Fighting Foreign Corporate Control Bill

I move, That the Fighting Foreign Corporate Control Bill be now read a first time. I nominate the Foreign Affairs, Defence and Trade Committee to consider the bill. New Zealand First is deeply concerned about the investor-State dispute provisions currently included in the Trans-Pacific Partnership negotiations. Nobel laureate economists, senior medical experts, international law experts, trade experts, international human rights experts, and more and more everyday New Zealanders are growing increasingly concerned as they learn more about the non-trade elements of this treaty.

The reality is that this Government has kept secret from the people of New Zealand just what it is that it is negotiating, and even why. For years now New Zealand First has asked this Government to make the policies in this treaty negotiation public to the people of New Zealand. It has not done that, despite international precedent from the EU, for example. That is why I stand here proudly in support in presenting the Fighting Foreign Corporate Control Bill.

Tim Groser recently labelled any concerns or counterarguments as politically irrelevant. He said that the views of those New Zealanders were driven by ideology and not based on evidence. It is clearly the manifestation of “third-term-itis”. Government members ask us to trust them, but they have not earned it.

The ambition of the Trans-Pacific Partnership is huge. Nearly 40 percent of the trading world will be included in this agreement, and I for one can actually understand why we would like to be a part of that. Our exporters compete against US firms, for example, which have huge protections. We would like the playing field to be levelled so that our businesses can enjoy the same access to our competitors’ markets that we allow others here already.

But the Trans-Pacific Partnership is also about renegotiating global investment rules. It includes legal rules covering issues such as investor protections and intellectual property rights. These rules allow foreign corporations to sue Governments if they introduce policies that interfere with corporate profits. Even the perceived loss of potential profits is ground for suit. This is the investor-State dispute settlement provision that this Government is allowing into our trade negotiations. Even the most optimistic supporters of the Trans-Pacific Partnership, for example, have to concede that this rule may not only prove to be very costly but it will, without a shadow of a doubt, also reshape our democracy.

We believe that those who have voiced their concerns are not only politically relevant, Mr Groser, but, further, New Zealand First believes that as New Zealand is one of the oldest continuous democracies on this earth, to have a select few Ministers and the Prime Minister sign this supposed free-trade agreement on behalf of all New Zealand, before it has been seen by all parliamentarians, before it has been seen by the Foreign Affairs, Defence and Trade Committee, and before it has been seen by even your National backbenchers or your support parties, is a travesty that is being undertaken in the name of democracy.

It is a failure—a failure—to understand where the people of this country stand.

💬 David Bennett: Where’s the conspiracy?

It is arrogance, Mr Bennett, pure and simple. Why? Because the details of these negotiations are completely concealed from the New Zealand public, yet they are available to over 600 United States corporations, which have made in-depth contributions to the negotiation process, dictating the terms and conditions that Mr Groser seems ready to accept at any cost.

Further, the negotiating documents will remain confidential for a further 4 years after negotiations have been concluded or abandoned. New Zealanders may, therefore, be subject to, and bound by, essentially a secret agreement that will be virtually impossible to reverse. Other countries have started to try to remove the investor-State dispute settlement provision from their trade agreements, only to find it will take 25 years to do so.

International trade is complicated stuff, which is why I am going to go slowly for the National backbenchers. In the early years of trade the focus was on trans-boundary tariffs, with a goal of actually levelling the playing field so that goods and services could more easily flow between nations. Today’s trade agreements are a wholly different beast. Instead of tariffs, they increasingly seek to reduce so-called non-tariff trade barriers. These non-tariff trade barriers can be any law, any rule, or any Government support that may have the effect of limiting trade or reducing corporate profits. They include such basic safeguards as, for example, those around drinking water, environmental protection, and even fair labour laws.

The investor-State dispute settlement provisions were originally designed to stop Third World nations repatriating assets from foreign companies. But investor-State dispute settlement provisions now allow foreign corporations that believe their profits have been hampered by a country’s laws or rules to challenge the host Government. This is the problem with investor-State dispute settlements. Foreign corporates do not have to use New Zealand law to settle those disputes between themselves and our Government. Luckily, the foreign corporates that have had grievances with New Zealand in the past have actually used the New Zealand legal process. I am proud to say that my understanding is that New Zealand has successfully defended all of those claims in New Zealand courts. This is a wonderful precedent, but it does not justify the head-in-the-sand approach from this Government, moving forward.

The investor-State dispute settlement provisions allow foreign corporates, not New Zealand firms, to go to a tribunal. This is not an actual court of law, here or overseas. What the National backbenchers might not understand is that these tribunals consist of only three players—a corporate lawyer for the country, a corporate lawyer for the foreign corporate firm, and a foreign corporate presiding over the proceedings. They play interchangeable roles, and clearly over time have conflicts of interest. Only the foreign corporate can sue. A Government itself cannot use the same tribunal to hold those corporates to account. I ask the Government and its MPs here today why they would happily sit there and watch while our freedom to govern ourselves is handed over to unaccountable secret tribunals that give foreign corporates an unfair advantage in circumventing laws, with the privilege of suing us added into the bargain.

💬 David Bennett: Well, your boss likes to sue people.

Remember, Kiwi firms, Mr Bennett, will not have access to the same process here at home. Investor-State dispute settlements are becoming a big business opportunity for big business. Corporations are now selling their actions against nations to investors at discounted rates and the investment companies are taking the gamble of a win, with the possibility of billion-dollar payouts. The number of claims grows every year. We are told that the investor-State dispute settlement provisions within our treaties are world class. Given that we have yet to be sued, they probably are. But do not forget or ignore the fact that many countries have been sued and have lost. The tribunal process is usually always secret, and at the request of foreign corporates, so where countries have thought themselves protected by similar exemptions and protections, this has not always been the case.

I anxiously now sit and wait in anticipation to hear from backbench National MPs who have not been briefed on the investor-State dispute settlement provisions in our next trade agreement, and who do not know what is in it. I say that this will be interesting. Thank you.

I would just like to acknowledge the previous speaker. Fletcher is a very good member of the Foreign Affairs, Defence and Trade Committee, and I have to acknowledge him.

How did he sneak this bill past Winston Peters? I do not believe that the Rt Hon Winston Peters has actually seen this bill. I think that in the turmoil of the deputy leadership battle he somehow managed to sneak this bill through. The Fighting Foreign Corporate Control Bill—if Winston saw this I am sure he would say something—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!

This is demonstrably outrageous. Thank you, Mr Assistant Speaker. You are right. Let me get back to the bill. I have to say that I am surprised that the deputy leader—congratulations to the deputy leader—with the international background that he has, would be supporting a bill like this.

This is a bill that, if it were to be implemented, would make it very difficult for New Zealand to continue to enter into free-trade agreements. In fact, this bill would stop 3,000 free-trade agreements from even existing. When you think about that, if you remove 3,000 free-trade agreements from around the world, things would grind to a halt pretty quickly. The bill is poorly drafted—there is no doubt about that—which is a real achievement when it has only two pages. It is a real achievement when it has two pages and it is poorly drafted.

The bill would prohibit New Zealand entering into international agreements that include provisions for investor-State dispute settlements. This includes the Korean free-trade agreement. I want to very quickly go over the Korean free-trade agreement because the member sat on the committee when the agreement recently came before it.

I want to quickly run through some of the numbers and the implications of what they mean for New Zealand, for our businesses, and for our economy as a whole. There is $65 million worth of duty saved for New Zealand exporters in the first year alone. So we will hit that first tariff reduction this year, and I have to acknowledge the whole committee for making sure that we could get the bill through the committee and meet that threshold. I want to acknowledge all the other committee members who have worked hard together on that.

Currently, $229 million a year is paid in duty by our exporters. There are 50 million people in Korea who want to buy quality New Zealand products, and $78.3 million worth of New Zealand cheese was exported to Korea in the year ended June 2014. We are currently facing a 36 percent tariff, and that is about to start reducing. The current tariff on whole milk powder and skim milk powder is 176 percent, and 89 percent is the current tariff that exporters face on butter, which is to be progressively phased out.

These are just a few of the numbers that highlight how important these free-trade agreements are for New Zealand. The reality of it is that we are a small country down the bottom of the world, and unfortunately we are exposed to the risks associated with trading globally. There are some things that we cannot control. That has become obvious—there are some things that we cannot control.

But what we can control is our own ability to be able to generate very good free-trade agreements. New Zealand has a history of doing that. We have got some outstanding free-trade agreements, which already have the investor-State dispute settlement provisions in them. It would be interesting to know, actually, why this bill is not retrospective. The reason for it is that we would lose deals like the Korean free-trade agreement or the Chinese free-trade agreement. We have seen how significant and how important they are to New Zealand.

The Agreement between New Zealand and the Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu on Economic Cooperation is another example of a trade agreement that would not be allowed under New Zealand First’s bill.

💬 Fletcher Tabuteau: What is he talking about?

What do you mean, what am I talking about? You just spent 10 minutes highlighting why New Zealand cannot enter into a free-trade agreement that has an investor-State dispute settlement provision.

The other thing that I want to address is the lack of consultation. There has been a concerted effort by the Opposition benches to put misinformation out there about the lack of consultation. I can tell you now—and I see that Mr Parker is in the debating chamber, and I have to acknowledge him as being someone who has a lot of knowledge around these free-trade agreements and a big history of having worked on them when he was in Government—that the fact of the matter is that there has been significant consultation around the Trans-Pacific Partnership.

We had the Council of Trade Unions appear in front of the Foreign Affairs, Defence and Trade Committee—and there are other committee members here who are quite welcome to stand up and try to rebut what I am saying—to make a submission. At the beginning of its submission we were led to believe that there had been very little consultation. By the end of it we were able to draw enough information out to find out that there had actually been three individual meetings and consultations with the negotiators working on the agreement. And that is not the only one. There has been wide consultation through the sectors, service groups, and people who are concerned and want to know the implications of the Trans-Pacific Partnership.

💬 Tracey Martin: Have you seen it?

Seen what?

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!

Thank you, Mr Assistant Speaker. The New Zealand Government is aware of the potential risks that investor-State dispute settlement provisions can pose if not negotiated carefully. It is possible to design mechanisms that carefully balance the objectives of protecting New Zealand investors abroad while safeguarding the Government’s right to regulate for legitimate public policy purposes. This balanced and cautious approach was taken in concluding the Korean free-trade agreement, and it has been taken to conclude the Trans-Pacific Partnership.

I would like to say that I would like to support Mr Fletcher Tabuteau, because, like I said, he is a very good member of the committee, but I cannot support this bill, and it is highly unlikely that we will receive it on the committee.

I want to explain why the Labour Party thinks that this bill should go to select committee, even though we think that the provisions in it are too broad in absolutely outlawing all investor-State dispute settlement clauses.

The National Party should consider why it is that 6 years into its Government, in respect of proposed trade agreements—including the last one that we have just negotiated with South Korea, which is of substantial benefit to New Zealand—there are thousands of people marching in the streets against free-trade agreements. One of the reasons why there is marching in the street against free-trade agreements is that there is public suspicion around investor-State dispute settlement resolution clauses. There are some well-founded concerns about some investor-State dispute settlement clauses, and there are also some incorrect concerns about investor-State dispute settlement clauses, but we are not going to resolve this as a country by refusing to have the debate about the rights and wrongs of them.

Investor-State dispute settlement clauses allow corporations to sue Governments for breaches of those corporations’ rights as set out in free-trade agreements. That is very important, particularly when you are dealing with countries that have got corrupt judiciaries, or judiciaries that might be too close to the Government or not independent of Government, which might, effectively, confiscate the assets of a New Zealand investor investing into a third-party country. So that is why you have investor-State dispute settlement clauses.

The negative side of them is that if they are not properly drafted, corporations can be allowed to sue Governments for doing what Governments ought to be able to do without suit, and that is to properly regulate for the benefit of their own country, whether it be for public health reasons like plain packaging of cigarettes, or alcohol control, or if you want to introduce controls on how much sugar is in food, for example. Those sorts of things are appropriate things for Governments to be able to do, and they ought not to be able to be successfully sued by overseas corporations for doing so. You need to be able to properly regulate the environment, including, for example, having a proper price on carbon or having improved standards of water quality, which might somehow impinge on the cost of production in a way that the corporate may not like. Governments should be able to do that without being sued.

When you get the New Zealand Medical Association turning up to make submissions to the select committee and saying that it is concerned about these things, the Government should not just say “We’re right; we know what we’re doing.” and close down debate. That is why we are supporting this bill to select committee.

I want to give another example, arising out of the South Korean free-trade agreement, of why this is important. The South Korean free-trade agreement allows the screening, pre-investment, of existing categories of investment—we do that for farmland at the moment—but it does not allow new categories of screening of foreign investment—i.e., into existing New Zealand homes. That is a mistake. Theoretically, if a future Government was to introduce a ban on the sale of homes to overseas people, South Korea could object, and a corporation from South Korea that could not make an investment could say that it had suffered a loss and sue the Government. The cost of those processes is so high, and the inability to prove loss—because the corporation could make an investment somewhere else and make a buck somewhere else—means that in all likelihood you will not get an investor-State dispute settlement claim on an inability to make a residential property purchase. But none the less the theoretical risk exists under the investor-State dispute settlement clauses in the South Korean agreement because of how the Government has negotiated.

It is making the same mistake in the Trans-Pacific Partnership—the same mistake in the Trans-Pacific Partnership—and all of those mistakes flow through to the Chinese free-trade agreement because the most favoured nation provisions in that mean that later more permissive agreements flow to the benefit of China. That shows why you have to be careful with investor-State dispute settlement clauses and the clauses that relate to them, and that is why we should have a debate about this in Parliament.

The Labour Party is not saying that investor-State dispute settlement clauses are always bad, particularly with Third World countries. We are saying, in respect of First World countries, that we would be willing to rely upon State-to-State resolution and to forgo investor-State dispute settlement clauses. We think this is a proper debate to have in New Zealand, and that is why we are supporting this bill to select committee.

It is a pleasure to rise to talk to this bill. Clearly our discussion is around investor-State dispute settlement provisions. Investor-State dispute settlement provisions set ground rules that allow countries to do trade with each other. It is a procedural mechanism provided for international agreements on investments. Investor-State dispute settlement provisions are really about making sure Governments give fair, equitable, and non-discriminatory treatment to investors. We include investor-State dispute settlement provisions in free-trade agreements as fair and good citizens of the trading world, in the knowledge that New Zealand exporters also have the same courtesies and protections in foreign countries. We often forget that our offshore investments have the same protection. It is a balance.

What is unbalanced is to take all of the economic benefits of a free-trade agreement, such as those we are going to get with Korea—and that has been the topic of discussion tonight, by way of example; the Korean free-trade agreement—and then not take the responsibilities of being a fair and reasonable trader. That is what this bill would do, and that is the message that it would send.

By way of example, with the Korean free-trade agreement New Zealand First would rather that we turn away $60 million of duties relief in the first year. New Zealand First would have us turn away benefits to kiwifruit growers, beef, lamb, and dairy producers. Our kiwifruit is competing against Chile, which at the moment has zero tariffs. Mr Tabuteau talked about wanting a level playing field. Well, there is a level playing field right there: give us equality with Chile on its zero tariffs, and we have exactly that level playing field that you are looking for. What is broken is that this bill would not apply to any currently ratified agreements already in place, and that would create an inconsistency across our trading partners and this Government. Good Government is about stability, not instability.

Let us look a little bit further at some of the myths that Mr Tabuteau raised around investor-State dispute settlements, which actually have many procedural safeguards in place. The allegation was made that maybe Government sovereignty and policy making—and Mr Tabuteau raised the question of health, and others have as well—could be compromised under investor-State dispute settlement agreements. Again, let us look at the Korean free-trade agreement with its investor-State dispute settlement provisions, and how health might be protected. For example, public health in the Korean free-trade agreement is held out in the first instance, as it comes under the category of “services supplied in the exercise of governmental authority”. There is our sovereignty right there. We have already cut it out and said that it does not apply. Furthermore, further policy space is preserved as reservations in the schedule of non-conforming measures. That is where health is protected as a social service for a public purpose.

The third thing is that some of these reservations, however, cannot be put aside under the terms of what is called “fair and equitable treatment”. We should not be afraid of fair and equitable treatment. We are good international traders, and when we look at some of the definitions of fair and equitable treatment—because people raised this as a barrier to us, that that is what is taken to court, the claims around fair and equitable treatment.

Well, let us look at a couple of international case studies. Cargill v Mexico: what is not fair and equitable, and would bring a claim, was “grossly unfair, unjust or idiosyncratic treatment; arbitrary beyond a merely inconsistent or questionable application … to grossly subvert a domestic law or policy for an ulterior motive.” Bilcon v Canada: “conduct … that is arbitrary, grossly unfair, unjust or idiosyncratic, is discriminatory and exposes the claimant to sectional or racial prejudice, or involves a lack of due process”.

New Zealand’s approach to fair and equitable treatment is as such: “The treatment … should amount to an outrage, to bad faith, to wilful neglect of duty, or to an insufficiency of governmental action so far short of international standards that every reasonable and impartial man would readily recognise its insufficiency.” We should have some surety in that.

Mr Tabuteau presented one configuration of what an investor-State dispute settlement tribunal might look like. Can I just add some clarity to that? There are three appointed adjudicators: you get to choose one and they get to choose one, and then you agree on the third. It is not quite the configuration that Mr Tabuteau would have you believe, where he confabulated some concept out of his mind as to who might sit on that tribunal. Go back and have a look at what the Korean free-trade agreement has. Look at its tribunal. I have it right here. There are a number of safeguards. It is not in secret. It actually comes out, has to be reported, and has to have consultation beforehand. It is a robust framework, not at all how Mr Tabuteau presented it. I think we should oppose this bill. Thank you.

I rise to speak in support of this bill about, essentially, outlawing investor-State disputes clauses in future trade agreements. I thought that perhaps the simplest way to come into this would be to quote at length from The Economist about exactly this issue, which has attracted a lot of attention. The Economist wrote on 11 October 2014 and it said: “If you wanted to convince the public that international trade agreements are a way to let multinational companies get rich at the expense of ordinary people, this is what you would do: give foreign firms a special right to apply to a secretive tribunal of highly paid corporate lawyers for compensation whenever a government passes a law to, say, discourage smoking, protect the environment or prevent a nuclear catastrophe. Yet that is precisely what thousands of trade and investment treaties … have done, through a process known as ‘investor-state dispute settlement’, or ISDS.” That is from The Economist magazine, talking about investor-State dispute settlements.

It goes on to say: “ISDS first appeared in a bilateral trade agreement between Germany and Pakistan in 1959. The intention was to encourage foreign investment by protecting investors from discrimination or expropriation. But the implementation of this laudable idea has been disastrous. … Multinationals”—this is The Economist magazine speaking—“have exploited woolly definitions of expropriation to claim compensation for changes in government policy that happen to have harmed their business. Following the Fukushima disaster in Japan in 2011, for instance, the German government decided to shut down its nuclear power industry. Soon after, Vattenfall, a Swedish utility that operates two nuclear plants in Germany, demanded compensation of [over NZ$5 billion], under the ISDS clause of a treaty … This claim is still in arbitration.” But, as The Economist says, “it is just one of a growing number of such cases … In 2012 a record 59 [of these cases] were started; last year [there were] 56 … The highest award so far is [for US$2.3 billion] to Occidental, an oil company, against the government of Ecuador”, because the Government of Ecuador apparently lawfully terminated an oil-concession contract.

That is from The Economist magazine, hardly renowned for its radical anti-business perspective on trade agreements. And what The Economist magazine and establishment figures all around the world are now doing is stopping progress on these kinds of clauses because they are so fundamentally dangerous to democracy and to regulation-making by Governments. That is why The Economist went to some length to explain the problems and the dangers with investor-State dispute settlement clauses, which allow multinational corporations to sue Governments if Governments regulate in a way that costs those companies money.

Think about the German nuclear industry. Germany is not renowned for having a Wild West legal structure, yet Germany decided, after the Fukushima disaster, that it no longer wanted to pursue nuclear power, and it would slowly phase out nuclear power. It is now facing an investor-State dispute settlement case of around $5 billion that it may have to pay in order to proceed with that perfectly sensible policy. Australia is facing a case because it wants plain packaging on tobacco, and Philip Morris rightfully says “That will cause us harm or damage our business.” Well, that is true, it will, but it will save thousands and thousands of lives. South Africa faced similar cases when it tried to tackle apartheid.

What the lawyer for—and I think this is really interesting—the nuclear power company Vattenfall, Kai Hobar, said when he was asked about the case he was taking against the German Government on behalf of the nuclear power utility company was: “States are complaining about this, but they’ve signed up to these treaties themselves. If they don’t want them, don’t sign them.” Those are the words from the lawyer who is suing the German Government because the German Government is phasing out nuclear power, a case that could cost it $5 billion. That lawyer is right: if we do not want these, do not sign them, and that is what this legislation does.

This piece of legislation, brought in by the New Zealand First Party, is really just an attack to frustrate an agreement that is in the best interests of New Zealanders. It is something that shows the real, true intent of that party, which is a party that is against an open and free New Zealand. It is a party that does not want free trade. It is a party that wants to take us back to the 1950s. It is a party that does not want immigration. It is a party that does not want change in New Zealand communities and society. It is a party that believes that a select group of a few people can decide and tell everybody else what to do. It is a party that is stuck in the past. Those party members are the dinosaurs of the past, and they have brought in legislation that tries to stop New Zealand from progressing and being in the open, free world that we can be part of and that has made our country so strong in the past. This bill is an attack on New Zealand’s future by the people who represent New Zealand’s past—that was ages and ages ago. We should be looking forward as a country and not back, as those dinosaurs next door are.

The Labour Party is pretty rich coming into this Parliament here today, because the Labour Party in its greatest day of free-trade agreements—every time you talk of the Labour Party and free trade, one person and one agreement are mentioned. Labour members say that Phil Goff got the New Zealand - China free-trade agreement. That is what they said. We heard that in this House only an hour ago. The Chinese free-trade agreement allows these kinds of clauses. It does allow these kinds of clauses. To have the Labour Party members come into this House now and say: “We think that this should still go through to the next stage for discussion.”, really is just them trying to bet on both sides of the coin. They do not actually believe in it. They know that New Zealand needs to be a free and open trading country. They know that an integral part of free and open trade is to have these kinds of clauses in the agreements going forward.

It is very rich of the Labour Party to come in here and try to open up the debate and say “Oh, we believe that there should be a debate on this issue.”, when in reality the biggest agreement that Labour signed had one of these clauses in it. It was an agreement that Labour is very proud of. Labour members cannot come into this Parliament and then be against these types of clauses, and then have them in that very one agreement, which they wanted.

💬 Clayton Mitchell: Tell us what you think of the TPPA with the ISDS clauses instead of what everybody else thinks.

OK. So we have got New Zealand First piping up again. New Zealand First—the party that does not want free trade in New Zealand. This is what this debate is about. Do you want New Zealand to be a free-trading country? Do you want the Chinese free-trade agreement? Do you want the New Zealand - Korea free-trade agreement?

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!

Do you want to have a free-trade agreement with the Pacific rim?

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!

💬 Ron Mark: I raise a point of order, Mr Speaker. I notice you, Mr Assistant Speaker, were a little distracted, but the speaker continues to try to bring yourself and your Chair into the debate—quite pathetic.

The ASSISTANT SPEAKER (Hon Trevor Mallard): I was attempting to call him to order. I think if he occasionally addressed the Chair, he might notice that that was happening.

There is no involvement of the Chair in this. This is about the New Zealand First Party, which is against free trade and the free-trade agreements.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Can I remind the member that when a ruling has been made on a point of order, it is not to be referred to by members. The member has been here for a while and he does know that.

💬 Ron Mark: But he never listens—never listens.

Oh, never listens. This is the New Zealand First Party, which does not want New Zealanders to trade—the trade that we have heard about from Mr Mark Mitchell, and what the Korean free-trade agreement would mean for New Zealanders. But, no, New Zealand First does not want that. New Zealand First does not want us to be in that trading bloc, which will be the future of this part of the world. That shows the small mindedness, the arrogance, the old-fashioned approach that is the New Zealand First Party. It is a shame that we have to even debate these bills in this House. It is an attack on the values of New Zealanders and this House that these bills should even be debated here, because they represent an attack on the fundamental values that New Zealanders want. New Zealanders want a progressive, open, and free country. They want a country that does not say no to people because of race, a country that is open to people to come here and make their future, a country that wants to have free trade and that wants to engage in the new world. That is the difference between this side of the House and the opposite side of the House.

💬 Ron Mark: This speech won’t get that member into Cabinet.

Mr Ron Mark is sitting there. Mr Ron Mark said that they wanted transparency around the negotiation of a free-trade agreement. They want to see the agreement. We did not see transparency around the New Zealand First deputy leadership contest, did we? When was that transparent? That was not around. When were the votes that were cast in that vote last week shown to the public? No. New Zealand First—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! The debate has been quite wide, but I think the member has got well beyond it now. I am going to invite him in the last half minute of his speech to address the bill.

💬 Ron Mark: He’s desperate.

Desperation comes from New Zealand First when their leader will not even come and support their flagship policy.

It is bad for New Zealanders that we even debate this bill. It is a shame on Fletcher Tabuteau to come to this House with legislation like this. New Zealand does not want the attitude that New Zealand First brings to this House, and Labour Party members should stand up and say the right thing. They have had the chance over the last week and they have not done that either.

I want to firstly thank Mark Mitchell for his contribution. It was a measured contribution in the spirit of the non-partisan nature with which trade agreements between our two great parties, and latterly other parties, over many, many years—decades—have been dealt with.

As for the last contribution by David Bennett, it was a waste of time. David Parker in his address did what I think the Government should have done. I am a rabid free trader. I believe in free trade. I am part of a party that has been pro - free trade and has initiated, as Mr Bennett pointed out in his snide way, many free-trade agreements, including the China agreement. Mr Bennett is right that there are investor-State dispute settlement provisions within the China free-trade agreement, and that is a well-known fact. Maybe he has just come out from under the mushroom in the last couple of days and worked that out.

But here, I say to Mr Bennett, is the difference: when we negotiated the China free-trade agreement—specifically, Phil Goff and Helen Clark—one, you did not see the outcry. You did not see the angst within the communities because as a Government, and through those two individuals, we brought communities with us. We kept them well informed. I accept that you cannot—and it is naive of those who say that we can—somehow negotiate an agreement in public. You cannot. You do not negotiate wages in public. You do not negotiate trade or commercial deals in public. It is a nonsense to put that forward.

But what you can—and I am certainly critical of the National Party on this one, and slightly critical of our commercial sector—talk about is what has been; i.e., the China agreement and other agreements that have been. You can talk about, as Mr Bennett in his own weird sort of way tried to articulate, the notion of investor-State dispute settlements within the China agreement. You can actually talk about what have been the benefits or the downsides of, say, the China free-trade agreement—but what I would argue are the benefits—and you can make a case that if we got even a slice of 40 percent of world trade for our commercial sector and our people in New Zealand in respect of jobs, growth, and wealth to exploit, that would be a good thing. You can generate those sorts of discussions.

I note, and I believe I was attacked at the time by the Green Party, which is sort of a badge of honour for me, that I was the one, when I was shadow trade spokesperson, who asked Tim Groser whether he would fight for and ensure that similar provisions and safeguards that exist within the China free-trade agreement that protect New Zealand’s right—despite investor-State dispute settlement—to regulate and legislate in the public good are in the Trans-Pacific Partnership, and the answer was yes. The Green Party attacked me and said I was sucking up to the Government for actually eliciting a commitment from them. But we will work that one out in some other stratosphere.

I say, as Mr Parker did, that the reason, and the only reason, we are supporting this bill—which I have to say, with respect, is a very simple bill, but it is very broad, far too broad, in what it seeks to achieve. I do agree with the National Party that if this was adopted it could well negate free-trade agreements, and that is not a good thing for our country. But what Mr Parker has articulated is the ability to have a select committee that examines this very issue and, effectively, do what the Government should have done years ago. For Mr Bennett to get up and say that we have come late to the debate on this is piffle. We have been asking publicly that the Government articulate and discuss with stakeholders, within the bounds of confidentiality, and raise these issues and actually put the debate out there—actually put the debate out there—so people can indeed be reassured.

I am not a conspiracy theorist. I do not believe in the trade bogeyman. If you look at trade agreements, despite our Green friends, throughout history where you have open markets, where you have opened closed economies, it does lead to better environment, labour, and human rights standards and greater wealth for those people. Where you have developed countries that can actually access wealthy markets for their products and services, it does actually lift economic growth and standards of living. That, unless you live in a flat-earth society, is undisputed. So the rationale for us supporting this simply to the select committee process is to allow a public debate.

I thank Mr Mitchell again for his contribution. It was measured. It was non-partisan. I conclude with this—slightly off target—to place on record my thanks to Minister McCully, the Prime Minister, and the Government for their support of our ambassador to the US, Mike Moore, who we know is recovering from some health difficulties. I take this opportunity to briefly simply congratulate him. He has done a job well. His task was to get trade promotion authority and to ensure that trade promotion authority got through, fast-tracked, because you cannot have a Trans-Pacific Partnership without trade promotion authority, and he has done that job. He is a person who is a passionate free trader. I would put his knowledge of this agreement and stack it up against that of anybody in this House, even Mr Groser—he may be insulted by that—as a person who would know the credibility and integrity of this deal. Mr Moore is a patriot. He is a citizen of this country and he is a believer in free trade.

But let us not try to have all the colourful weasel words. Let us take Mr Mitchell’s example. We will support this for one reason and one reason only: to do what the Government has failed to do, and that is to engender a public debate so that people can actually examine this proposal for what it is.

First of all, I do have respect for my Foreign Affairs, Defence and Trade Committee colleague Fletcher Tabuteau. I understand we both were academics before coming into politics. You were teaching international economy, and I was teaching international relations. However, this particular bill is very disappointing. This is a poorly drafted bill. It is an anti-trade bill and a political stunt.

This bill would prohibit New Zealand entering into international agreements that include provisions for investor-State dispute settlements, or ISDS. The bill’s purpose is to “protect New Zealand laws” and “to protect the public interest”. What a misleading statement. New Zealand’s laws and public interest are protected in all New Zealand’s trade and investment agreements, including those that provide for compulsory investor-State dispute settlements. We are aware of the potential risks that investor-State dispute settlement provisions could pose if we do not negotiate very carefully.

When the Foreign Affairs, Defence and Trade Committee was examining our trade with the Republic of Korea, we discussed this investor-State dispute settlement issue at length. Clearly it is possible to design mechanisms that carefully balance the protection of New Zealand investors abroad with the need to safeguard the Government’s right to regulate for legitimate public policy purposes.

Investor-State dispute settlements are not new. They have been there for quite a few years. New Zealand has extended investor-State dispute settlements to a number of countries or trading partners, including our trading partner of China in 2008 when we negotiated or reached a free-trade agreement with China and then to the Association of South-east Asian Nations, or ASEAN, in 2009 and in the same year to Malaysia. No investor-State dispute settlement claim has ever been brought against the New Zealand Government.

So this is an anti-trade bill, but we all know that trade is particularly important to our economy. It plays an independent and positive role in raising incomes. Of course, New Zealand First does not care too much about our economy and has no genuine interest in raising accounts for New Zealanders. They have been running this scaremongering campaign of foreigners taking over New Zealand.

When National took office in 2008 the world economy was suffering from a global financial crisis and the New Zealand economy was in recession, right? The future for our economy in those years was absolutely gloomy. It was forecast that our unemployment rate would hit 11 percent and then our debt could reach over 60 percent of our GDP. In those years that was forecast, but we all can see that we have worked out of this financial crisis and economic difficulty. One important factor was our free-trade agreements with various countries, particularly our free-trade agreement with China. So in 2008 New Zealand became the first and only OECD country to conclude a free-trade agreement with China. Labour can take credit for that.

Since the signing of the free-trade agreement New Zealand’s exports to China have grown significantly from $2.3 billion in 2008 to $6.7 billion in 2012 and then $9.96 billion in 2013. Our trade relations with China were a key factor for New Zealand to come out of the global financial crisis earlier than many other OECD countries. Had this bill become an Act before 2008 then our trade with China would have suffered and our economy would have been in a very bad situation. So this is how damaging this bill could be.

This bill would prevent proceeding the Korean free-trade agreement, which is currently before Parliament. The fact is our exporters to South Korea have been paying $229 million a year. Thank you.

I want to thank Fletcher Tabuteau for bringing this bill to the House. I too am deeply worried about the contents of the Trans-Pacific Partnership and the inability for New Zealanders to have sufficient public debate on the contents and on the process of this agreement before it actually becomes a done deal.

I do not think anyone listening to this debate tonight should be in any doubt that Labour is a party that supports free trade. Within our party we have varying views. You have heard my colleague Clayton Cosgrove describe himself as a passionate free-trader. Well, I would not describe myself in that way, but what I would say is that I am a passionate supporter of the right for sovereign Governments to legislate in the public interest and to also support our own industries and our own innovation industries. That is what I am here to support tonight. This is why Labour is supporting this bill to the select committee. It is because there is a void that exists at the moment in our country on the ability to have a sensible discussion about some of the provisions that people are most concerned about in the Trans-Pacific Partnership. That is why Labour is supporting this bill to the select committee: so that there can be a sensible debate and informed debate.

I am really disappointed tonight to hear the National Party back-benchers displaying their blind ignorance and their rote-like message delivery when they should actually be looking more seriously at the issues and listening to their constituents. The National Party really has nothing to fear about having this discussion. In fact, those members should be welcoming this discussion. In many of the Trans-Pacific Partnership countries there is a stronger debate going on, and they should actually be saying “We have nothing to fear. We want to have this discussion. We’re up for having this discussion.” That is why National should be supporting this bill tonight to a select committee.

Why is this bill before the House? It is before the House because there has been no ability to have the debate that needs to happen because everything that we are debating is around what might be the case—what might be the case—and it is around the substance of leaks that have come out. It is not about the actual knowledge of what we know, and so the investor-State dispute settlement provisions is the thing that has been latched on to as the symbol that is emblematic of how a Government and how a country can lose control of its own sovereignty and its own ability to legislate in the public good. That is why this debate is so important and why this bill should go toa select committee.

Everybody should be very clear about this: if this agreement does get to the point of being signed, when it gets to Parliament it will have already been signed. The public debate may be allowed to be had, but it will have already been signed and we will not have had the opportunity to have that debate before then. The ability for democracy to have occurred and the ability for a proper democratic process will not have happened, and we will not have been able to have that discussion. I think that is pretty critical, which is a very good reason for all of the parties to support a proper debate in a select committee process around the investor-State dispute settlement provisions.

So what is it we are actually debating? Why are we worried? It is a mechanism by which the multinational corporations can go to some international arbitration tribunal and sue the Governments of countries in which they invest. I think one of the speakers mentioned that there are around 3,000 of those. We know that they are not all bad. We know that there are provisions that actually do protect countries, but we also know that there have been many, many issues raised about some of them—

Order! [Interruption] Can I just remind members that they should—and I did make the point to David Bennett—address the Chair and occasionally glance in the direction of the Chair to ascertain whether the Chair is on his feet trying to quietly ask the member to finish. The member’s time has expired.

It gives me great pleasure to rise on behalf of the ACT Party in opposition to this bill. I notice a slight contradiction in the two New Zealand First bills that have been presented and are soon to be voted down tonight. The first one was about Parliament introducing a statute to undermine an agreement or a contract entered into by the Crown. The second is based on the claim that the Crown is about to sign away all democratic rights and that somehow we will no longer be a democracy. I just ask members to ponder: if the first bill was going to be effective, then why is the second one needed?

💬 Clayton Mitchell: It doesn’t make sense.

I will give him a moment. Actually, I do not have enough time for them to get that. But, fundamentally, the supporters of this bill and opponents of free trade, I have to say, tend to be of a certain type: those who wear tinfoil hats, are worried about chemtrails from trains, think that 9/11 was an inside job, and, more specifically, tend not to understand the concept of limits to democracy and limits to democratic decision-making.

The fact is that in the normal course of things, the majority does not rule unencumbered without due process, without property rights, or without any type of regulatory restraint. In fact, one would hope that when a Government or a Parliament makes laws, it would do it with respect to all of those things. In fact, one would hope that when a Government regulated, it would do correct problem definitions, it would identify impacts on free trade and property rights, it would identify winners and losers, and it would do cost-benefit analysis on a variety of different options for regulating. That is what we would all hope were the limits on legislation passed by a majority. That is something that people who are in favour of this bill tonight and opposed to the Trans-Pacific Partnership agreement and investor-State dispute settlements tend to have a real problem with.

But they have an even bigger problem when those constraints on the tyranny of the majority may in fact be put in place or pursued by people who are not part of New Zealand, because they are already opposed to limits on the tyranny of the majority, they are already sceptical about property rights and due process, and they are even more sceptical about foreigners. Well, the fact is that New Zealand is a trading nation. We have heard it so many times before, but what we need to realise is that New Zealand, as a jurisdiction of around 5 million people, is comparable with, say, British Columbia, or Colorado, or Denmark. If one was to go to any of those jurisdictions and say “Why don’t you pull out of your effective free-trade agreement and your integration of laws and regulations with Canada, in the case of British Columbia; or the United States, in the case of Colorado; or the EU, in the case of Denmark, because if you don’t, if you continue to be integrated into this wider market, then you have no democracy and your grandchildren have been sold out?”, they would say “You’re nuts”, to quote them—not to address the Chair. I say precisely the same thing to those members tonight.

In actual fact, throughout our history we, as New Zealanders, have gained from being able to enforce free-trade agreements, even to the chagrin of foreign Governments. I need only mention the long-running apple case to say that we are a trading nation that believes in limits to Government, and we realise that when we integrate with the rest of the world—

💬 Hon David Parker: That wasn’t ISDS; that was State to State.

—some of those limits will be pursued by other Governments, and the State will not be acting on behalf of corporations. They are going to have to do it themselves, which seems to be a step backwards, from their point of view, Mr Parker. But, none the less, for all of those reasons I am very proud to stand and oppose this rather sad and all too short and poorly thought-out wee bill. Thank you.

We have never been sued through the tribunal process; this is true. But what this Government has not acknowledged is something called the chilling effect. This Government has itself been stymied by the chilling effect, refusing to implement plain packaging legislation because of the fear of investor-State dispute settlement retaliation by large foreign corporates. Governments around the world are being stymied through fear of billion-dollar claims, afraid to act in the best interests of their citizens and afraid to introduce meaningful and good laws. This is called the chilling effect, and it is already immeasurably changing sovereign nations’ approaches to supposed self-rule. Let us be a proud nation and make a stand. Let us punch above our weight and make it clear to our international friends that we insist that democratically elected representatives of the people should be the ones who determine our future and our laws. We do not care to act in fear of financial retaliation from foreign corporates dictating our futures.

Real solutions are actually available. This is not a unique problem to New Zealand. Firstly, and most obviously, corporates worried about dodgy Governments can already purchase political risk insurance. New Zealand firms do it now when they venture into those overseas markets. Australia refused to have an investor-State dispute settlement in its treaty with the US. And what do you know? The US signed it. Canada is considering not signing the Trans-Pacific Partnership as its Parliament debates many issues, including the investor-State dispute settlement. South Africa has said it will be withdrawing investor-State dispute settlement provisions from its treaties going forward. France and Germany have been particularly strong in voicing their concerns about investor-State dispute settlement provisions.

The European Union is now divided against its equivalent trade agreements with the US because of the investor-State dispute settlement provisions and is now considering a new system for resolving disputes between investors and States. That echoes a Franco-German proposal for a permanent European court to settle disputes in international trade agreements. The European Commission, which handles trade issues for 28 European Union States, has suggested a multilateral court. Investor-State dispute settlements are dead. They must be replaced by a new public and transparent system of investment protection in which private interests cannot undermine public policy that is subject to public law. The German economic Minister has called for establishing an international court and has rejected the old investor-State dispute settlement provisions.

For New Zealand First, a new system means publicly appointed judges, not private arbitrators; saying yes to full transparency during the court cases and yes to an appellate mechanism; and changes in law by New Zealand’s sovereign Government so that affecting a company’s profits would not be a sufficient reason to take legal action against a State. If these conditions are not met, it is not good enough for us and it should not be good enough for this Government, which presumes to represent all of New Zealand. It was sent a message in a by-election not so long ago. It does not have the mandate it claims. Listen to all New Zealanders and look past just the numbers, Mr Seymour, and look to understand how this is actually affecting the people of New Zealand—our sick, our needy, our Kiwi-owned small businesses, the regions, and, I say it again, the people of this country.

We have not given New Zealanders the opportunity to be heard on investor-State dispute settlements, and especially on the Trans-Pacific Partnership, for example. Do not stifle democratic principles for the profits of foreign corporates, or even simply for the profits of our own companies. The profits of New Zealand firms should be our first priority, yes, but you were elected to represent all the interests of all New Zealanders. I challenge you to go forth, Minister Groser, and actually secure a free-trade agreement in this Trans-Pacific Partnership. Do that without giving away our sovereignty and without compromising individual New Zealanders, and then we will all profit from these negotiations. Thank you.

I raise a point of order, Mr Speaker. I ask for a personal vote on the grounds that this party vote is so close that a personal vote may make a material difference to the result. This is a significant piece of legislation that should be put to a select committee. We are voting on the fundamental nature of our democracy—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! No—sorry, if the member has reasonable grounds I want to hear them.

💬 Paul Foster-Bell: Speaking to the point—

The ASSISTANT SPEAKER (Hon Trevor Mallard): No, no. I am sorry. I interrupted the member prematurely. I want to hear the grounds that the member has.

💬 Hon Dr Jonathan Coleman: Better ring the Green Parrot.

Yes, exactly. I have been led to believe that not all members of this Parliament are on site, and so their votes should be held into question.

I raise a point of order, Mr Speaker. I have absolute confidence that all of the National Party members, except for those who have duly been granted leave within the allowance given to the National Party, are here, and any suggestion otherwise I take personal exception to.

I want to thank the member for his point of order, but I rule, as previous Speakers have done on questions of this type, that without particular evidence, then the word of whips or other people casting votes must be taken.