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TPPA and sovereignty

Written By: - Date published: 10:23 am, May 21st, 2015 - 13 comments
Categories: Globalisation, law, trade - Tags: , , ,

The fate of the TPPA seems to waver day by day.

In an interesting development for NZ yesterday Tim Grossing Grosser (who has joined the PM as an international laughing stock) admitted that the TPPA will include the most controversial of provisions:

These are called “investor-state dispute settlements” / ISDS provisions. They are complex and controversial, depending on the details they can work for NZ or they can surrender our sovereignty. David Parker has an excellent summary here:

  • ISDS provisions can help protect New Zealand companies against unjust treatment in overseas countries where governments do not treat investors or exporters fairly, especially where Courts are not free from corruption nor impartial and separate from government.
  • However other forms of these clauses undermine the sovereignty of governments, including our own, to regulate for public purposes including:
    • Environmental standards for clean water or air, or climate change, and protection of public property rights – like terms for use of public water and access to rivers and lakes.
    • Public health measures such as what health treatments should or shouldn’t be able to patented, and controls on smoking.
    • Whether a country can control the overseas purchase of our farmland or housing if that affects values.

ISDS provisions have been included in deals negotiated by Labour with China, Malaysia and ASEAN. These have been well considered versions (no one has sued NZ under them yet) – as Key put it in 2012:

…fundamentally New Zealand does make sure that, and has ensured in the past, there are safeguards when it comes to investor-State dispute settlement provisions.

Naturally the government claims that the ISDS provisions of the TPPA will be well designed too. But will they? Such clauses are falling out of favour. I’m going to quote extensively from this excellent piece by Bruce Munro in the ODT:

Prof Kelsey has been watching the proliferation of ISDS cases since the new millennium.

”The investor-state dispute process in the investment chapter of the TPPA is enforceable by the companies themselves. That’s the whole problem,” she says.

”And that investment chapter is very broad in what it can capture in terms of government action.

”The number of cases has absolutely mushroomed … because the international investors have grasped on to these with alacrity in the last few years.” A United Nations report on the rise of ISDS says governments are concerned.

Ongoing cases include a United States pharmaceutical company suing Canada because its supreme court refuses to recognise a drug patent; Germany being sued for phasing out nuclear energy; and Egypt for raising the public sector minimum wage.

Closer to home, Australia is being sued by tobacco giant Philip Morris under an investment agreement the country has with Hong Kong. WHEN, in late 2012, Australia became the first country to introduce plain packaging of cigarettes, Philip Morris responded with an ISDS, arguing the new packaging unfairly impacted on its investment.

The tobacco company has also partly financed a case being taken against Australia by five tobacco-producing states through the World Trade Organisation (WTO).

In 2012, Mr Groser was reported as saying he did not believe the investor-state dispute procedures being negotiated in the TPPA would limit the Government’s ability to pass laws. Two months ago, the New Zealand Government announced its Bill providing for mandatory plain packaging on cigarettes would be delayed until the WTO case against Australia’s plain-packaging law had been concluded.

In Europe, the backlash against ISDS provisions in trade agreements is growing. The European Union is in the middle of negotiating its own version of the TPPA with the United States. But things are coming unstuck for the Transatlantic Trade and Investment Partnership (TTIP) over the issue of investors suing governments. The EU has pressed pause on negotiating the investment chapter of the agreement while it holds public consultation on the issue. France and Germany have declared they will not sign up to a deal that includes ISDS measures.

Of course, the exact detail of the proposed TTIP, TPPA and the other free trade deal ”biggie”, TISA (Trade In Services Agreement), are unknown because negotiations are held behind closed doors. Unknown, unless you are among the 600-odd US corporate advisers who have access to the text and provide input to it.

What is publicly known about the content of the TPPA comes largely from leaked draft chapters. Critics say this is not good enough; living in a democracy means citizens should have the right to know about, and have a say in, what is done in their name.

Calls for the TPPA text to be publicly released and debated have come from, among others, the US Congress, the vice-president of Peru and opposition politicians in Japan, Australia and New Zealand. … Prof Kelsey [says] ”If we have nothing to fear [from the agreement] then show us the text”.

Grosser has confirmed that the TPPA (if it ever happens) will contain ISDS provisions. Such provisions are increasingly seen as problematic, and we can’t have any confidence that they will be negotiated well when US “corporate advisors” get to see the text and we the people do not (see this excellent insider account of the massively excessive secrecy surrounding the development of the TPPA).

Unless and until the text of the TPPA is made available for public discussion I for one hope that the rumors death of this process have not been exaggerated.

13 comments on “TPPA and sovereignty ”

  1. Chooky 1

    Good Post!…. including summary by David Parker, Bruce Monro and conclusions by Prof Jane Kelsey

    …imo the Labour Party should be very actively and publicly opposing this secret agreement….as are American politicians


    ..this should be a number one issue that all New Zealanders are aware of ….our sovereignty depends on it

    Prof Kelsey’s assessment of the TPPA?: It would mark the politically facilitated ascendancy of corporates at the potential expense of New Zealand’s economy, environment, health and sovereignty.

    ”It’s all about NZ Inc,” Prof Kelsey says.

    ”It’s a hybridisation of the public and private domain where commercial interests take precedence, and other interests are accommodated within the framework that is developed by and for NZ Inc.”

    • Chooky 2.1

      she is very impressive!….and she and others are putting up a good fight….Obama has no excuses!

  2. Colonial Rawshark 3

    living in a democracy means citizens should have the right to know about, and have a say in, what is done in their name.

    Well this is the key point. On a scale of 1/10 how truly democratic are the FVEY countries signing up to these agreements.

    US 4/10?
    UK 6/10?
    Canada 6/10?
    Australia 7/10?
    NZ 7/10?

  3. vto 4

    Does the TPPA also give the right for the government to recover profits from corporates in the event laws change which affect corporate profits positively ……. In the same way corporates can recover profits from government in the event laws change which affect corporate profits negatively?

    Maybe Wayne Mapp would like to answer this……..

    • AmaKiwi 4.1

      Excellent point.

      Corporate lobbyists can bribe our politicians to legislate favors which increase their profits and the people get zero.

      Heads and the corporates wins. Tails and the people lose.

      • Colonial Rawshark 4.1.1

        As you know, the USA leads with this model of “government” – one where the transnational corps and Congress/Executive simply end up being different aspects of the same thing.

  4. joe90 5

    Gift wrapped with a bow.

    ISDS is just one of the gifts to big business hidden in the draft TPP and TTIP agreements. These are treaties written behind closed doors by the lobbyists, for business interests, not for the public’s interest. Fast track is a way to jam these lousy provisions down the public’s throat, without a proper public airing of the issues. Other dangers include further empowerment of international drug companies to strengthen their patent claims, thereby continuing to gouge consumers with sky-high prices.


  5. dukeofurl 6

    There are stories out of the US that the Yanks want to rule out boycotts of Israel goods as one of the conditions of allowing Trade agreements like TPP.

    “U.S. Senator Ben Cardin (D-Md.), a member of the Senate Finance Committee and Ranking Member of the Senate Foreign Relations Committee, issued the following statement on his amendment to the Trade Promotion Authority legislation that would counter the Boycott, Divestment, and Sanctions (BDS) movement against Israel. The amendment, which passed unanimously, would require U.S. trade negotiators to make rejection of BDS a principal trade negotiating objective in Transatlantic Trade and Investment Partnership (TTIP) negotiations with the European Union. The TPA bill was approved by the Finance Committee with a 20-6 vote.”
    NY Times.

    You can just guess who is writing these amendments ?

    • joe90 6.1

      Advocating boycotts against Israel has been illegal in France for more than a decade. Same deal for boycotts against Iran.

      Open mike 13/05/2015

      edit: seems anti-boycott regs have been on the books for quite some time

      During the mid-1970’s the United States adopted two laws that seek to counteract the participation of U.S. citizens in other nation’s economic boycotts or embargoes. These “antiboycott” laws are the 1977 amendments to the Export Administration Act (EAA) and the Ribicoff Amendment to the 1976 Tax Reform Act (TRA). While these laws share a common purpose, there are distinctions in their administration.


  6. tracey 7

    Did anyone hear the International Commercial Arbitrator specialist from the USA on RNZ earlier this week reassuring everyone that the Investor Rights part of the TPP won’t be bad because, and you will enjoy this, countries negotiating take into account their domestic and otherconstituencies:

    Feel better?

    “But Gary Born, who specialises in international commercial arbitration, told Radio New Zealand’s Sunday Morning critics of the TPP should not be concerned about sovereign governments being overruled.
    “States, when they negotiate international agreements, pay close attention to their domestic and other constituencies,” he said.
    “[They] take those concerns into account in order precisely to balance the concerns – on the one hand, of trade, and on the other hand, environment, public health and other matters.”

    He had (to my ear) an incredibly creepy voice. I did wonder why he was trotted out this week.


    Chair, International Arbitration Practice Group… Mr. Born heads the firm’s 70-person international arbitration group, which is based in London and integrated with related practices in our New York, Washington, Berlin and Brussels offices. Mr. Born has represented European, US, Asian and other companies in arbitrations under all leading institutional rules (ICC, LCIA, AAA, Vienna, Stockholm, ICSID) and in ad hoc arbitrations in all leading international seats (London, Paris, Geneva/Zurich, Vienna, Stockholm, New York, Washington, Singapore). He has particular experience in joint venture, investor-state, M&A, investment banking and other financial services, project finance, energy, oil and gas, intellectual property and insurance disputes.

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