I get the distinct feeling that protesters against the TPPA are mostly gullible idealists with little idea of the reality of government or international relations. I don’t profess to be an authority, or even an expert. However, I feel justified in saying that I am intelligent enough to logically consider the relevant issues before condemning something.
I don’t think New Zealanders are stupid. Actually, the contrary. I think if the majority of people stopped and considered the relevant factors of a multilateral trade/investment agreement like the TPPA, they would see it is politics as usual. Not a sinister conspiracy theory.
I’ve heard at least 10 people say that the TPPA is bad for New Zealand’s democratic freedom. But I get the feeling most of them don’t actually know what that means.
What they are referring to (probably unknowingly) is the investor-state arbitration clause rumoured to be part of the TPPA. This clause would allow international corporations to take legal action against the state if the agreement is breached. Sounds sinister? Well, yes and no.
First, this can be a problem. In 2011, the Australian federal government passed the Tobacco Plain Packaging Act 2011. This was clearly not in the interest of cigarette producers. In response, international tobacco conglomerate Phillip Morris Asia took legal action against the Australian government for an alleged breach of the 1993 bilateral investment treaty (BIT) between Australia and Hong Kong. Following a number of failed attempts to challenge the law in domestic courts, Phillip Morris has now progressed the case to an international arbitration court created by the Australia-Hong Kong BIT. Now, while it has cost Australian taxpayers a small fortune to fight in court, the claim is frivolous. No legal commentator expects the claim to succeed. And therefore it is an irrelevant argument against the general inclusion of an investor-state arbitration clause in investment agreements.
Second, the clause exists solely to encourage foreign direct investment. Foreign direct investment is the process by which overseas companies operate in New Zealand. In doing so, they create jobs, increase the products and services available, and offer new training and employment opportunities. In short, foreign direct investment is essential to constructing an effective economy.
Bilateral investment treaties were created to encourage foreign direct investment, including the unique investor-state arbitration clauses everyone is so upset about. The rationale being that if a company took the risk to invest in a foreign state, and then that state decided to pass laws that directly damaged their profitability, the company would have a forum in which to seek remedy.
This happened in 2001 when Argentina fell into crisis following a massive economic downturn. The Argentinian government removed the pegging of the pesos to the US dollar, and its currency plummeted in value. However, the multinational companies operating in the country still had to pay the same rates to utility companies despite the halving of their income. As a result of the domestic law changes, the companies were effectively wiped out.
I’ve obviously simplified many aspects of the 2001–2002 Argentinian crisis, so this example should be viewed in isolation, as should the Phillip Morris v Australia one. However, it is worth pointing out that both sides of the debate have ample grounds for argument.
But here’s the interesting part. New Zealand already has a number of agreements with investor-state arbitration clauses. Here’s a list of countries whose companies could sue us: Singapore, China, Malaysia, Thailand, Australia and Hong Kong.
If you’re going to protest against something, at least go and find out if what you’re protesting about has already happened. Because in this case, it has.