PM Key denies he has changed stance on Trans Pacific Partnership provisions that would allow NZ to be sued by foreign investors

By Alex Tarrant

Prime Minister John Key has rejected a claim that he had done a backflip on the issue of American companies having the right to sue the New Zealand government under the Trans Pacific Partnership agreement being negotiated with the US government.

He said it was far-fetched and extremely unlikely a foreign investor would be able to sue the New Zealand government.

Key’s comments follow a press release from TPP critic Professor Jane Kelsey, which said: “In response to questions about New Zealand and Australian positions during a briefing to civil society in Washington on 31st January Ms Wiesel said “New Zealand had retracted the Prime Minister’s statement. It is not their position.””

Key said he was not aware of any statements that the US trade representative had made.

“I simply haven’t seen those. Nor have I had any discussions from the point at which you asked me that question [last year] to the statements made today, so I certainly haven’t changed my position,” Key told media in Wellington on Monday afternoon.

“It’s not new for New Zealand to include these provisions in trade deals – we did that in the case of recent trade deals, including China – and from the government’s perspective, the advice I continue to receive is that it is far-fetched that an investor would be suing New Zealand,” Key said.

“Nor do we believe or accept the proposition put up by Jane Kelsey that we somehow cede our sovereignty by signing a free trade agreement,” he said.

“We don’t believe that the way the provisions will be structured that they would allow frivolous claims and in our view the way we pass regulation and laws in this country would mean that it’s extremely unlikely, and in our view far-fetched, that we’re going to be sued.

“Certainly if you look at the China experience as a good example, and I think there’s a number of FTAs where we’ve had the same provisions, New Zealand has neither been sued nor had anyone looking likely that they would sue New Zealand.

Key said media were free to take any questions on the issue up with Trade Minister Tim Groser.

“As far as I’m concerned, the advice I’ve had is that it’s extremely unlikely that we would be getting sued,” he said.

Key had “absolutely no idea” why a US trade representative would have said he had retracted his comments.

“But I haven’t made a single comment in this space to anyone since you last asked me that question in this Beehive,” Key said.

“Either I’ve done it telepathically of I haven’t done it at all, and I think we’d take the latter as being the likely outcome. All I can tell you is from the moment you asked me that question to the moment you’ve asked me this question, that [this] is the first time I’ve discussed this matter,” he said.

See Bernard Hickey's video interview with Jane Kelsey last year.

Here is the press release from Professor Jane Kelsey:

In November last year, Prime Minister John Key described as “far-fetched” the idea that investors could sue the New Zealand government directly in a secret international tribunal to enforce rules in the proposed Trans-Pacific Partnership Agreement (TPPA). 

This week, US trade negotiator Barbara Wiesel said that was no longer New Zealand’s position, according to TPPA critic Professor Jane Kelsey.  

In response to questions about New Zealand and Australian positions during a briefing to civil society in Washington on 31st January Ms Wiesel said “New Zealand had retracted the Prime Minister’s statement. It is not their position.”

Under standard US terms for such agreements, investors can claim millions in compensation from governments on the grounds that new regulation has adversely affect their investment. Under a TPPA that would apply to investors from all participating countries, including our largest sources of investment, the US and Australia, JaneKelsey said.

“In other words, the Key government is happy for pharmaceutical firms in the US, Australian banks or Singapore-based Brierley Investments to sue the New Zealand government for millions in compensation if they think new laws or policies are unfair or unreasonable or erode their profitability”, said Professor Kelsey.

“We saw with the Hobbit, just a threat from a foreign investor is often enough to see a government cave. The leverage of Warners over our labour laws and taxpayer subsidies will pale into insignificance with a TPPA.” 

Professor Kelsey speculates on three explanations for the flip-flop. 

“Either John Key did not know what his negotiators were proposing to do when he described investor-state enforcement as “far-fetched”; or he was lying to the New Zealand public; or he has buckled to pressure from the US, and possibly his own Minister and officials, to agree.”

“This proposed bill of rights for foreign investors is even more frightening when government has announced assets sales and privatisation of ACC, policies which failed in the past and required the government to step back in.”

“The Prime Minister needs to be upfront about the government’s real position before the next round of negotiations begins in Chile on 14 February and explain why he is prepared to give foreign firms the legal power to override New Zealand’s sovereignty and extract settlements of hundreds of millions of taxpayer dollars.”