New Zealand Herald, Auckland
Leaked draft of trade deal exposes risks - professor
By Audrey Young
14 June 2012
The Trans Pacific Partnership agreement being negotiated at present would open up New Zealand Governments to litigation for tightening regulations in such areas as gas and oil and exploration or even introducing a capital gains tax, according to Professor Jane Kelsey of Auckland University.
She was commenting last night after seeing a chapter on investment, leaked to the Washington based organisation Public Citizen, which has released it.
Both she and the group are strong critics of the trade deal being negotiated by nine countries, including the United States, New Zealand and Australia.
Dr Kelsey said the leaked chapter had been authenticated as a recent draft.
It contained a section on investor-state disputes allowing investors to claim damages against Governments in special tribunals if their investments are impaired by Government action.
The leak showed that Australia was the only country of the nine objecting to the investor-state dispute proposals.
Dr Kelsey said the New Zealand Government last week opened tenders for oil and gas exploration in 23 onshore and offshore sites at a time when it had weak regulation on such exploration.
"you can guarantee those oil firms would threaten to sue if new regulations hit their share value or profitability."
Whether or not they had a good legal case would be beside the point.
"They can tie up Governments for years in massively expensive legal battles. Just that threat can ’chill’ the regulatory decisions."
She said the draft text should ’’worry the heck out of Labour’’ if it was serious about introducing taxes on capital gains or speculative financial flows.
She believed that a section protecting investors against ’’expropriate or indirect expropriation" could apply to a Government re-regulating the broadcasting market, for example, or cutting the number of pokie machines allowed in a casino.
Dr Kelsey also said that the draft would limit what a Government could do in a financial crisis because it would not be able to impose controls on the transfers of money in or out of the country.
If a bid by the United States to have Government bonds treated as investment was successful under the TPP it would affect sovereign debt restructuring in situations such as Argentina once faced and Greece is facing.
Dr Kelsey said the leak sent a message to TPP negotiators as a whole that "obsessive secrecy is its own worst enemy - it simply confirms they have something to hide."
She called on negotiators to release the current texts at their next meeting on July 2 in San Diego so the deal could be subject to full and informed scrutiny.
The other countries in the negotiation are Singapore, Chile, Brunei, Malaysia, Peru and Vietnam.