Political & Economic week ahead: will TPP deal close?
Two big offshore deals kick off the week. The first is the Trans-Pacific Partnership Agreement.
The long-awaited deal is a bit like the Jabberwocky poem in Alice in Wonderland – the alarmism means the political atmosphere is full of strange and threatening noises which only leave a general impression that something bad is about to happen.
As Alice observed of the Jabberwocky poem – “Somehow it seems to fill my head with ideas – only I don’t exactly know what they are! However, somebody killed something: that’s clear, at any rate.”
We should know later today – maybe, although as of late morning the negotiators were still changing the time of their press conference, which is to be held in Atlanta, Georgia.
The other big offshore event is in the early hours of Tuesday morning and is potentially an even bigger deal than the TPPA – the OECD’s crackdown on multinationals shifting their profits to low-tax jurisdictions.
This project is called ‘BEPS’ – base maintenance and profit shifting – and is aimed at firms like Apple. Google, Facebook and Starbucks, not to mention a whole portfolio of lower-profile firms, minimising their tax by reporting profits and intellectual property ownership in tax favoured jurisdictions.
The big question hanging over BEPS is how much sign up there will be from the big players – especially the US. The other one is how far the information sharing will go between tax authorities, and whether any disputes system will be binding on the participants.
Potentially, it has far greater implications for the giving up of both personal and national autonomy than any of the draft positions leaked thus far from the TPPA talks.
Both those international issues should dominate politics this week – and if they do not, then both New Zealand politicians and New Zealand media are letting New Zealanders down.
On the economic front, tomorrow sees the release of the latest business mood data from the NZ Institute of Economic Research.
The quarterly survey of business opinion is the largest of these surveys and although it does not cover farmers – unlike other business mood surveys – it covers the food processing industries.
Last week’s rival survey from the ANZ Bank – which happens more frequently and which does cover farmers – seemed to indicate a floor in the recent drop in optimism has been reached.
The NZ Institute of Economic Research survey, which is out tomorrow morning, should show whether that is a trend or a rogue result. Of particular importance is not so much the headline question about the general outlook for the economy – this is always a bit rogue, in all the surveys – but firms’ expectations for their own activity, and, in particular, their hiring and investment intentions.
In recent surveys, these have stayed remarkably strong even as businesses report their general outlook is on the wane.
Whether those job and investment plans are still solid is a particularly important part of tomorrow’s result.
