BEWARE THE TRANS-PACIFIC PARTNERSHIP AGREEMENT!

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Why should we be concerned about the Trans-Pacific Partnership?

If these negotiations succeed they will create a mega-treaty across nine countries that will put a straightjacket around what policies and laws our governments can adopt for the next century.

Which countries are involved in these negotiations?

As of November 2010 there are nine: in addition to the US and New Zealand, there are Australia, Brunei, Chile, Malaysia, Peru, Singapore, and Vietnam.

When do the negotiations begin?

There have already been three rounds of negotiations. The fourth round is in Auckland on the week of 6 December 2010 at the Sky City casino!

What could the TPPA affect?

Everything from foreign ownership of land and resources, including mining licenses, media laws and support for local NZ content, Treaty settlements, control of financial speculation, the price of medicines, to compulsory labelling of food, plain packaging of cigarettes, privatisation contracts for water, prison, schools and hospitals under public private partnerships (PPPs)

Which NZ policies will be key targets for the US?

The US trade office publishes an annual hit list of trade barriers in each country. NZs current sins include:

- restrictions on sale and manufacture of GMOs and labeling of GM foods

- NZs strict quarantine and labeling (sanitary and phytosanitary) rules

- Parallel importing, especially for music and computer programmes

- Intellectual property protection in the digital media and pharmaceuticals.

- the Pharmac scheme for buying drugs and subsidies

- voluntary local content quotas for broadcasting

- dominance of Telecom over competitors and new entrants

- increased restrictions on foreign investments

How come it is described as a trade agreement?

Thats a clever branding exercise. It is really an agreement that guarantees rights to foreign investors that operate out from any of the TPP countries – think entertainment (Warners and Sony), pharmaceuticals (Merck and Pfizer), mining (RTZ and BP), tobacco (Philip Morris), retailers (Wal-Mart and Woolworths), finance sector (Merrill Lynch, Westpac, AIG, Macquarie, JP Morgan), agro-business (Cargill, Monsanto), private water operators (Bechtel, Veolia) and much more.

That sounds like the MAI that we defeated in the 1990s!

It is the Multilateral Agreement on Investment on steroids. The TPP is effectively a bill of rights for big corporations that is designed in secret and shackles future governments and our democratic right to decide future policy and laws.

How would a TPPA give foreign investors special rights?

That works at several levels.

1. laws that allow foreign investment would be locked so they could only be weakened, unless the government reserves the right to strengthen them before it signs the agreement. Previous NZ governments have already done that for everything but sensitive land, privatisation of existing SOEs, and a small number of assets.

2. it would guarantee foreign firms are consulted over proposed new laws and the government would have to show how it had responded to their views. NZers have no such guarantee of input into our own laws!

3. if the government does go ahead with a new policy or law that the investors say affects the value of their investment they could sue the government for millions of dollars for breaching their rights under the TPPA (trumping our domestic laws). The case would be heard in a secret international court run by the UN or World Bank, not in our domestic courts.

Sounds like Warners and the Hobbits on a massive scale!

Thats a really important lesson we saw how one company could pressure the government to change labour laws overnight and get massive tax subsidies from a government that says theres no money for health, early childcare, public transport, Imagine the chilling effect of a threat from these foreign companies to take a law suit against the government if it goes ahead with a law they dont like.

What are some examples of restrictions?

Current examples of laws currently being considered include plain packaging of cigarettes, tighter regulations onshore and offshore mining exploration, stopping foreign sales of taonga that are under Treaty claims, banning the sale of the kind of toxic financial products that fuelled the financial crisis, restrictions on sale of strategic assets to foreign firms, a tax on hot money flowing into and out of the country

How does the NZ government justify the TPP?

The familiar line about better access for Fonterras milk powder into the huge US market. As US economist Joseph Stiglitz said Most of these free trade agreements are managed trade agreements and theyre mostly managed for the advantage of the United States, which has the bulk of the negotiating power. There is no real negotiation and one cant think that New Zealand would ever get anything that it cares about. They also think a TPPA can morph into an Asia-Pacific wide FTA yeah, right!

What can we do about it?

Get the word around all your networks, facebook pages, websites and media

Ask your MPs, local government and iwi leaders if they know whats going on

Demand the government holds an inquiry to bring the negotiations into the daylight

Organise meetings and action around the TPPA

For information and campaigning websites on the TPPA in Aotearoa and internationally see www.tppdigest.org, www.nznotforsale.org, and follow the links.

Get No Ordinary Deal, ed. Jane Kelsey from www.bwb.co.nz, bookseller or local library.

2 COMMENTS

  1. Corporates suing NZ govt no longer far fetched

    &lt ;http://tppwatch.org/2011/02/06/corporates-suing-nz-govt-no-longer-far-fetched/>

    7 February, 2011

    Last year Prime Minister John Key was asked whether the Trans Pacific Partnership Agreement would include provisions that allow foreign companies to sue governments for passing laws that might affect their profits.

    These provisions are common in other US trade agreements, such as NAFTA (an agreement between the US, Canada and Mexico), where governments have paid out US$326 million “compensation” to corporates.

    Philip Morris is also using similar provisions to threaten countries that have introduced plain packaging of cigarettes.

    John Key said in November last year that these ‘investor state dispute’ processes sounded far-fetched, ruling out these provisions

    &lt ;http://www.scoop.co.nz/stories/HL1011/S00125/no-ordinary-deal-book-launch-pm-response.htm> .

    Now, a US trade negotiator has said that was no longer New Zealand’s position.

    In response to questions about New Zealand and Australian positions during a briefing to civil society groups in Washington on 31st January, the trade official said “New Zealand had retracted the Prime Minister’s statement. It is not their position.”

    Read the full story here

    &lt ;http://tppwatch.org/news-video-audio/media/key-backtracks/> ,

    and make sure you sign the open letter

    &lt ;http://tppwatch.org/what-is-tppa/release-the-text/>

    to the Prime Minister calling on him to release the text of the Trans Pacific Partnership

  2. THE TRANS-PACIFIC PARTNERSHIP (TPP) –

    A BILL OF RIGHTS FOR FOREIGN INVESTORS

    What is the Trans-Pacific Partnership?

    A proposed ‘free trade’ treaty between the US, New Zealand, Australia, Brunei, Chile, Malaysia, Peru, Singapore, and Vietnam. The fourth round of negotiations start in Auckland on 6 December 2010.

    Why is investment in a ‘free trade’ treaty?

    That is a brilliant branding exercise. Old-style trade agreements aimed to cut restrictions on import and export of cars, TVs and agricultural products, such as border taxes (tariffs) and quotas. Those are almost all gone, except for sensitive sectors that some countries won’t change (like dairy in the US). US corporations led the way in converting trade agreements into investor-rights agreements, starting with the North American free Trade Agreement or NAFTA in 1987. A TPPA would be a NAFTA-style agreement.

    What counts as an investment?

    Not just the obvious, such as a manufacturing plant or shares in a company. It could cover residential property developments, shopping malls and tourism venture, a private education institute or rest home chain, exploration and mining concessions, banks and finance companies, intellectual property rights, contracts to run PPP prisons, hospitals, roads or schools, and much more.

    Do foreign firms just want to the right to make an investment under the TPP?

    They want much, much more. Big business from the US, Singapore and Australia in particular want a TPPA to give them five kinds of guarantees:

    – no restrictions on their right to invest in a country;

    – no restrictions on their right to move money in and out of the country, including all profits, even at a time of financial crisis;

    – prior consultation by governments on any laws or policies that might affect their business and an explanation of what notice the government took of their views;

    – governments won’t introduce laws, policies or practices that reduce the value of an investment without full compensation, even if there are sound public policy reasons; and

    – rights to sue the government before a secret international UN or World Bank tribunal for compensation if they believe new laws, policies or decisions breach the protection of their property rights under the treaty.

    Can governments really be sued by investors under trade treaty?

    There were 66 cases brought by investors under NAFTA by November 2010, challenging the right to re-start a toxic waste dump, a levy on tobacco companies to cover smoking-related health costs, plain packaging of cigarettes, a ban on gasoline additives and on certain pesticides, levies to support local R&D, and much more.

    Did the foreign investors win these cases?

    The successful cases resulted in over US$326 million paid in compensation. But a claim or a threat of a case can be just as effective in ‘chilling’ government decisions – just like Warner Bros got changes to NZ labour laws and massive tax breaks by threatening to take the Hobbit out of NZ. Those outcomes are often invisible.

    Are there other examples outside NAFTA?

    Highly controversial examples in other investment treaties involve major water companies that seek huge damages when governments close down privatised water contracts because they have failed to deliver the needs of local communities.

    Do we know that these rights would be guaranteed in a TPPA?

    Investor-state dispute powers are standard in FTAs the US signs. The only exception is Australia, which said ‘no’ in the Australia US FTA and has said it doesn’t want investor state disputes in a TPPA.

    What is the New Zealand government’s position?

    When a reporter asked the PM that question, John Key dismissed the idea of investor-state enforcement as ‘far-fetched’ – he didn’t seem to realise that it existed in NAFTA, in five of NZ’s existing FTAs and a bilateral investment treaty with Hong Kong, China. Trade Minister Tim Groser seemed equally ignorant when he supported the PM’s view in a question in the House. Groser floundered and made some very basic errors when asked about the investor-enforcement powers in the NZ-China FTA and clearly didn’t understand the rules, even though he sat on the select committee that heard submissions on that Treaty.

    But Groser said there are safeguards to protect NZ’s sovereignty in these FTAs

    Presumably he meant the Annex that tries to restrict the grounds on which an investor can complain about an ‘indirect expropriation’ – a government measure that reduces the value of the investment. However, there is no guaranteed protection for the public interest and there are plenty of grounds for foreign investors to bring claims and force the government into long and costly cases, with damaging effects on ‘investor confidence’.

    Are there any other protections?

    Each party can list aspects of foreign investment that aren’t subject to the rules. But NZ has very few restrictions in its FTAs. At present these cover sensitive non-urban land, some restrictions on fishing quotas, sale of assets currently in state ownership, and special restrictions on Telecom and AirNZ shareholding and boards of directors.

    What if government decides to tighten up on foreign investment?

    It is almost impossible to add to the list. A ‘standstill’ rule locks in the current rules, except for the few areas the government has reserved. In the Singapore agreement, every new liberalisation is also automatically locked in. That would have happened if the latest review of foreign investment had gone to plan and weakened the rules even further. Instead, the government tightened them but only for rural land, where it still has the policy space to do so. Labour’s new policy to restrict sales of sensitive assets would run into problems; they already had to look for loopholes when they looked for ways to stop the sale of Auckland airport to a Canadian pension fund.

    Why worry about a TPPA if NZ already has these obligations in other FTAs?

    Because the US firms are litigious and will use their power mercilessly, as Warners has shown even without the TPPA leverage. The same powers would accrue to Australian investors, who own most of NZ’s banks, supermarkets and retirement villages, and Singaporeans, including firms like Brierleys that moved offshore. Even European or Japanese investors could get greater rights than NZ businesses or citizens under a TPPA by operating through a firm located in a participating country.

    For more information see http://www.TPPWatch.org

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