The Trans-Pacific Partnership text confirms the federal government's rampant over-selling of the economic benefits to Australia. While heralded by a few, mainly food exporters for opening foreign markets, any benefits from the TPP to our economic wellbeing will be small and short-lived.
The TPP is not about multilateralism but discriminatory regionalism personified. It is further proof that efficient globalism (or multilateralism) founded on the WTO's non-discrimination principle is being replaced by inefficient regionalism built on discriminatory Preferential Trading Agreements (PTAs). Discrimination between trading partners distorts global trade. The TPP is another nail in the WTO's coffin and globalisation on which Australian prosperity has relied.
Negotiated secretly like all PTAs, the TPP covers under 40 per cent of world trade; major traders e.g. EU and China are excluded. It not only discriminates against non-TPP members but as a bunch of PTAs the TPP also entrenches discrimination between its parties. It is riddled with side deals, different transition periods, unequal member-specific and member non-specific tariff quotas, and incomprehensible rules of origin, just to mention some discriminatory measures. It is more about managing trade discriminatorily among members than open competition. 
The TPP is a bizarre mix of confusing negotiated outcomes bearing little resemblance to globalised trade. Its complexity guarantees it will be a nightmare to administer and understand, for traders, investors and consumers. The TPP simply super-imposes a layer of discriminatory regionalism on an already overlapping and tangled web of PTAs between TPP members and non-members. Trade in the Asia Pacific, as elsewhere, will now become even more of a 'dog's breakfast,' compromising global efficiency. Rather than simplifying the global trading system, PTAs like the TPP are making it less transparent and more cumbersome.
The TPP promotes discriminatory inefficient regional supply chains by encouraging firms to import inputs from and export to preferential markets. Yet establishing efficient global value chains requires cutting across all regions.
The US, a hegemon, wants to impose its trade rules on others through the TPP. President Obama has admitted the TPP exists to enable the US rather than China to set the trade rules in the Asia Pacific. Australia has no interest in any hegemon setting the rules, which risk being biased in its favour. Global trade rules are best set multilaterally and enforced in the WTO to safeguard the trading interests of other nations.
We want no repeat of Australia's bilateral with the US (the AUSFTA) where we agreed to US demands not just to offer preferential tariff and investment access to our market, but to strengthen IP protection, seemingly contrary to Australia's own economic interests. These IP provisions, favouring US firms, have now essentially been extended to all other TPP members. After rejecting US demands to adopt ISDS provisions in the AUSFTA, we accepted them in the TPP (except with New Zealand). Foreign (and not domestic) investors can now sue our government in an outside forum. Australia should avoid trading off negative domestic policy changes simply to clinch a trade deal.
It is inconceivable that discriminatory regionalism will somehow lead to globalisation and multilateralism. PTAs, as the TPP shows, are non-connectable. We are seeing the development of an international trading system that resembles an incomplete jigsaw puzzle with missing pieces. Mega-regionals like the TPP entrench discrimination, including within, and add additional layers of convoluted discriminatory bilateral PTAs that do not help. The only solution lies in all governments multilateralising their "spaghetti bowl" of preferences to remove discrimination. However, this will not happen while ever governments choose discrimination over non-discrimination. Reviving the WTO to effectively defend globalism and non-discrimination would help, but instead governments persist in destroying it. Those advocating PTAs due to the failed Doha Round are only hastening the destruction of globalism and non-discrimination, with full disregard of the adverse impacts of discrimination on trade.
Contrary to official claims, the TPP has not really advanced trade liberalisation in Australia or elsewhere. All tariff reductions negotiated are spoiled by being discriminatory, and have the minimal relaxation of tariff quotas on food. Further, the TPP, like all PTAs, is more concerned in other areas with negotiating commitments on paper (e.g. services and government procurement), which often are less restrictive than existing measures and/or contain various loopholes and exclusions that ensure trade restrictions remain.
Assertions on the benefits to Australia from the TPP rest largely on the greater market access gained for our exporters. However, such limited transitory gains to a few exporters do not guarantee national economic benefits to Australia. This requires much more. Greater market access abroad, for example, does nothing to improve our efficiency or to benefit our consumers and taxpayers.
A far better approach would for Australia to unilaterally remove our own trade barriers. These reforms could be comprehensive and non-discriminatory, and should include abolishing domestic subsidies and our many protectionist quarantine measures, just to name a couple. Such reforms would deliver far greater national economic gains than the TPP and all other PTAs put together. They would improve Australia's productivity and permanently boost growth by benefiting all efficient Australian producers, whether exporting or competing domestically with imports and enabling our best activities to flourish. Australian consumers, who ultimately should be targets of reform, would gain from cheaper and more diversified goods and services.
While Australia cannot control the proliferation of PTAs elsewhere, we can ensure that those involving us are independently assessed and monitored to guard against continued over-promising and under-delivering. In entering PTAs the government should realistically recognise their limited role in advancing Australia's economic wellbeing. We should also avoid locking ourselves into bad domestic policy choices in PTAs.
Quite simply, the government should stop believing its own propaganda and instead base trade policy setting on transparent economic analysis. Setting trade policy on the back of exaggerated claims of the economic benefits of PTAs and the TPP is not only delusional but likely to distort policy priorities.
The way forward is for the government to ask the Productivity Commission (PC) to routinely monitor implementation of Australia's PTAs to see if they are delivering the claimed national welfare gains, and if not to assess why not. Failing this, the PC should initiate its own monitoring as part of its statutory duty to publicly scrutinise industry assistance. It's worrying that both Trade Minister Robb and our chief trade negotiator, the DFAT secretary, have strongly defended secrecy by resisting calls to subject PTAs to on-going transparency and public analysis, needed to evaluate their economic worth - they sound like vested interests guarding their turf.
The biggest improvement the Government could make would be concentrate on unilateral reform, and playing down the role of PTAs. A decent dose of unilateral non-discriminatory reform, including in non-direct trade areas, would do more to recover our loss in international competitiveness which our slippage in global rankings reveals. PTAs cannot undo the mess.
Australia should start by unilaterally multilateralising all of our discriminatory trade-related measures adopted in the TPP and other PTAs e.g. extend negotiated zero tariffs, including on cars, to imports from all countries, and apply the more liberal investment screening thresholds now applied bilaterally to some investors to all sources.
Such changes should become a pillar of the government's response to the PM's latest call for undertaking enlightened and soundly based economic reforms.
Malcolm Bosworth is a Visiting Fellow, Arndt-Corden Department of Economics, ANU.