• Self Government Anyone?

    Getting lawyers to agree on anything is notoriously difficult. So when one hundred retired judges, prominent legal academics, lawmakers and leading practitioners from New Zealand and overseas put their names to something, it’s time to sit up and take notice.

    What is it that raises the concern of so many eminent lawyers? It is the prospect that our government is about to trade away – in secret – an important part of our powers of self-government.

    The Trans-Pacific Partnership (the TPP) currently being negotiated is presented as a straightforward free trade agreement. But it is clear that the Americans will insist (as they have done with other similar agreements) that the agreement should allow foreign corporations to stop our government (or any future government) from changing New Zealand law in a way they think might undermine their value.

    Private companies from the other eight countries, even though not themselves parties to the agreement, would be able to sue our government, not in our own courts, but in private tribunals set up specifically for the purpose (and existing practice shows that the arbitrators in such tribunals can be judges one day, and lawyers for litigants the next).

    Under these arrangements, an American corporation, for example, would be given 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 (smoking comes to mind), could be threatened with a crippling law suit unless it backed off.

    The rights protected by these provisions go far beyond real property rights and include financial instruments, mining concessions, intellectual property, public-private partnership contracts and even market share.

    Nor is it just the government that would be hog-tied. A particular worry for lawyers is that our courts, too, could be over-ruled. The foreign investment tribunals have decided that courts are part of a country’s government (riding roughshod over any doctrine of the separation of powers) and that they, too, must comply. Even if our courts had upheld the validity of a law properly passed by the New Zealand Parliament, that decision could be challenged by a foreign corporation alleging it breached their rights under the TPP. Even a jury decision in private litigation could be challenged and lead to the government paying millions in compensation.

    In a recent case brought by Chevron, for example, a tribunal ordered the Ecuador government, in defiance of their constitution, not to enforce a ruling by Ecuador’s Appeal Court that Chevron must pay $18 billion to clean up toxic waste in the Amazon Basin.

    The concerns expressed by the 100 signatories to the lawyers’ open letter released today do not arise from mere speculation. Provisions like those causing concern have a well-established track record. When there were only a few cases, no one took much notice. But as American and European companies investing and trading overseas have increasingly enforced the rights arising from these treaty provisions, concerns have grown.

    And with good reason. There has been an exponential increase in the numbers of such cases brought by (largely American) foreign corporations against governments which are parties to agreements similar to the proposed TPP. Over $675 million has been paid out in awards made by the special tribunals in cases involving US companies alone.

    What adds to the concern is that the negotiations on these arrangements are being conducted by our government in secret. We are not allowed to know what is being discussed, and by the time the TPP is presented to Parliament, the deal will have been done. There will be no meaningful debate or Select Committee scrutiny. We won’t even be allowed to see what trade-offs the government has made until four years after the text has been signed.

    Yet the concessions made in secret by today’s government would permanently lock New Zealand into a marketplace controlled and dominated by foreign corporations. Voters would be left without any possibility of redress.

    When the Prime Minister was asked about these issues when the negotiations began some months ago, he described fears of special legal rights for foreign investors as “far-fetched” and pooh-poohed any concerns. Yet the Australian government has been quite open in declaring that it will oppose any such provision, basing itself on the Australian Productivity Commission’s warning that it would have no economic justification and carry policy and fiscal costs.

    Our own government, by contrast, has demonstrated in its dealings with overseas corporations like Warner Brothers, Sky City and Shanghai Pengxin how far it is prepared to go to accommodate overseas business interests. We have good reason to fear that the TPP will continue that process.

    We have already sold off into foreign ownership a higher proportion of our national assets than any other developed country. The TPP could mean that control over what remains, now and into the future, would in effect be handed over to international corporations. This is a heavy price to pay for a trade deal in which our partners, at most, commit to buy what they want to buy anyway.

    Bryan Gould

    7 May 2012

    This article was published in the NZ Herald on 9 May.

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