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Alert: Hong Kong Free Trade Agreement
9 November 2000
In 1997-98, public outrage led to the defeat of the proposed Multilateral Agreement on Investment (MAI) which would have given unprecedented powers to transnational corporations. Yet actions by this government threaten to achieve many similar aims piece by piece. This is despite both the Alliance coalition partner and the Greens, on which the government's existence depends, having campaigned strongly against such policies.
The few controls on foreign investment that remain are being weakened step by step. Major overseas takeovers continue. Fletcher Paper and Air New Zealand are just two since the Labour/Alliance government took power.
I am very concerned that there has been no action to strengthen the feeble controls that are still in place. There are no "national interest" criteria for the great bulk of foreign investment where no significant land or fishing quota is involved. We need to regain the ability to choose investment that suits us, and we need stronger 'good character' laws for foreign investors.
The trigger point for investments to require Overseas Investment Commission approval was raised from $10 million to $50 million by the outgoing National Government, and nothing has been done to reverse that.
In fact, the Singapore "Closer Economic Partnership" cements that in. It commits us to opening even further to foreign investment over the next few years, particularly in the services sector where important social services such as health and education will eventually be affected. On top of that it strips us of the ability to reinstate international capital controls.
I am concerned that this is only the start. There are investment liberalisation agreements that were negotiated by the previous government with Chile and Argentina in 1999, which have MAI-like "expropriation" clauses that would allow investors to force the government to pay compensation, or even revoke laws, if environmental or social measures reduce their profitability. These need only Cabinet approval to go into effect. They have never been opened to public consultation or Parliamentary debate.
The government has announced negotiations with Hong Kong on a similar agreement to that with Singapore. It has committed itself to developing a wider version of the Singapore and CER agreements with the whole of South-East Asia, through negotiations headed by Bill Birch. It has talked about new free trade and investment agreements with Chile and the U.S.A. It supports opening more services to foreign investment through the General Agreement on Trade in Services (GATS) under the WTO, and there are proposals for other investment agreements there too.
I therefore strongly urge you to
The world's political climate has changed radically with the 1997 Asian financial crisis, the Seattle debacle and the numerous demonstrations, critical reports and studies that have followed. Though changes in domestic policies recognise the failure of previous approaches, New Zealand's international economic policies seem not to have taken any notice of the sea-change that has occurred.
Rather than continue to follow the previous government's international free market policies, which are completely at odds with the new government's opposition to free market policies at home, New Zealand needs to manage its economic relationship with the rest of the world. New Zealanders need to have a say in that.