In the wake of an open letter signed by a large group of lawyers and politicians from New Zealand, the US and other Pacific nations protesting at potential “investor state” provisions in the Trans-Pacific Partnership Agreement, the Ministry of Foreign Affairs and Trade is trying to give assurances that there will be no danger to New Zealand’s control over its own laws.
The provisions will, on the face of it, allow overseas investors to sue governments if local variations in laws damage the viability of their business.
New Zealand ICT businesses and industry bodies are casting nervous eyes particularly on our exclusion of software from patent rights in the Patents Bill, still going through Parliament. The hard-fought provisions of New Zealand’s Copyright Act pertaining to illegal downloading may also be threatened, critics suggest.
However, an MFAT spokesperson says “New Zealand’s position has always been to ensure that any commitment entered into in a trade or investment agreement preserves New Zealand’s ability to regulate for legitimate public policy purposes, and this remains our position.
“Successive New Zealand governments have previously agreed to reciprocal provisions that enable investors to challenge breaches of certain free-trade agreement commitments in several of our other FTAs, while preserving New Zealand’s ability to regulate for legitimate public policy purposes as noted above. This balance will remain in any discussions on ISDS in the TPP negotiation,” the spokesperson says in an email to Computerworld.
“Nothing we are looking at would give investors the blanket right to sue the government or open us up to frivolous and historic claims with the potential for investors being awarded punitive damages,” says MFAT, in answer to the points raised in the open letter. The lawyers’ criticisms are targeted primarily at existing trade agreements such as NAFTA, and it is only conjecture that similar provisions might be included in the TPPA, it says.
The open letter notes that Australia has excluded investor state dispute provisions from TPPA and other future trade agreements and encourages other TPPA nations to do the same.
“The ostensible purpose for investor protections in international agreements and their investor-state enforcement was to ensure that foreign investors in countries without well-functioning domestic court systems would have a means to obtain compensation if their real property, plant or equipment was expropriated by a government,” the letter says.
However, the types of property covered by such clauses have now been extended to include intellectual property, contract rights and other non-physical categories.
Powers conferred by the provisions have been extended to rank the rights of foreign investors higher than “the sovereign right of nations to govern their own affairs” the letter says.
Misgivings — and government reassurances — about potential conflict between ICT-associated intellectual property law and free-trade agreements have been aired for more than seven years.