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TPP Investment Concerns Unfounded


TPP Investment Concerns Unfounded

Concerns that the Trans Pacific Partnership (TPP) will result in the New Zealand Government being successfully sued by international corporations are unfounded and incorrect, says the NZ US Council.

“It is absurd to suggest that the New Zealand Government would be so naïve to allow itself to be hoodwinked into an agreement that damaged its ability to regulate in the national interest,” Executive Director Stephen Jacobi said.

“Modern investor state dispute settlement provisions in free trade agreements do not undermine the rights of sovereign states. In fact, the opposite is true – they explicitly protect the rights of states to regulate in areas like the environment, health and safety and other matters of public policy.

“What they do provide is protection against arbitrary and discriminatory decisions by governments leading, for example, to the expropriation of assets without compensation. Investment dispute settlement is about providing assurances to investors that governments abide by proper legal processes. Most people would see this as sensible and fair.”

Mr Jacobi drew attention to information recently released by the US anti-globalisation movement, Public Citizen, which showed that under the North American Free Trade Agreement (NAFTA) only 9 of the 64 claims filed against NAFTA parties (the United States, Canada and Mexico) had been won by investors.

“The NAFTA experience shows that any suggestion that these provisions give corporations the automatic right to sue governments and win is a gross over-simplification. NAFTA has highly developed investor-state dispute provisions which have been amended by the parties since the agreement entered into force in 1994. Clearly they do not guarantee that a case may be taken or that it will be successful.”

Mr Jacobi said that the value of compensation paid to foreign investors arising from successful cases had to be seen in the light of the overall value of trade and investment in NAFTA.

“Trade between the NAFTA parties is valued at over US$1 trillion. Foreign direct investment is over US$800 billion. The value of compensation paid to investors - $326.9 million – needs to be put in context, it is a very small proportion.”

Mr Jacobi said New Zealand business also had an interest in seeing effective investor protection enshrined in TPP.

“New Zealand not only needs foreign investment to grow the economy, New Zealand investors offshore also need protection from actions by foreign governments in changing the rules of the game after an investment decision has been made. That’s why such provisions were carefully built into the NZ/China and NZ/ASEAN FTAs. The sky has not fallen in on our heads since then.”


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