AIM on Trade

The advent of Donald Trump in the US provides an unprecedented opportunity to take a good, hard look at Aotearoa's place in the world. And to ask the question - why are we still a loyal member of the American Empire? As the old saying goes, you are judged by the company you keep. The Campaign Against Foreign Control of Aotearoa (CAFCA) says it's time for this country to pull the plug, to finish the business started in the 1980s which saw NZ nuclear free and out of ANZUS; and break the chains - military, intelligence, economic and cultural - that continue to bind us to the American Empire.

Let's deal with the world on our terms, not on those dictated from whichever empire we happen to be a junior member of at the time. CAFCA is initiating a nationwide dialogue to advance the case for a non-aligned Aotearoa based on policies of economic, military and political independence.

Accordingly, we announce the Aotearoa Independence Movement. AIM is a campaign, not an organisation. More details can be found on the AIM home page. There you'll find written, video and audio material.

The campaign has begun for a truly non-aligned Aotearoa. As our first project, we will be producing a series of papers on different aspects of what that would look like. And there will be a series of meetings around the country to as part of this dialogue. AIM needs as many people as possible to get actively involved.

Murray Horton
Organiser, AIM.

What a Progressive Trade Agreement Would Look Like

It’s Our Future, which led the successful New Zealand campaign against the proposed Trans-Pacific Partnership Agreement (TPPA) has prepared this ten-point list of what a progressive international trade and investment agreement should look like. It was prepared with the September 2017 general election in mind but its relevance extends way beyond that.

1. An End To Secrecy

Negotiations must take place under conditions of openness, including the regular release of draft negotiation texts to the public.

2. Democratic Oversight

Negotiation mandates must be voted on by Parliament - with the aid of public submissions - before the start of future trade and investment negotiations. Future trade and investment agreements must also be presented to Parliament for approval before the conclusion of negotiations, and following independent economic, health, human rights and environmental impact assessments.

3. Unrestricted Right To Protect The Public Interest and the Environment

The New Zealand government must be free to protect and promote the wellbeing of its people and the natural environment in any way it sees fit. To achieve this, trade and investment agreements must contain strong and enforceable carve-outs to ensure that social and environmental regulation is not undermined.

4. Regulation of Overseas Investment

The New Zealand government must be free to set its own rules on overseas investment, and to change these rules in accordance with national priorities.

5. Protection of International Law

Trade and investment agreements must not undermine states’ obligations in other international agreements, including those protecting human rights, labour standards and the environment. These obligations are to take precedence in the event of any inconsistency with future trade and investment agreements.

6. No Investor-State Dispute Settlement

Overseas investors must not have access to rights, remedies and dispute mechanisms other than those available to local investors.

7. Honour the Treaty of Waitangi

Any future trade and investment agreements must contain a strong and comprehensive carve-out to protect the rights of Māori, consistent with te Tiriti o Waitangi and other recognised sources.

8. Exclude Local Government

Elected local government bodies must be free to make, and be accountable for, their own decisions without being subject to the constraints of international trade and investment agreements.

9. Retain The Role Of The State

Trade and investment agreements must not undermine, directly or indirectly, the authority of the State to regulate the economy, hold assets, provide services to the public and enter into commercial arrangements.

10. Promote The Free Flow Of Knowledge And Information

Trade and investment agreements must not confer new monopoly rights over the use and distribution of knowledge, or over the digital domain.

Trade Agreements & Local Government

Point 8 of the 10-point list (above) says that trade agreements should exclude local government. Correct. But local governments need to be part of the campaign for progressive trade and investment agreements. An excellent very recent example of a campaign to get local government on board right throughout the country was the TPPA Policy Solution, fronted by the indefatigable Greg Rzesniowiecki. Greg writes: Publicly interested governance is the way forward.

The campaign in opposition to the TPPA was bolstered by local governments identifying the threat to their sovereignty. They recognised that the TPPA would constrain their ability to administer their role and responsibility to their constituencies. They had already seen the removal of the Four Wellbeings from the Purposes of the Local Government Act 2002 in the 2012 amendments which the National government pushed through despite opposition from all sectors of the community.

Accordingly, New Zealand councils saw the merit in adopting a positive policy identifying the matters to protect when negotiating trade and investment treaties. Sovereignty is the key concern in any democracy and liberal civilisation. The right to not be coerced into accepting arrangements that are against one's interests, in this case the interests of the majority of people. Each NZ council is a sovereign entity, a democratic unit, which does not want its decision-making constrained to suit the profits and whims of a foreign transnational corporation (TNC). 12 Councils who comprise 60% of the country’s population adopted the TPPA Policy Solution for all of us. Here it is:

That (name of Council) encourages the Government to conclude negotiations on the Trans Pacific Partnership Agreement in a way that provides net positive benefits for the (name of local region or city) and New Zealand, that is, provided the Agreement achieves the following objectives:

  1. Continues to allow the (name) Council and other Councils, if they so choose, to adopt procurement policies that provide for a degree of local preference; to choose whether particular services or facilities are provided in house, by council-controlled organisations (CCOs) or by contracting out; or to require higher health and safety, environmental protection, employment rights and conditions, community participation, animal protection or human rights standards than national or international minimum standards.
  2. Maintains good diplomatic and trade relations and partnerships for (local region) and New Zealand with other major trading partners not included in the agreement including with China.
  3. Provides substantially increased access for our agriculture exports, particularly those from the (name of) region into the US market.
  4. Does not undermine Pharmac, raise the cost of medical treatments and medicines or threaten public health measures, such as tobacco control.
  5. Does not give overseas investors or suppliers any greater rights than domestic investors and suppliers such as through introducing Investor-State Dispute Settlement, or reduce our ability to control overseas investment or finance.
  6. Does not expand intellectual property rights and enforcement in excess of current law.
  7. Does not weaken our public services, require privatisation, hinder reversal of privatisations, or increase the commercialisation of Government or of (insert name) Council or other local government organisations.
  8. Does not reduce our flexibility to support local economic and industry development and encourage good employment and environmental practices and initiatives like the (insert examples), and the Mayor's Taskforce for Jobs which enable marginalised young people to develop their skills and transition into meaningful employment.
  9. Contains enforceable labour clauses requiring adherence to core International Labour Organisation conventions and preventing reduction of labour rights for trade or investment advantage.
  10. Contains enforceable environmental clauses preventing reduction of environmental (and biosecurity) standards for trade or investment advantage.
  11. Has general exemptions to protect human rights, the environment, the Treaty of Waitangi, and New Zealand's economic and financial stability.
  12. Has been negotiated with real public consultation including regular public releases of drafts of the text of the agreement, and ratification being conditional on a full social, environmental, and economic impact assessment including public submissions.

What Would People-Friendly Globalisation Look Like?

Bill Rosenberg

Bill is the Economist and Policy Director at the NZ Council of Trade Unions (CTU). This was published in the New Zealand Herald (24/4/17), titled “Government Should Give Up On Deals Like TPP”.

With the Transpacific Partnership Agreement (TPPA) in its death throes, it is time to think about what a good alternative – and what people-friendly globalisation – would look like. It is not simply taking the same model and adding on a few weak labour and environment chapters as the TPPA did. The whole framework needs to be changed. The main point is this: public concerns are not primarily about trade in the conventional sense of importing and exporting goods. Most New Zealanders support greater exports.

That doesn’t mean there are no concerns about the effects of trade. Recent research has shown how oversimplified most economists’ and politicians’ portrayal of trade has been. There are winners and losers – but in theory the winners could compensate the losers and still win. Unfortunately, our systems of progressive taxation and social support have been seriously weakened and no longer do that sufficiently. The recent Organisation for Economic Cooperation and Development (OECD) report on New Zealand’s treatment of people who get made redundant made that clear.

Too frequently just the winners win, raising inequality and social tensions. That must be fixed to ensure public support. But these agreements are no longer mainly about trade. It is misleading to talk about them as Free Trade Agreements – I’ll call them international commerce agreements – and it is misleading to label public concerns as protectionism.

These agreements are now mainly about services, regulation (including so-called non-tariff measures), foreign investment, intellectual property, government procurement, commercialisation of public agencies, and other matters that are “behind the border” and cut deeply into people’s daily lives. That is why people protest at restrictions on the ability of future Governments to make and change rules in the public interest, to adapt to new circumstances and repair poor policy of the past.

Concerns are heightened at the lack of openness in the negotiations and the lack of full Parliamentary processes. This is important international legislation and New Zealanders would not stand for domestic legislation being made in this way. Briefly, here are some examples of public concerns. Non-tariff measures include essential rules such as for food safety, workplace health and safety, biosecurity and privacy. It is difficult to disentangle those from deliberate trade barriers. Attacking them raises concerns that commercial considerations will overwhelm the public interest.

Many services including education and health are highly sensitive and closely connected to who we are as a nation. Commercialism can endanger their quality and reputation. Financial services critically need more regulation rather than less, learning from the Global Financial Crisis. Digital services create intense concerns about privacy, which in Europe contributed to the halt of the Trans-Atlantic Trade and Investment Partnership negotiations with the US – a similar proposal to the TPPA. Some digital services, such as Uber and the job auction site Airtasker profoundly undermine working conditions and upskilling.

Many services are provided through temporary migration for work or overseas investment into New Zealand – both highly sensitive issues. Giving extra-judicial rights to overseas investors to sue governments over their laws and decisions is seen by many people (including prominent jurists and economists) as a step too far in increasing commercial power.

International Commerce Should Serve Working People

Intellectual property is protection, not liberalisation. It is win lose unless carefully balanced. Longer protection mandated in these agreements destroys the balance and favours big pharmaceutical and media corporations by making medicines and other goods and services costlier with minimal economic justification. Restrictions hindering our use of Government procurement to help local firms and raise employment standards make growing new industries, better jobs and living standards even more difficult.

A 2015 3 News poll showed 54% of voters disagreed with the TPPA and their concern has not diminished. A recent survey by Chartered Accountants Australia and New Zealand of the businesses most likely to support these agreements – traders and would-be traders – shows even they are not enthusiastic. The top “desired policy” among those businesses was no change. Five of the other ten policies they wanted are contrary to these agreements, like subsidies for local industries and higher tariffs. The costs in public support, time and resources in pursuing such agreements are enormous. That time and resources would be better spent directly supporting exporters.

It is not enough for the Government to repeat old arguments and assurances and plug on with the deeply distrusted TPPA model. It is time for an honest debate. International commerce agreements cannot be an exception to the values that we strive for domestically. We need much greater support for working people through the big changes that globalisation and technology bring, and policies that give them real assurances they will share the benefits – not just hear about them in a politician’s speech.

Working people don’t oppose greater interactions with other countries, nor trade. They just want international commerce to serve working people rather than working people serve international commerce.

“I Unashamedly Choose A Working Democracy”

Here is an extract from another 2017 article by Bill Rosenberg on this subject: “I suggest that what we should seek as far as possible is consistency between our aims at home and our international aims. Wellbeing should be primary. Agreements should recognise as primary the right of each nation to make rules in its citizens’ interests in certain essential areas. An example is in areas fundamental to their wellbeing including health, education, safety, environment, conservation, culture, human (including labour) rights, and actions it considers necessary to address disadvantage of social groups, inequalities of income and wealth, and inequalities of outcomes. Within those limits, intentional trade barriers can then be reduced. The process of developing these agreements should be as similar as possible to the development of domestic legislation, with much greater openness and public consultation”.

Bill quotes other experts who write that what they call “hyper-globalisation” is a direct threat to both democracy and the nation State. Bill writes: “I unashamedly choose a working democracy: The point of this is certainly not to advocate closing up the borders. That would be daft. The point is that the current intense model of globalisation – hyper-globalisation – must be reformed to make it friendly to democracy within nation states”. Bill’s whole article is well worth reading – it is the lead piece in the February 2017 CTU Monthly Economic Bulletin (which he writes and edits). A longer and more recent version of that same article is online here as part of “No More Business-As-Usual: Where To Now For International Trade?”, edited by David Hall, The Policy Observatory, Auckland University of Technology, July 2017).

International Trade Agreements Must Be Subject To Rule Of NZ Law

These are two of the Key Points from Jane Kelsey’s “The TPPA: Treaty-Making, Parliamentary Democracy, Regulatory Sovereignty And The Rule Of Law”. The full document is available here.

The 30-chapter Trans-Pacific Partnership Agreement (TPPA) constrains domestic law and policy at central Government level and, in places, by local government and State-Owned Enterprises, in diverse areas beyond traditional aspects of international trade.

Provision for investor-State dispute settlement lacks the characteristics of a credible and independent legal process and effectively displaces national judicial processes for a privileged class of international investors

Trade Is a Health Issue

Excerpts from “Trade And Health: Joint Statement Of Principles”, Public Health Associations of Australia and New Zealand. Full document available here.

The Public Health Associations of Australia and New Zealand support a fairer regime of trade/investment law that supports health, social and environmental goals, as well as economic development; which prioritises equity within and between countries as a necessary condition for improvement in global population health; and is consistent with international law relating to health, the environment, and human rights.

The Public Health Association of New Zealand affirms the following principles, together with the Public Health Association of Australia:

  • A fair regime of regulating trade, investment and intellectual property (“trade and investment agreements”) should prioritise health and social and ecological sustainability as well as economic development.
  • Trade and investment agreements, and their dispute settlement mechanisms, should be consistent with international law with regard to health, human rights, the environment, and worker protection.
  • Trade and investment agreements must:

a. prioritise equity within and between countries for global population health improvement.

b. not limit or override a country’s ability to foster and maintain systems and infrastructure that contribute to the health and well-being of its citizens, nor penalise a government for doing so.

c. preserve policy space for governments to regulate to protect public health.

d. be negotiated in a transparent fashion, with opportunities for public and Parliamentary scrutiny before commitments are made

e. be subject to health and environmental impact assessments that are carried out by parties independent of corporate interests.

The Public Health Association Recommends That Government And Government Agencies:

  • Advise other agencies and stakeholders at an early stage of any proposed trade and investment agreement, to uphold open, transparent and democratic processes
  • Ensure that the general public and agencies are effectively involved in developing new proposals for trade and investment agreements. At a minimum, this requires the actions in the two following items

i. Ensure that trade and investment agreements have an independent Health Impact Assessment(HIA) carried out at stages that allow fully informed public consideration of the proposed agreement

ii. Make publicly available the HIA and early texts of proposed trade and investment agreements for review, discussion, and debate

  • Work together to ensure that trade and investment agreements do not negatively impact on public health or equitable health outcomes. Agreements should support health, social and environmental objectives as well as economic objectives. This includes the following considerations:

the scope of agreements

the concept of and criteria for “exceptions”

the responsibility for government to regulate for the common good and the public health, currently and in the future. This involves careful consideration of whether any investor-State litigation clauses have the potential to restrict, or even negate, such capacity

consistency between trade and investment agreements and other instruments of international law

independent dispute resolution processes that value health, social and environmental objectives.

Actually, There is an Alternative

New Zealand governments, whether National or Labour, have been among the world's most zealous disciples of the “free trade” cult. Supporting what are totally misleadingly called "free trade" agreements has been a central plank of the governing ideology in this country for decades. We are told that such agreements are good for the country and, more threateningly, there would be "consequences" if we dared to get out of them. Well, actually, there are very recent international precedents where countries have taken a good hard look at the supposed benefits of such agreements, discovered that the evidence doesn't hold up, and cancelled those agreements forthwith.

Ecuador is an excellent current example (although not the only one). It set up a Citizens Commission on the subject, which recommended that Ecuador quit such agreements, and the Government acted on that advice. This is a timely reminder to New Zealanders that there is a myriad of options when it comes to NZ reassessing its place in the world. "There Is No Alternative" is hogwash. The below is from the Transnational Institute (TNI) in Europe.

Ecuadorian Citizens Commission On Investment Protection (CAITISA)

The Ecuadorian Citizens’ Commission for a Comprehensive Audit of Investment Protection Treaties and of the International Arbitration System on Investments (CAITISA) was set up by the Ecuadorian government to audit the country's investment treaties and make recommendations to the Government. The commission was comprised of Government officials, academics, lawyers and civil society groups.

Our own TNI researcher Cecilia Olivet was nominated President. In May 2017, the Commission's report was published and its recommendations to terminate the country's Bilateral Investment Treaties accepted by the Government.

Ecuador Terminates 16 Investment Treaties (TNI, 18/5/17)

On May 16, President Correa of Ecuador signed decrees terminating 16 Bilateral Investment Treaties (BITs), including with the US, Canada, China and eight European countries. The decision follows the recommendation of the Ecuadorian Commission that audited the country's Investment Protection Treaties (CAITISA).

The President of the CAITISA Commission Cecilia Olivet (a researcher at the Transnational Institute) commented "Ecuador has taken a sound decision by terminating its investment protection agreements. The auditing process revealed that these treaties not only failed to attract additional investment or advance the country's development plan, they also diverted millions of dollars of Government money to fighting costly lawsuits. We hope other governments will learn from Ecuador’s example and review their own investment agreements to find out if they are truly beneficial to their citizens".

The 12-person CAITISA commission was set up in October 2013 and was comprised of Government officials, academics, lawyers and civil society groups, including the foremost expert on investment law, Muthucumaraswamy Sornarajah and the former Attorney General for Argentina, Osvaldo Guglielmino. Treaties were terminated with: China, the Netherlands, Germany, the UK, France, Spain, Italy, Sweden, Switzerland, Canada, the United States, Argentina, Bolivia, Peru, Venezuela, and Chile.

Summary of CAITISA's Report Key Findings:

1.The Bilateral Investment Treaties (BITS) signed by Ecuador failed to deliver promised foreign direct investment:

  • Ecuador, which has more BITS than many countries in the region, only received 0.79% of global foreign direct investment (FDI) that flowed to Latin America and the Caribbean
  • The principal sources of FDI flows into Ecuador are from Brazil, Mexico and Panama, none of which have a BIT with Ecuador
  • Of the seven largest foreign investors in Ecuador, only 23% come from a country which has a BIT signed with Ecuador.

2. Ecuador’s BITs contradict and undermine the development objectives laid out in the the country’s constitution and its National Plan for Living Well (Buen Vivir). The 2008 Ecuadorian Constitution of 2008 requires the State to regulate foreign investment to ensure it plays a positive role in achieving the country’s Living Well Plan. However, BITS include clauses that erode these State competencies.

3.While promises of investment and development have failed to materialise, the costs for Ecuador have been immense with investors disproportionately benefiting in cases against Ecuador:

  • Ecuador has faced 26 cases in international tribunals based on the Bilateral Investment Treaties
  • In 2014, Ecuador was fifth in the world in terms of investment protection arbitration cases; today it is in tenth place
  • In the 15 cases where the tribunal has made judgements on jurisdiction, the investor has been favoured in 13 cases (87%) and the State only twice.

4. A total of $US21.2 billion dollars has been demanded as compensation from Ecuador by corporations for supposed violation of investment protection agreements.

5. The total amount disbursed so far by the State has been $US1.498 billion dollars, equivalent to 62% of health spending.

6. Of the cases that are currently open, the State runs the risk of having to disburse $US13.4 billion. This is equivalent to 52% of the General State Budget for 2017.

Summary of CAITISA's Key Recommendations:

1 - Termination of all bilateral investment treaties

2 - Negotiation of new instruments between the State and Investors such as:

a) international investment contracts with restricted rights and investors’ obligations

b) Investment treaties based on an alternative investment model. The Commission has made the recommendation to:

  • highly restrict the definition of investment
  • exclude certain rights for investors commonly found in investment treaties such as: indirect expropriation, national treatment, most favoured nation, umbrella clause, survival clause.
  • a list of rights for the State that would be included, such as: rights of the State to impose obligations to foreign investors, apply performance requirements, impose taxes, secure technology transfer, force investors to respect human rights, among others.
  • key obligations for the investor, such as: respect for national and international human and social rights, contribute towards national development according to pre-determined criteria, among others.

3 - Regarding the international investment arbitration system

  • Exclude Investor-State dispute settlement mechanism from any future treaty
  • Provide legal security to investors in national courts

4 - Develop a comprehensive national policy and specific rules for foreign investment.

5 - Consolidate the powers and the institutional governance of foreign investment in one agency.

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