Monday, 7 February, 2011 - 07:40

In November last year, Prime Minister John Key described as "far-fetched" the idea that investors could sue the New Zealand government directly in a secret international tribunal to enforce rules in the proposed Trans-Pacific Partnership Agreement (TPPA).

This week, US trade negotiator Barbara Wiesel said that was no longer New Zealand's position, according to TPPA critic Professor Jane Kelsey.

In response to questions about New Zealand and Australian positions during a briefing to civil society in Washington on 31st January Ms Wiesel said "New Zealand had retracted the Prime Minister's statement. It is not their position."

Under standard US terms for such agreements, investors can claim millions in compensation from governments on the grounds that new regulation has adversely affect their investment. Under a TPPA that would apply to investors from all participating countries, including our largest sources of investment, the US and Australia, Jane Kelsey said.

"In other words, the Key government is happy for pharmaceutical firms in the US, Australian banks or Singapore-based Brierley Investments to sue the New Zealand government for millions in compensation if they think new laws or policies are unfair or unreasonable or erode their profitability", said Professor Kelsey.

"We saw with the Hobbit, just a threat from a foreign investor is often enough to see a government cave. The leverage of Warners over our labour laws and taxpayer subsidies will pale into insignificance with a TPPA."

Professor Kelsey speculates on three explanations for the flip-flop.

"Either John Key did not know what his negotiators were proposing to do when he described investor-state enforcement as "far-fetched"; or he was lying to the New Zealand public; or he has buckled to pressure from the US, and possibly his own Minister and officials, to agree."

"This proposed bill of rights for foreign investors is even more frightening when government has announced assets sales and privatisation of ACC, policies which failed in the past and required the government to step back in."

"The Prime Minister needs to be upfront about the government's real position before the next round of negotiations begins in Chile on 14 February and explain why he is prepared to give foreign firms the legal power to override New Zealand's sovereignty and extract settlements of hundreds of millions of taxpayer dollars".