Media release 23 June 2009

NZ US Council Rejects FTA Scare-Mongering

The NZ US Council rejects as “scare-mongering” unsubstantiated claims that New Zealand would be disadvantaged in a future free trade agreement with the United States.

“New Zealand needs increased trade and investment to get the economy growing again. A free trade agreement with the United States would reduce trade barriers, put us on a even footing with competitors who already have FTAs with the US and provide additional cover against protectionist reflexes in the United States”, said NZ US Council Executive Director Stephen Jacobi.

Mr Jacobi was reacting to media reports of an academic conference in Auckland which has (apparently) been discussing the Trans Pacific Partnership (TPP) to which it is hoped the United States, Australia, Peru and Viet Nam will become a party along with New Zealand, Brunei, Chile and Singapore.

Mr Jacobi particularly contested the notion that New Zealand would be disadvantaged in terms of provisions aimed at promoting increased investment between New Zealand and the United States.

“Inward foreign investment provides capital to help New Zealand companies grow and create jobs. Outward foreign investment by New Zealand companies provides for better distribution and more cost effective manufacturing closer to end consumers while retaining important product design functions in New Zealand. Any investment dispute settlement provisions once agreed would apply equally to both countries. They are aimed at ensuring governments do not change the rules without good reason and due process once investments have been made.

“New Zealand enjoys a good international reputation for the quality of its regulation. New Zealand Governments are most unlikely to get into disputes with foreign investors. That is not the same for other governments and New Zealand companies need cover when investing offshore”.

Mr Jacobi said that New Zealand negotiators tended to proceed cautiously when considering FTA provisions.

“FTAs should only be entered into when they meet New Zealand interests. New Zealand’s existing FTAs including with China and ASEAN absolutely preserve the right of governments to make regulations that apply equally to local and foreign investors in the areas of health, safety, and the environment”.

Mr Jacobi said reports from the Auckland conference suggested it had focused on dispute settlement provisions under the North American Free Trade Agreement (NAFTA).

“NAFTA’s provisions will not necessarily be applied uncritically to TPP. Even under NAFTA the impact of investment dispute settlement has been significantly less than claimed. Of 42 cases taken against Canadian, Mexican and US governments in the decade between 1995 and 2005 companies won only five. Awards under these cases represent less than 2% of the amounts claimed”.

Mr Jacobi said that informed public debate about FTAs was helpful but scaremongering needed to be rejected.

“The Council is disappointed not to have been invited to participate in the Auckland conference. Holding such discussions behind closed doors is not appropriate for academics seeking to understand complex trade negotiations”.

About the NZUS Council – www.nzuscouncil.com
The NZ US Council is a non partisan body funded by both business and the Government to promote New Zealand’s broader relationship with the US. Two-way trade with the US is valued at over $8 billion and the US is a leading source of investment, innovation and business ideas. In September 2008 the US announced it would negotiate with New Zealand, Chile, Singapore and Brunei to join the Trans Pacific Partnership (TPP). The Council, together with its Washington based counterpart organises the US NZ Partnership Forum. The third Partnership Forum will be held in Washington DC 6-8 October 2009.

ENDS

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