June 14, 2012

TPPA should not cut off government options on jobs

The government shouldn’t sign trade agreements that cut off New Zealand’s policy options to grow jobs for Kiwis, the clothing and textile workers’ union said today.

Leaks today from the draft Trans Pacific Partnership Agreement show New Zealand wants to sign a document that bans governments from implementing performance requirements on foreign investors or investments about use of locally produced goods or services.

Paul Watson, FIRST Union textiles secretary, said that this put at risk any future Buy Kiwi Made commitments government might want to ensure were in contracts.

“Most other trading nations have strong government procurement requirements. The United States requires its solders to be kitted out in American made uniforms and Australian infrastructure projects often have a minimum local content provision,” he said.

“New Zealand should follow suit, but signing up to agreements in secret that cut off policy options to support local jobs is reprehensible.”

“With increasing uncertainty facing our manufacturers and exporters, we need a government with an aggressive strategy for protecting and boosting local jobs.”

“Through their refusal to tackle our monetary policy settings, and now by further hurting their ability to protect local firms and workers, its clear we have a government that is putting the interests of overseas investors ahead of working families.”

Paul Watson said although the draft investor rights chapter had been leaked today, the government procurement chapter of the TPPA was still secret, and he called on Trade Minister Tim Groser to release this and other chapters for full public scrutiny

Background

The leaked draft investment chapter of the TPPA can be accessed here.

An analysis from Jane Kelsey is also accessible via that page, see the brief section on page 2 entitled “What the NZ government cannot do” for discussion on government procurement. This section is also pasted below.

From page 8 of the leaked investment chapter is section 12.7. It includes these two clauses among others, in terms of commitments a government cannot require of a foreign investor

No party may, in connection with the establishment, acquisition, expansion, management, conduct, operation or sale or other disposition of an investment of an investor of a Party [or of a non-Party] in its territory, impose or enforce any requirement or enforce any commitment or undertaking:
…
( b ) to achieve a given level or percentage of domestic content
( c ) to purchase, use or accord a preference to goods produced in its territory, or to purchase goods from persons in its territory

From Professor Jane Kelsey’s analysis: (http://tpplegal.wordpress.com/leaked-texts)

What the NZ government cannot do: The standard rules guarantee investors will get at least as good, if not better, treatment than local firms and do not have special conditions imposed on their investments. The government could not:

• discriminate against TPP investors or their investments in favour of NZ counterparts, ie no preferences for NZers and no foreign investment restrictions, unless the right to do so is explicitly reserved in an Annex that is very hard to change (Art 12.4, 12.9).

• discriminate against TPP investors or their investments in favour of those from other countries – this means they can take advantage of any better provisions that are in any of NZ’s other investment agreements, including some sweeping ‘umbrella’ clauses in the China NZ FTA and the Hong Kong New Zealand bilateral investment treaty. Again, the government could retain the right to discriminate in specific circumstances if that was explicitly reserved in an Annex that is very hard to change (Art 12.5, 12.9).

• impose performance requirements on foreign investors or investments about use of locally produced goods or services, ie Buy NZ (Art 12.7)

ENDS

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