying to put it back into the WTO with huge resistance. So we're seeing this quite desperate attempt to keep what they call the bicycle moving forward. But my sense is that the bicycle not only has two very flat tyres but it's heading over a little cliff. Our challenge is to work out what's the next lot of rules that rebalance in ways that are constructive for the international arena but also reconstructive for some of the harm that's been done in the last three decades. Coming back to the University of Auckland and now my fourth trip to New Zealand, it's coming back to an institution that teaches the teachers. So I'm a teacher but this institution and two individuals in particular at it have taught me. Professor Scott Optikin as you may know was my tutor and teaching assistant in law school. And he taught me a lot about legal writing including writing briefs. And those of you in the international trade law class that we just concluded about an hour ago know about a lot of graphs and charts. And Professor Optikin was the first one who told me that I couldn't put a graph in a brief. And so I became a trade lawyer not a litigator like him. And you also read in the trade class the chapters on GATS in volume one of the textbook. Those chapters are directly from the lecture notes from Professor Jane Kelsey that I took in 2003. She taught me a lot about trade and services and she's acknowledged in that book very graciously. And furthermore she has taught me a lot about how to look at trade issues from a different perspective. When she mentioned Rogeromics and Reaganomics and Thatcher Revolution, that's the economic paradigm in which I was educated. So when I first started looking at trade rules that's the lens through which I looked at. And you'll notice last Wednesday in class we started with that Ricardo-Smith paradigm. We went through very carefully the analysis of economic comparative advantage and absolute advantage. But you'll notice it didn't stop there. We then critiqued the Ricardo-Smith model, went through its 20 controversial assumptions and then went to Marxist-Leninist theory and dependency theory. All of that is thanks to a broader perspective that I was exposed to with Professor Kelsey. So this is very much a place that teaches the teachers. And one of the ways I can try and give back, aside from saying a few words about TPP, is as I promised to the class that you made a lot in there that I had a gift for you. So after class, you get to come and pick up your free copy that the publisher arranged of this book. We have just enough copies, I won't stack them all up now. And you will see if you look in this book at the index at page 452, you go down to K, and you'll see, oh wow, Kelsey, Jane, pages 35 and 266. And Jane Kelsey is her scholarship, is indeed mentioned at those pages. And you'll see it talks about some issues she's already touched on. And that is first on trade and labor rights issues in TPP. And you'll see that she's cited at 35 as the renowned scholar, Professor Jane Kelsey of the University of Auckland. And at page 266, you'll see her work concerning state-owned enterprises and privatization is cited and quoted. And here she's mentioned again very favorably as a prominent critic of TPP. And it was just a delight to write, putting those little adjectives to say thanks. So don't leave without taking your copy and I suggest getting her autograph on it. So that's a little bit of introduction and thanks to both of you. Now, let me say a little bit about TPP. And please accept my apologies for doing a little bit of reading and having to check back. Hopefully that will facilitate the discussion later. Comprised of 240 lines, Act 4 Scene 3 of Macbeth is the longest scene of that Shakespearean tragedy. The stage is static because the discussion is about what the past teaches the characters for their future conduct. What action should they take given what has happened thus far? Macduff has fled from Scotland to England, where he meets Malcolm, the son of the victim of Regicide Duncan. The past is colored black by Macbeth's murderous tyranny. Not only did Macbeth have Duncan murdered, but also flance, the son of Banquo, plus all of Macduff's family. Does this past mean that Macduff should grieve indefinitely and be passive? Or, as Malcolm successfully argues, does the past mean that grief should be turned to revenge? TPP is the longest FTA in human history, consisting of a cortex of 30 chapters plus 63 annexes, 61 side letters. TPP spans 6,000 pages. It's far easier and more pleasing to read Act 4 Scene 3 of Macbeth, or even all of Shakespeare's longest play Hamlet, than to read just the cortex of TPP. And that's true, of course, for Shakespeare's poetry. Shakespeare wrote 154 sonnets. And the cortex, in contrast to just 154 sonnets, the cortex of TPP, is about 800 pages. No stylistic elegance, no trade rule restricted to 14 lines with a rhyme scheme, no quatrains, no final couplet in Iambic Contaminer. And unlike the sonnets, you don't get themes usually of love, beauty, or even truth. That's not usually a concern in some of these provisions in TPP. Now, the stylistic contrast between Macbeth and TPP is true even if you have a different subjective disposition to trade English. Contemporary trade English, since Gadd has some really odd words and acronyms. Contrary to the popular belief, Shakespeare invented about 1700 words in English, and all of the words, almost all, 90, 95%, are still used in the English language and even still used in the form today. Open any page of TPP, and you are going to be confronted with an acronym you never heard of, a term that you never saw before, and you'll say, let's pick up Shakespeare. Now, linguistics aside, in terms of the difference and the length, there is a crucial substantive similarity. The debate about what the terms of TPP are or are not, or what TPP should or should not contain, or whether TPP should or should not be approved, that's a debate about the meaning of the past for the future. Just like Act 4, Scene 3 of Macbeth, what does NAFTA, what do the post-NAFTAs, what do the Uruguay-Round Agreements teach families around the world about trade liberalization? That's being asked from Kansas City to KL, from Bombay to Bordeaux, from Rio to Riyadh. And the dominant voice, when families and friends and individuals all sit down and get together and talk at their kitchen tables or in the bars, or wherever they speak, the dominant voice in most of this discourse is that akin to Malcolm. People turn your grief over the adjustment costs from prior trade liberalization into revenge. Fight TPP, oppose free trade. Now this book does not take that extreme of view, but nor does it aggressively champion TPP. Neither does it take the view that all the past omens from past trade deals are bad and develop an opposition to trade liberalization. Macbeth made those mistakes when he drew the wrong inferences from The Three Witches and you get the worst outcome and a tragedy everybody dies. On the other hand, it doesn't take the view that TPP is perfect, far from it. It's a remarkable FTA. All of its provisions were secret and we had a little chat in class about WikiLeaks and it was finalized on the 5th of October 2015. The text was not published until the 5th of November 2015 and the text actually was cleaned up and published in February of 2016. Even with the passage since then, that's a lot to absorb, 6,000 pages. Now, people need some sort of sense of what do you think about the deal? And we're all familiar in law schools with grades. So here's the thesis. TPP merits a preliminary grade of a B and the B is an evenly weighted average of a C on economics and an A on national security. 50-50. And the importance of the latter grade should not be underestimated. The connection between trade and national security has not been given enough attention, especially and most surprising maybe in the U.S. Academy. And here, too, there's an analogy with Shakespeare. The acts and scenes in Macbeth take place in Scotland, except for Act 4, Scene 3. That's in England. And on either side of the border, Scottish and English, at a macro level, the play is about more than just the future well-being economically of Scotland. It's the security of the Scottish realm at stake and whether there should be foreign intervention from England to advance that security. So much of the drama that's surrounding TPP that occurs in America is also occurring in the other 11 parties, but not all of it. And much of the drama includes economics and national security both. Now, I'll say a few words about why the C on economics and the A on national security. The C on economics comes from a number of provisions in TPP, some of which Professor Kelsey already referred to. But let's start with one of the perhaps most obvious ones, and that is, is this really about free trade? Is this deal really about liberalizing trade immediately and unconditionally? And those of you know from our class, we use the acronym DFQFEIF, another one of those things that sound more like a rhyme scheme in Shakespeare, but it's actually a trade term. Duty free, quarter free, immediately upon entry into force. As we heard over and over again from American officials in the previous administration, TPP will reduce immediately, well I didn't say immediately, reduce trade barriers, cut tariffs in particular on 18,000 products. Is that really true? Well, yes and no. If you actually look at the tariff schedules that are attached to TPP, you will see that only about 83%, 82.85 to be exact, of the itemized lines, tariff lines, get DFQFEIF treatment, all of the rest are put in a staging category. So for example, New Zealand has three staging categories covering 359 products. Japan, 59 staging categories with 1,203 products. Vietnam, 35 staging categories with 3,106 products. And the staging categories vary in length of time from as short as 2 to 5 years to as long as 20 years, Ballpark, 20 years. That means we don't get full implementation of DFQF for a good 20 years on all 100% of the tariff lines. And the other trick about staging categories is, are the phase-outs front-end loaded, back-end loaded, or equally weighted? Is a tariff of say 100% coming down across 20 years in equal lots of 5 percentage points a year? Or are you doing 10 now and 90 in year 19 or vice versa? Well, as you can imagine, when you look at the staging categories, we see plenty of back-end loading that is keeping the liberalization to later. So to call this a free trade agreement is a misnomer. It is a deal about managed trade even in the most conventional sectors, the agricultural and industrial product sectors. It's about managed trade. And one of the problems which again American politicians fell into the same trap as they did with NAFTA is they oversold the deal to the public. They sold the public on the idea that this was about free trade, cutting these 18,000 tariffs overnight, and will experience all the Ricardo Smith's gains from trade. And that's not the reality of the deal. And I might say when they came to Kansas City, the U.S. trade representative in particular, when they came to Kansas City to try and sell the deal, that was a moderate of the panel, they came with two deficiencies. Let me put it politely. One was they really didn't know their audience. They came from inside the Beltway, read their press release bullet points on cutting 18,000 tariffs and had no clue what the actual interests were at stake on the Missouri or the Kansas City side of the border, whether they even knew about state-line road dividing the border was unclear. And they also came unable, ill-prepared to sell the deal with effective points. I had to give them points to sell the deal. I said, for example, did you realize that Vietnam is in this deal and that Vietnam is a country with which we once fought a horrific war and many of them in this audience are Vietnam veterans. And some of the brutalities were just as brutal as we're seeing with ISIS in Syria. And now there's a 90 million strong market of young people. And guess what? Something we make in the Kansas City area? Motorcycles. Take a look at roads around Hanoi. 40-45% of them are not paved or poorly paved and very bumpy. They certainly cannot accommodate cars made and certainly not made in the U.S. What do Vietnamese young middle-class, rising middle-class people want? Motorcycles. What does TPP do? Bring down the tariffs on motorcycles. What a nice story. This is a country we used to bomb mercilessly. We used to have POW, MIA issues with, and now we could export motorcycles. They didn't even know to sell the deal properly like that. So they either oversell it, 18,000 tariff cuts, or they undersell it by not telling the key stories and the localities. Small wonder why some of the major issues or some of what ought to maybe perhaps not be such major issues depending on your view actually envelop and sink the deal in Congress. Some of them, Professor Kelsey mentioned already. Data exclusivity extending from 20 years to 37 years. Patent protection on biologics. Whether there's a case to be made or not, I'm not sure. I'm not the IP expert. But that case was made in the hands of Senator Orrin Hatch saying, absolutely not. If it's not 12 years, it's not good enough for the US. And the deal in TPP is five years plus three years of market conditions. So you'll see through the details. And those kinds of special interest exceptions actually worked well to torpedo the deal in Congress. Rather than getting a sense of the broader good, the broader mosaic of how this thing might actually benefit the US economy. And the Kansas City Star published a story with data from credible sources on where do campaign contributions go to individual Congress persons. Number two on the list, and I'm not trying to be ad hominem. These are just facts. Senator Hatch. So the positions of many of the Congress people are absolutely, I can't say linked. That'd be false accusation, but absolutely somehow connected, associated. I don't know what the right word is. You have to look at the who's funding home, right? Again, without making any accusation about what's dictating positions. And we saw this pattern in a number of cases. And with the waning of the Obama administration and the rising rhetoric that started with the presidential debates in December January, December 15, January 2016, it was pretty clear TPP was not going to get through Congress. And that's a bit on the economics. What might have been at least a halfway decent argument for common good and seeing how special interests really sunk the deal from the U.S. perspective. That's enough easily along with managed trade to give it a C. Now many critics, and I would definitely accept the criticism. Why'd you give it a C? Why not an F? Why not a D? It could be even lower on economics. And that's a fair enough critique of the book. What about national security? Why an A? We just discussed in class earlier today and a little bit yesterday, the trade national security nexus. TPP, from the American national security perspective, is about containing China. Containing the Communist Party's rise across the Asia Pacific region. Containing China as run by the Communist Party. And what do I mean by that? Well, geographically, everybody should be familiar with the Nine-Dash Line. The Nine-Dash Line are claims that the Communist Party has to about 90% of the South China Sea, through which 50% of world trade passes. Some of those claims have already been put paid by the Permanent Court of Arbitration in July of 2016 ruled entirely in favor of the Philippines. And if you look at some of the literature under the United Nations Convention on Law of the Sea, some of the claims truly are questionable, like creating an island that wouldn't normally be there and could not normally be inhabited, and then claiming it as a basis to have territory and a zone around it. That's not permitted under the Law of the Sea. It's not just the U.S. that's interested or at stake here. It's all the other claimants to freedom of navigation and sovereignty. So the idea of across the South China Sea. So TPP was stitched together with Vietnam, Malaysia, Philippines, Brunei, several of the countries, Japan, that have interests in the island disputes. Initially, the Obama administration didn't want to use the word containment. It is a provocative term. It does date back from the Cold War. And least of all, me wants to bring back memories of the Cold War or be provocative with respect to China or the party. The best is a strategic partnership, not conflict, obviously. So I don't mean to be provocative about that. But in fact, TPP was specifically drafted by the American team to exclude China from the negotiations so that the U.S. and its 11 partners could write the rules like on state-owned enterprises and then invite China in, not exclude China later on if China wanted to come in. So it was never designed to forever exclude China, but it was designed to create a rules-based system in Asia-Pacific, see how things go over the Nine Dash Line, and maybe China might come in. It's not a surprise then that four American secretaries of state and eight secretaries of defense, or I might get that, I might have converted that, four secretaries of defense and eight secretaries of state endorse TPP. One of them even said, TPP is worth an aircraft carrier to me. Now we have 10 aircraft carriers in our fleet, one is coming on board. That's pretty significant. So when we look at TPP, we want to look at it not only as an economic creature and not only from the perspectives of free trade, managed trade, and all of the points that Professor Kelsey correctly mentioned about effects on local people, whether it's the right model of liberalization. Why is it going into issues like data exclusivity? Why aren't we leaving that up to the countries? But we also need to see it as a national security device. Now, as you know, famously, the current president withdrew from TPP as one of his first acts. That decision by the president has been reiterated as final by the U.S. Trade Representative Robert Lighthizer and by other officials in other venues. So if they stick to their word, what they will do is renegotiate NAFTA with Canada and Mexico maybe try a bilateral deal with Japan. Continue perhaps the other FTAs that we have bilaterally with TPP partners like Korea, Singapore. And then who knows what the U.S. trade policy will be with respect to New Zealand. My own view for what it's worth, that is a waste of time and a waste of taxpayer money and a waste of resources. To have the U.S. Trade Representative renegotiating NAFTA, rethinking the bilaterals, hey, we just spent eight years doing that, it's called TPP. If you have a problem with TPP or our partners in New Zealand have a problem with TPP, let's look at it together, the 12 of us. That doesn't seem to be where things are headed. And as the title of the talk says, we'll have to just wait and see about what the future holds. Don't forget your book before this is over. Not carrying them back. Well, thanks for that. That was absolutely two fascinating perspectives on this and absolutely right on topic. So this is just to be clear, this dialogue also serves as the last hour and a half of Raj's class on international trade law. Not only was Raj the LRF distinguishes any fellow, but he was also teaching a class for us in the master's program in international trade law. The second time that he's taught here, the first time was with Jane. So that's terrific and I'm sure that raises a lot of issues. We've got about a half an hour, which is a long time. So I'd invite anybody in the audience, Jane's former students, Raj's students or anyone else who's here to ask any questions and we'll get some dialogue going, which is the point of this talk. So who would like to make a comment or ask a question to get things going? Don't be shy. Hmm? Okay. Question for you, Raj, but I'm sure, Jane. I might repeat it just for the audio. Yeah. When you said in the 8th National Security, I thought maybe you meant sovereignty, which is probably, you know, being the key sort of lightning rod here is around the impact of TPPA-like agreements on the ability of countries to regulate or re-regulate. Do you have, was that part of your sort of an assessment on national security, the issue of, you know, the demon credit of security in the nation? It was part of the economic evaluation, not the national security evaluation. It's a great question. Yeah, sure. The book tries to define criteria for assessing on an economic sense and a national security sense and why to give a C versus an A. The problem that you've identified is what the book talks about in the sense of this deal reinforces plutocratic oligopolistic interests. And it goes through from ancient Greece. What's the definition of plutocracy? And then from economics, what are oligopolies? And then what are some of the specific provisions in TPPA where you see plutocracies and the rules that they favor that reinforce the oligopolies that they control? Where do you see some of those rules in TPPA? The national security dimension was more traditionally military interests. That is the issues of sovereignty in the sense of the islands and freedom of navigation. And underlying those interests of value systems between the parties involved, what the values the Communist Party is proposing across its people into Asia and what the values traditionally the U.S., New Zealand, Australia, some of the other countries have shared. So the answer is yes, but in the other realm. The problem with that answer is it kind of does stretch the definition of economic evaluation. You could say, well, how come you're saying democracy is part of the economic calculation? That wouldn't be the traditional neoclassical approach, the Chicago school approach, but in a more broad-minded and liberal sense it would. But it also conflates values to exclude the value of democratic control. So I mean I question the extent to which any reference to values really does come within that conception of national security. So to be less vague, the values I'm thinking about are what does the Party stand for in terms of individual rights and freedoms that the U.S. military is traditionally safeguarded after the Second World War throughout the Asia-Pacific? Like in Vietnam. Like in Vietnam. I think there's a different, we have a different framework of looking at some of this. And some of what I've been doing recently on the mega deals, there's the geopolitics argument, which is the kind of national security, whose rules are going to govern the world. There is this strategic set of arguments, which are different countries have different reasons for doing what they're doing. And then there is a political economy argument. And I think where we have a difference, for me the political economy issues are what then raises the questions of where is power held in an economic and a social and political sense, which is where I see the instabilities happening. So I think we have a different approach to that. When I was in China last week it was when the One Belt One Road Summit was on. And the discussions were really interesting because on the one hand we're familiar with the TPPA and TISA and TTIP arguments which are, because of course China was excluded from TISA as well, who's going to make the rules in terms of what interests. And the Chinese were describing that as the old Bretton Woods model. Whereas the One Belt One Road Initiative was depicted as being pro-development, pro-SMEs, not the elite of the corporate beneficiaries, but the One Belt One Road actually looking at how you integrate for the benefit of developing countries through this different model. And so you've got this set of rules and strategies that are attached to these quite different approaches. And my concern going back to political economy is that the One Belt One Road Initiative is based also on a highly digitised economy, which is the same as we're seeing now through the e-commerce parts of TPP and TISA and the WTO proposals, both of which are premised on the notion of constant disruption, creative destruction, instabilities, constant remaking. And both of the models seem to me to carry that problem of instability, insecurity, automation leading to job losses and so on. And so there's a political economy problem with both of the models. You've got the geopolitical layer, you've got the strategic interest there, but there's actually a fundamental shared problem with the China approach and the US approach. Yeah, I would agree. And just to pick up on that a little bit. The Chinese are selling One Belt One Road as a pro-development, but a different way of looking at it is that as you may be suggesting is, this is about taking care of bloated state-owned enterprises controlled by communist party oligarchs in China in steel or aluminium, you name it, because who's steel, aluminium, etc. is going to be used on the One Belt One Road. And it's easy to be exploited because where else is Pakistan going to turn, right? So you have to look through the labels and ask who's really benefitting from the deal. And if I could just add, given that we're doing a dialogue, two other elements to that. One is that it's not just the SOEs in China, it's Jack Maher and Ali Baba, who are the equivalent of Gaffa, Google, Amazon, Facebook and Apple. And both of them are looking at controlling the digital platforms, which others will be supplicants to. And so you've got and heavily financialized in the China side of things as well. And the second is that we're now seeing internationally China pushing bilateral investment treaties and investment chapters in FTAs that are exactly the TPPA model. And they're trying to push it in the WTO now for the Buenos Aires Ministerial in December in the name of trade facilitation and investment. And so China is trying to use exactly the same legal tools to protect its offshore investments against the kinds of backlashes that the US, EU, Japan and others have also used them for. Can I ask a question? This is not my area of law, but two things just struck me. One on the security issue, one on the interest, special interest issue. So my area of law, which is criminal law, when people choose juries in the United States, nobody thinks that the prosecution of defense wants to choose a fair jury. They want to choose a jury that's favorable to them. The idea is that in the contest of strikes and preemptories and challenges for cause, something of approximately, sort of the approximate equivalence of a fair jury kind of comes out. So when I get into the talk, it strikes me that it never occurred to me that trade agreements were really all about the common good. It strikes me at the basic notion of any agreement, any sort of contract between parties is trying to argue their own interests. And it's no surprise to me that countries want to argue their own interests and fight for their own interests. If those interests are the interests of their corporate donors or the interests of their labor unions or the interests of whatever they see it, they will do that. Now there's an issue, of course, of who gets to capture the interest market, right? I mean whose voices allows. But the idea that countries are negotiating for themselves doesn't strike me as so unusual. But maybe it's the difference between a trade agreement that's based on notions of common good or a trade agreement just based on individual notions of particular goods from which some rough approximation that we can all live with comes out. So I guess I'm wondering, it sounds like you're both critiquing that in one way or another, but why is it actually surprising? How could it be any other way? That's my first question. Well, I mean, trade agreements need not be about the common good. And as you correctly suggest, it's not surprising when countries approach it from a completely self-interested perspective and try and extract the maximum amount of concessions from the other side and give the minimum amount reciprocally. In fact, traditionally trade negotiations are conducted on the basis of reciprocity. But it's long been understood in the GATT since 1947 that at the end, when we all sit down and we look at a text, we agree on it as part of what's called a single undertaking, that we're all going to move forward with no country objecting because we all believe there's enough in it for us that it's worth moving forward. And we also benefit from being in the system. We benefit mutually from the rising prosperity and hopefully poverty alleviation that the deal is bringing about. Now, that hasn't always happened. Certainly not the poverty alleviation as we know across the last 20 or 30 years but there has been a sense of we're all collectively in it together. And in fact, when we come to the area of dispute settlement, I'll propose your comment about jury trials, the reason that in most cases, not all, that we get compliance with WTO adjudicatory outcomes by the losing parties because they know they're repeat players in the system doesn't always work, but generally they say, well, I lost this time. All right, I'll comply. It may take time. You know, maybe I'll drag my feet, but I'll comply because next time I'm going to be on the other side. So there's been this underlying common good anime. Now, it's not called that. That actually comes, the term common good comes from the principle of social justice theory. And I think that one of the problems which I, in that terminology, which I think Professor Kelsey absolutely rightly mentioned starting off was we've lost this shared sense. The public that looks at the trade agreements and the officials who negotiate it and the legislators have to pass it of what's in it for all of us. And in fact, I remember being told, and we probably all heard this repeatedly, that Congress people and senators will not sit down and read all 6,000 pages or even the 800 pages of core text. And they may give a couple of staff members the time to do that, maybe. But what they'll do is what we call guerrilla raid missions into the text. You look for just that interest, just that provision that you care about based on your interest groups in your constituency that you represent or that fund you from out of state. And just to finish the point, it's really, really important for everyone to understand and actually Professor Optu is a better expert at this, the effect on U.S. politics including trade politics of the Supreme Court decision in Citizens United, which allows for unlimited campaign contributions to political action committees. Pick your lobbying group. They can fund candidates, PA PACs, to an unlimited degree. And while hypothetically there's not supposed to be any link between the PAC and the candidate, I think we know what the reality sometimes is. And that is worrisome because it can really make getting a sense of the common good and trade deals through Congress. I would say it's almost even simpler. You've got someone like Donald Trump just saying America first. And that's just an explicit rejection of the notion of any underlying basis of common good in a free trade group. I'm not sure that common good actually... I'm much more of a cynic. Yeah, well that's kind of the opposite. But Tony Angi when he was out here some time ago did the Masters Trade course as well. And from his perspective, the asymmetry of rulemaking in the international economic law arena that is a form of legal imperialism of who made the rules and then who built on the premises and the underlying rules that were developed through the colonial and imperial era that then formed the base of the GATT and how many countries were in the GATT originally. And part of the problem with the WTO now is Dan, there's all these developing countries in there who aren't letting us have the rules we want so we go off and we make our own rules in our own arena. Very asymmetrical. USFTAs based on a model agreement. What's the room for negotiation? You negotiate around the edges. And so even when you've got a criminal trial you've got a question of how equal are the parties. But when you look at the Trans-Pacific Partnership agreement even when Japan came in, it was the US plus the limit. Because there was no negotiation around certain things. Well the Aussies were tough on beef. He was a hot tie. And Japan really was tough on rice. But yeah, but they had how many sacred products that came out of rice. What we're seeing now, and this is I think what is the most important rulemaking development at present is the attempts to, even if TPP is dead, to make it live through other agreements. So making it normative. And it's been called organ harvesting. And in the texts that we've got in the WTO now for the ministerial in December, it's the same texts in Asip. We're seeing Japan and Korea and Australia and New Zealand tabling the TPP texts there. But you've got China, you've got India and you've got ASEAN that operates by consensus. So there you've got a bit of your courtroom contest. Back in the WTO, you've now got, the developing countries are not themselves united. The BRICs are all over the blooming place. And so it's South Africa, it's the Africa group, it's the LDCs that are the ones who are trying to resist that expansion of the agenda. There's normative rules in the WTO at the ministerial. And so it is, it's an institutional power politics game about whose rules will reflect, not just the individual corporate interests, but as I said, sort of what's the model of capitalism that's operating that the rules need to serve. And I think we really are having, we're having a contest between China's version of the model and the US version of the model. And one of the interesting illustrations of the divergence sometimes of interests among developing countries came up in the context in the TPP negotiations on rules of origin for autos and auto parts, where Mexico was taking one view along with Canada and finally brought along the US, whereas Japan wanted rules of origin that protected its supply chain for autos and auto parts that ran through Vietnam, a TPP party, and Thailand, it's not a TPP party. So basically the Vietnamese and the Japanese wanted lower regional value content on autos and auto parts to qualify for origin, whereas Canada and the US, and to some degree Mexico, wanted a higher NAFTA, or even perhaps higher rules of origin. So there was a negotiation over that all-important number which we studied in class, the 20%, 25%, or 62.5%. And one of the interesting countries to watch, and I always tell this to officials in the Gulf, particularly in Saudi Arabia, because Professor Kelsey mentioned what model should we look at. So look at Mexico. Mexico is a really interesting country. You see how their trade positions have matured over the decades as they have become more and more of a developed or developed like country, even though they've been fighting a horrific drug war. And Mexico came out with this proposal which ended up being adopted in TPP, which is, look, let's look at the specific kinds of auto parts at stake. If it's a low value added auto part, like let's say a windshield wiper, we don't want to become, we're not going to become rich making windshield wipers. That can be done fine in Vietnam or Laos. So that can be a 25% rule of origin. But on something far more sophisticated, like an engine system, or maybe the audio system that has Bluetooth or wireless, that we want to do. That we're going to stake more of our development on. So Mexico has been able to see itself as it is and as it wants to be, and then take specific technical trade policy positions in the negotiations. That's kind of been a pretty cool thing to watch since NAFTA. And it's interesting because this is not something that you'll hear from the current crop of American leadership about, well, how has this benefited common good? How has it benefited our partner Mexico? And if you know much about U.S. history, that's another country with which the U.S. has often been in war at, grabbed land from, and had terrible prejudicial relations with. I could ask my second question or someone else could ask a question, because we've got about 10 minutes left. Yeah, go ahead. Guys, sorry. Sorry. You were talking about behind the border disciplines on Ghana. Do you think that they're modified in future trade agreements in order to preserve the right to be trade in the public interest? Or do you think that in order to preserve their right, or you expect them to operate for a system of time? And let's just keep the answers a little quick, just in case you have a question. Well, one of the things that we're seeing increasingly over recent agreements is technical ways that remove future rights to regulate. I mean, whether it's negative lists and investment in services chapters or in financial services, never regulating new financial services and products that you don't know about yet, and so on. In the work I've just been doing, analyzing all of the dreadful TISA texts from last November, we are seeing really, really strong pressure there for governments to agree that whatever commitments they make now by whatever new technologies exist in the future that you've never thought of. So if you think about drones and driverless trucks now and you think of, goodness me, what might the next generation of those be? And we've given away the right to regulate them. Oops. And one of the big fights inside the EU on TISA, one of the reasons why it stalled late last year, was that the European Parliament has said that the Commission cannot promise never to regulate new services. And it's that fundamental question what Lila raised about sovereignty or about the ability of the right to regulate because the right to regulate in the agreements, which is rhetorically mentioned time and again, is only the right to regulate to the extent that the rules in the agreement allow you to regulate. And so it's a meaningless piece of rhetoric which trotted out as a piece of reassurance to any critics who don't have the next bit of the ammunition to go back and say, but actually this is what it means. So yeah, that regulatory issue, especially with the trade and services agreement because services is actually all about regulation, isn't it? There's no pretense that it's about motor vehicles or garments or whatever, although increasingly advanced because they're IT driven and so on. And it's a similar story in TBP with the services schedules. There are actually two sets of annexes. They're called non-conforming measures. And in one of the annexes is Professor Kelsey suggesting the trade negotiators, if they know what they're doing and they're clever and they really want to protect the right to regulate, they have to specifically put the schedule to service sector or sub-sector or sub-sub-sector in the right annex and then list the right exceptions. And to do that requires all of you. You lawyers representing different service industries have to go to MFAT or go to the USTR and say, you better preserve the right to regulate being buried in that non-conforming measure annex. And if you don't, you'll lose it. It's sort of a squeaky wheel gets the grease. One of the interesting things in the TESA New Zealand schedule, which I happen to have seen, is that they have tried to correct some of the errors that we pointed out in New Zealand's TPP schedule. And so even countries that have been doing this for a long time and considered themselves well-advanced on services, they make mistakes, let alone not having the crystal ball. Yeah. Firstly, I've had the pleasure of reading in James' undergrad class for international economic regulation. As she said, she's quite on the other end of the spectrum from the right, and I've just completed his master's class. So it's quite cool to see you guys both talk about this stuff. But really... It's cool for us. Having, like, you know, studied for the both of you and obviously doing some research with Jade and writing a paper for you now. I do get the, like... And I asked you this in the first day, which is what Scott just said. Inherently, you're going to negotiate as a country for the best of your interests, right? Which means that you're... And you talk about reciprocity and making sure that there's a common good. And Jade obviously thinks that that's kind of fizzled out. You might have started away with that, but that's not happening now. But what I'm trying to get to is, what do you, as academics, what do you think, how can you make it better? Be it by tweaking what you have with the WTO and bearing in mind that it's only 15, 20 years old. Or as perhaps what James says is, an overhaul or more of a structural change from the 30, 40 years that you usually see changes in the economy. But what do you do about it? How do you make it a better system so that you are actually helping with developing countries or the WCs? And like we spoke about today, the SDT treatments, the Special Differential Treatment, which is meant to help them, but the U.S., for whatever reason, doesn't actually enforce any of it because it's got these listed products or whatever, which is the kind of side of the big case and I agree with that. But how do you make it better or what can you do to make sure that while the economics of free trade are kept in play, but how do you do it structurally? There's a quick response to this because we're pushing time. You have to be careful. Well, I mean, WTO is there. Some of us were not great fans of the non-trady parts of the WTO, such as the intellectual property and the GATs and so on. But there is improvement that could be made there if there was the political will, but there is not the political will to address some of the outstanding issues. The more interesting question from my viewpoint now is especially with these agreements that are falling over. I have a three-year research project which is options and strategies to exit agreements. And the three case studies are the investment agreements which countries are exiting and developing new models, really interesting to talk to the governments doing that, which include a number of the BRICS, different models, capital controls because there is now a recognition that capital controls are legitimate policy tools and how do we extract that? And then the tobacco issues and ongoing issues from there about how do we remove from the domain of so-called trade agreements the regulatory issues that are important for social policy reasons. And, you know, the falling over of the mega deals leaves some space. And so this is where probably, although I know, Raj, you've talked about putting better things into the agreements as well. It gives time to do that thinking. But the thinking has to happen because our government and some others are held back on trying to keep the bicycle going forward. Yeah, I agree. I think that it's going to be very hard in the U.S. because we are maybe 20 or 30 years into this cycle of an American model of capitalism and it doesn't really stress the common good. And we're seeing the results with the population in terms of its health care and the social services. And I think that process is going to have to play out across the U.S. at the ballot box. Until we get a shift in thinking about trade and common good in the U.S., which is, I don't see that in the next, well it could in the 2018 elections, we'll see. But it's more of a cultural shift and it's a shift that takes leadership that we haven't seen. You know, I think a second change that needs to happen is a lot more attention to poverty alleviation and the link that connects dots between trade, growth in per capita GDP, more equitable income distribution and reduction in the recruitment bases for al-Qaeda and ISIS. I think that case still isn't clear to many in the American public. That it's, while some of the leaders in violent extremist organizations, CEOs, might come from wealthy backgrounds like Osama bin Laden himself. The foot soldiers are marginalized and they're often poor. And that can be whether they're from Manchester or whether they're from Raqqa. And they're, I'm still perhaps naive enough to believe in that what we talked about, that Cordell Hall vision, that if you can generate growth through trade and if the benefits are properly spread and not hoarded by a plutocratic elite, that you can help reduce that sense of marginalization. And I think a third piece of it, and this is a shared interest, or this is a common good interest, shared interest is on climate change. One of the chapters in the textbook is of course on climate change and we are now seeing, we all have a shared interest in it and we're seeing a lot of trade issues come up from climate change. We just did the solar panels, solar modules case, right, with India and the U.S. today. And there are issues of national treatment and that has to be worked out. So the very phenomenon that it exists and it is at least partly caused by humanity has to be sort of, you know, I think acknowledged. The bottom line cutting across all of these points is education about globalization and about trade which in the U.S., frankly, depends on where you go. I mean, if you go to good college prep high schools if you go to good colleges, you get it. But if you are stuck at a lot of very poorly funded schools with diminishing funding and cutting education budgets, it's hard to persuade people about these benefits and what the opportunities are and they seem more risk and threat and fear which leads to prejudice than they do opportunity. All the more reason to come here and take classes from one or both of you. Unless you don't trouble me. I think we are going to have to wrap this up because we said we would. So, Crystal, let me thank Professor Bala Raj and Professor Kelsey Jane. This is a fantastic opportunity to have two world leading experts on issues related to trade and globalization in one room together. I hope we get to do this again. Obviously a lot of issues going forward. So watch this space and thank you all for the students who came. And above all, this is now the official end of Raj's International Trade Law class. So the last thing to do is please come up and get your books. And thank you for coming. Thanks to me for recording this. And just conclude right there.