Dr Bill Rosenberg Free Trade Checkpoint I/V
‘Checkpoint’. National Programme. Radio New Zealand. 19.04.2001
Proposed New Zealand-Hong Kong Free Trade Agreement.
Interview with Dr Bill Rosenberg, Christchurch, New Zealand.
An opponent of the proposed free trade and investment agreement with Hong Kong is warning the deal could destroy what remains of New Zealand’s textile and clothing industry. The Prime Minister, Helen Clark announced from Hong Kong, this week, that negotiations will begin to formalise a closer economic relationship. The Canterbury University’s Dr Bill Rosenberg, a researcher on foreign investment says the agreement has fishhooks and could see Hong Kong investors demanding compensation for lost profits if their Zealand activities are restricted by environmental laws. On trade, Dr Rosenberg says Hong Kong presently exports about $25 billion worth of cheap clothing, textiles and footwear and much of it would be eligible for the New Zealand market even under a free trade deal requiring goods to be at least 40% produced in the country of origin.
“…Labour costs in Hong Kong are not much different from here so it’s not cheap labour that they are using but what they are using are vast numbers of factories in cheap labour countries in Africa, the Middle East and Asia, and particularly, of course, in China and mainland China itself. And what they do and this is what Hong Kong specialises in, is acting as an intermediary to bring in partly made goods from all these other factories and assembling them to order for clients overseas.
But they will still meet a rule, say for 40% local content that we have with Singapore, for instance?
Well, I would think that the Hong Kong intermediaries will see this as a challenge to meet that rule and qualify for the zero tariff.
And how much stuff might come in?
Hong Kong is, as I see it, a very large exporter of these goods - they could provide for New Zealand’s total needs for these things if it came to that.
Given that then, it’s surprising that local manufacturers aren’t far more alarmed about this deal.
Well, the clothing manufacturers are. The Manufacturers’ Federation as a whole has been somewhat more cool about it but the clothing, textile and footwear manufacturers are very concerned about it for good reason and so are the unions representing the workers in those factories. They are most concerned that factories in some of our provincial areas, where these kinds of employment are amongst the few that people can get, are going to be closed down as a result of all this….”
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On the investment front, you’re saying that Hong Kong investors here under this deal could sue if something like environmental laws affect their activities – that sounds bizarre!
It is bizarre – it’s a direct parallel with what is happening in the North American Free Trade Area [NAFTA] between Canada, the United Stades and Mexico. There, they have an investment clause which has been called “creeping expropriation” and what it allows companies to do is to take the governments of those countries to a private arbitration tribunal to ask for compensation if their profits or the value of their investments are threatened. A small state in Mexico refused a permit for a toxic waste dump because it was threatening to pollute the local water supplies. In those cases, because the profits of those corporations were threatened, they got in one case $13 million and the withdrawal of the law and an apology, in another case they got $16.7 million from the respective governments.
But in the current investment deal that we have with Hong Kong, there’s a clause which specifically says that you can say “no” to an investor if you have a lawful public purpose for saying that, i.e. water contamination.
These corporations can challenge whether that’s for a public purpose but even if it is established that it’s for a good public purpose, they can still ask for compensation.
And they can still be told “no” though.
Well, no, then they can take it to one of these tribunals which will make a decision.
We’ve already got an investment agreement with Hong Kong which says that. Why aren’t we already in some kind of legal battle over exactly those issues?
Well, the first point is we don’t know if we have been because these tribunals can be held in secret and no one may know if they are happening. But the second thing is, that this interpretation has only come to light in the North American Free Trade Agreement and is becoming more and more popular there for these investors to make use of it. The more well known it becomes, the more likely this agreement New Zealand has with Hong Kong will be used for the same purpose……”
That’s a critic of free trade and investment deals, Dr Bill Rosenberg.
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Dr Bill Rosenberg’s comprehensive analysis paper: “Globalisation By Stealth – The New Zealand-Hong Kong Free Trade & Investment”. 64pp. (Acrobat Reader required). Hard copy available from CAFCA for NZ$10.00.
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