Secrecy In TPPA Negotiations Mocks Democracy

- Jane Kelsey

The animated commentary and debate in June 2012 over the leaked investment chapter from the Trans-Pacific Partnership Agreement (TPPA) negotiations shows how relevant and important it is – and why the nine parties are so desperate to keep it secret. There was an equally vibrant buzz in the US after Public Citizen leaked the text. Huffington Post’s story logged 28,000 comments within a day, treble the previous highest response. The reassurances that trip off the tongues of Trade Minister Tim Groser and Prime Minister John Key seem much less convincing when they can be checked against the text.

Charter Of Rights For Transnational Corporations

Public Citizen’s analysis shows the TPPA text goes further than existing US investment treaties. It far exceeds any of New Zealand’s. True, other chapters that are still secret could change that view. That is all the more reason to release the whole text now. The simplest way to describe the leaked chapter is a charter of rights for investors across the nine countries. Other investors will try to take advantage of the rules through the backdoor. Those rules will lock in the current foreign investment regime, so we cannot become more discriminating about what foreign investment we have, why, and on what terms. They also allow overseas investors to seek compensation if Government regulation substantially affects the value or profitability of an investment. Local investors won’t have that power.

An investment can be anything from shares and real estate to mining or casino licenses and contracts for public private partnership schools. Most discussion of constraints on the Government’s right to regulate has centred on tobacco controls, because Philip Morris is challenging Australia’s plain packaging laws under another investment treaty (trademarks are investments) and has hinted at similar action here. But a raft of other policies could also prompt investor complaints. Imposing a capital gains tax. Slashing Sky City’s pokie numbers, especially if National guarantees more in a Convention Centre contract. More stringent mine safety laws, a ban on fracking, iwi approval for drilling in wahi tapu, or tighter regulation of mining by companies that the Government has invited to tender. Capping electricity price increases. Tighter alcohol retail laws. Reversing ACC privatisation, as Labour did before. Stronger finance sector regulation, such as capping a bank’s market share or banning crossover retail, investment and insurance activity.

Especially scary, given the Eurozone meltdown, is that New Zealand has agreed to US demands not to use capital controls to stop hot money flows that play havoc with the currency and exports. The leak confirms what we feared - that all countries except Australia have endorsed the power of foreign investors to sue our governments directly in secretive offshore investment tribunals for breaching these far-reaching guarantees and protections. We should applaud and join Australia. Instead Prime Minister Key said all parties should adopt the same rules – by implication the other eight should gang up on Australia and force it to back down.

Corporations Can Sue Governments

If the US gets its way, it may not even be necessary for investors to allege the Government has breached the TPPA rules. They could use the ad hoc offshore tribunals, which do not operate under the same legal disciplines as domestic courts, to enforce contracts with the Government on mining, electricity supply and other natural resources. Whether foreign investors have a strong legal case is usually beside the point. They can tie Government up for years in hugely expensive legal battles. Just that threat can “chill” the regulatory decisions.

Groser delivered the familiar platitude that the “Government will not sign any agreement which stops us now, or in the future, from regulating public health and other legitimate policy purposes”. The Minister knows there is a mountain of case law in the World Trade Organisation disputing that right to regulate - and that governments often lose. Ultimately, the ability to regulate is useless if overseas investors can sue the pants off us for loss of profits. Recent moves to tighten up the wording of rules on “expropriation” and “fair and equitable treatment” in free trade deals aim to restrict the creative interpretations of the investment tribunals, but they are far from watertight. New Zealand is apparently not supporting the most robust version of these restrictions in the TPPA.

Obviously, Major Concessions Have Already Been Made

In any case, a far-reaching “most-favoured-nation” clause will let investors shop around for better rules in New Zealand’s other agreements, mixing and matching provisions to build super-TPPA obligations. The Greens and Mana have taken a strong stand for sovereignty. Winston Peters called on negotiators to withdraw from the next round of negotiations in San Diego (in July 2012. They didn’t. Ed.) and launch a Select Committee inquiry so all New Zealanders can see the full proposal and comment on it. The Government majority rejected a petition seeking such an inquiry in 2011 (and none has been forthcoming in 2012. Ed.).

Labour’s position is still unclear. In the House, trade spokesperson Clayton Cosgrove seemed to side with Groser, but said later that he wanted to get the Minister’s commitment to protect New Zealand’s sovereignty on the record. Groser has no problems saying the TPPA, like other agreements, would cede some sovereignty for, as yet, unspecified gains. The Minister is adamant the text will remain secret until the deal is done. Alarmingly, he says neither he nor the Cabinet have seen the text. Yet it is clear that major concessions have already been made. Who, then, is making these decisions and driving the negotiations and to whom are they accountable? Such mocking of democracy needs to end now.

This was published in the New Zealand Herald, 20/6/12. Ed.


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