• 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.

  • 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.