China could have sued under China FTA if Crafar farm sale was declined

Admin2 — Mon, 30 Jan 2012 03:59:39 +0000

If the New Zealand government had declined the Shanghai Pengxin purchase of the Crafar farm it could have faced an international law suit for breaching its free trade agreement with China, says University of Auckland law professor Jane Kelsey.

‘When China’s politicians warned New Zealand politicians last year that the agreement was a two way street it is clear they were referring to their rights as foreign investors under the so-called “trade” treaty.’

That view was reiterated in Shanghai Pengxin’s application to the Overseas Investment Office (OIO).

The New Zealand China Free Trade Agreement was signed in 2008.

The government cannot treat applications from Chinese investors differently from similar applications from other countries’ investors under what is known as the ‘most-favoured-nation’ or MFN rule.

Shanghai Pengxin’s application pointed to numerous purchases of farmland by investors of other nationalities, and claimed that rejection of its otherwise well-founded application would amount to anti-Chinese discrimination.

Prime Minister John Key admitted on Campbell Live on Friday night that the FTA ‘has in it the most-favoured-nation status that means we can’t discriminate’.

Sale: “cast(s) a spotlight on the even greater risks of the more extensive foreign investor rights proposed for the Trans-Pacific Partnership Agreement (TPPA), a debate that the government is desperate to avoid.”

That contradicts paragraph 62 of the OIO advice to ministers that there was no problem under the China FTA in a paragraph that does not address the MFN rule.

‘Presumably the Prime Minister got alternative advice from elsewhere’, Professor Kelsey said. She urged the government to release those documents.

‘The government would have pulled out all the stops to avoid a Chinese investor supported by the Chinese State taking it to international arbitration for breaching the FTA, even if it felt it was on strong legal ground.’

‘Such a dispute would have huge ramifications for New Zealand’s diplomatic and economic relationship with China.’

‘It would also cast a spotlight on the even greater risks of the more extensive foreign investor rights proposed for the Trans-Pacific Partnership Agreement (TPPA), a debate that the government is desperate to avoid.’

According to Professor Kelsey ‘the US is demanding much stronger protections for its would-be investors in the TPPA than China secured and the Key government has apparently rolled over and agreed to them, unlike Australia’.

‘The popular angst being channeled towards the Chinese needs to become a more principled opposition to deals that sign the sovereignty of our resources over to foreign corporations and who can sue the government in offshore courts if they don’t get their way.’

Download the OIO’s Decision Summary

Based on a Media Release By Professor Jane Kelsey

Trans-Pacific Partnership: New Zealand jumping onto a sinking ship

admin — Mon, 15 Mar 2010 05:49:14 +0000

Talks started in Melbourne today for the US, Australia, Peru and Vietnam to join an expanded Trans-Pacific Strategic Economic Partnership (TPP, currently comprising NZ, Chile, Brunei, and Singapore, known as the P4 Agreement), with November 2011, when the US hosts APEC, as the target to seal the deal. This will be used as the backdoor means to secure a US/NZ Free Trade Agreement. Already the Americans have said that they see this as more than a mere free trade deal but as a vehicle for broader Asia/Pacific economic integration, which has enormous political implications. Alarm bells should be loudly sounding.

A free trade deal with the US would be catastrophic for any remaining economic sovereignty that New Zealand has. CAFCA says this not because we are “anti-American”. All such FTAs – such as with the existing P4 partners, or the more recent ones with Malaysia, the Gulf States and Hong Kong – pose the same threat to a greater or lesser degree. And our opposition to them is not because of “xenophobia” but for well founded grounds that they simply enmesh NZ more and more tightly in a cobweb of transnational corporate control.

So it’s a recipe for disaster to enter into an FTA with the biggest economy in the world, headed by a Government that aggressively pushes the interests of American Big Business (there is a seamless flow between the US Government and US Big Business, as is evidenced by the trillion dollar bailout of the mega-greedy financial sector, a textbook example of socialism for the rich).

And why would NZ want to jump onto a sinking ship? The US has big, big problems at the moment, with huge debt, record numbers of people losing their jobs and/or homes, company crashes, and a preoccupation with having to do something to fix its ramshackle social infrastructure (President Obama has postponed his Australian trip, which was to coincide with the start of these negotiations, to spend more time dealing with his campaign to reform the laughing stock that is the US health system). World trade dropped 12% in 2009, the biggest plunge since WW2, and globalisation is no longer flavour of the month – except with blinkered ideologues like Mike Moore, whom the Government has appointed as Ambassador to the US with an FTA as his self-proclaimed top priority. We’d be better off getting as far away as possible from this particular sinking ship.

A full blown US FTA will:

Remove any remaining “restrictions” on foreign investment, as the US regards NZ’s (purely token) oversight regime as “discriminating” against US transnational corporations, even though the Government has promised to further “liberalise” the Overseas Investment Act, a law which is in danger of being liberalised to death.

push up the price of medicines by potentially hundreds of millions of dollars a year by attacking Pharmac;

make access to digital recordings more expensive, and copying more restricted;

attack our GE controls and food labelling,

weaken our controls on food imports where they might carry diseases.

It is always presented as a means of getting NZ agricultural products into the US market. Ask Australian sugar cane growers how successful they were in getting their product into the US under the US/Australia FTA (Australia is one of the countries wishing to join the TPP, so that what they managed to protect from their FTA with the US is now also up for grabs). The Americans have a simple policy when it comes to “free trade” – do as they say, not as they do. In other words, they want the world’s markets opened up to their products, while keeping their own heavily subsidised agribusiness sector fully or heavily protected from outside competitors.

Both National and Labour myopically see a US FTA as being the Holy Grail of their adherence to the cargo cult of “free trade”. It’s actually a poisoned chalice and it will be New Zealand which will be poisoned by it.

This is also presented as NZ’s “reward” for being a loyal little satellite of the US, and taking a bigger role in the American war in Afghanistan. Older New Zealanders will remember the infamous “guns for butter” phrase of Sir Keith Holyoake, Prime Minister during our involvement in the Vietnam War. It means sending our soldiers to fight in US wars in order to, theoretically, gain trade access. Nothing much seems to have changed in the ensuing 40 years (except now it is “guns for milk”, as the Government’s trade policy is driven by a single minded focus on serving Fonterra’s interests). It is worth noting that the Waihopai spybase is NZ’s biggest contribution to each and any American war, much more so than any deployment of a few SAS troops to help prop up a horrendously corrupt Government of warlords and drug barons in Afghanistan.

People who kid themselves that “we” stand to gain from a Free Trade Agreement with the US would be wise to reflect on the rueful words of Sir Christopher Meyer, Britain’s Ambassador to the US in the runup to the 2003 US/UK invasion of Iraq. Speaking to the current public Inquiry into Britain’s part in that invasion and war: “Meyer expressed frustration that Britain was unable to gain much diplomatic leverage from its position as the US’ chief ally. Britain failed to persuade the US to liberalise trans-Atlantic air travel and, almost on the day when British commandoes joined the fighting in Afghanistan, the US imposed tariffs on imports of specialised British steel” (Press, 28/11/09). If this is the way that the US treats its “chief ally” when it comes to protecting its own trade and economic interests, how do you think little old NZ will get on?

For full details see the New Zealand Not For Sale Website www.nznotforsale.org

There you will find a wealth of information about just why this proposed Free Trade Agreement is such a bad thing.

We particularly recommend that you read Bill Rosenberg’s excellent article “Who Wins If We Get A Free Trade Deal With The US?”

Murray Horton

Secretary/Organiser

CAFCA

Campaign Against Foreign Control of Aotearoa

Box 2258, Christchurch, New Zealand

cafca@chch.planet.org.nz

http://www.cafca.org.nz

New Zealand Not For Sale » Overseas Investment Act

China could have sued under China FTA if Crafar farm sale was declined

Trans-Pacific Partnership: New Zealand jumping onto a sinking ship