Free Trade or Self-government?

In the final weeks of the election campaign, the question of whether or not to sell some of our key assets remains, for many voters, a defining issue. Yet, while that question is hotly debated, a related issue of equal if not greater importance is sliding by under the radar.

That asset sales should raise real concerns is hardly surprising in a country that has already sold a higher proportion of its economy into overseas ownership than any other developed country. For many, it raises fears, not just about the loss of control over our economic future, but about our powers of democratic self-government as well.

Yet, while those issues rise to the top of the election agenda, Bill English will – this weekend in Hawaii – give consent in our name to the broad principles of a new multilateral agreement which will pose an even greater threat to our continued existence as a genuinely self-governing democracy.

He will do so without ever consulting us. Not only that – we will not be allowed to know what is in the agreement, and even the record of the negotiations themselves will be kept secret, it seems, for up to four years.

Parliament will not be allowed a say until the deal is done. There will be no scrutiny by a select committee. The government – in the persons of the Prime Minister, the Minister of Finance, and the Trade Minister – will make these secret decisions for us.

Yet we already know that the Trans Pacific Partnership Agreement is certain to raise issues of the greatest importance. We already know that the government is so convinced that “free trade” is a good thing that it will be prepared to sign away almost anything for the chance to sell to our trading partners the products that – in a food-hungry world – they want to buy anyway.

We know that our government will roll over at the mere sight of a dollar bill. Who can forget the unseemly haste with which we gave away huge tax advantages and changed our labour laws at the behest of Warner Brothers? Hardly the action of a government or a country with any self-respect.

Little wonder that there is a real concern that the American pharmaceutical industry will insist that the role of Pharmac – the government agency that has used its buying power to keep down the price of prescription medicines and has accordingly saved New Zealanders hundreds of millions of dollars – will have to be reduced so that the drug companies can extract much greater profits from us.

On this, as on other similar issues, Ministers give us general assurances – and by the time we discover what those mean, it will be too late.

It is now clear, however, there is an even more insidious and threatening danger at the heart of this secret agreement. One clause that the Americans will insist on (as they have done with other similar agreements) is a provision that would allow foreign private corporations to sue our government (including all future governments) if they saw any sign that the terms of the secret agreement might not be adhered to.

The legal action would be brought, not in our own courts, or even in a properly recognised international court, but in special tribunals set up specifically for the purpose. It would be necessary to establish these courts especially because they would be dealing with very unusual cases – cases where privately owned companies could sue a sovereign country to enforce treaty provisions to which those companies were not even parties.

Let us be in no doubt what that would mean. It would mean that an American corporation would have far more extensive rights against our government than any New Zealand company would ever have. It would mean that a future government, perhaps elected to change policy in an area like environmental protection or health and safety, could be prevented from doing so by a foreign corporation suing that government in a special tribunal.

It would mean, in other words, that concessions made in secret by today’s government could never be claimed back. We, as a country, would be locked into a marketplace controlled by foreign corporations.

This is not mere speculation. American and European companies investing and trading overseas have regularly enforced these rights arising from similar treaty provisions.

Ironically, the history of this kind of provision has begun to attract attention because it has come back to bite those who created it. The Germans, some decades ago, began to insert such provisions in treaties with third-world countries, so that the interests of German investors in those countries could be protected. Such was the power of German investment, and the weakness of the recipient countries, that no one took much notice.

Now, however, with the crisis in the eurozone and the growing investment of formerly third-world countries in Europe, the boot is on the other foot – and European countries are suddenly crying foul at the prospect of being sued by private companies from China or Korea.

Before New Zealand gets embroiled in similar proceedings, could we at least get a clear answer to a simple question? Does the TPPA, to which Bill English nodded assent this weekend, contain a similar provision?

Bryan Gould

11 November 2011.