Richard Fyers: Trade deal no threat to our sovereignty

It's time to remove barriers to free trade, writes Auckland commercial lawyer Richard Fyers. Photo / Thinkstock

The business community is an ardent supporter of the Trans-Pacific Partnership, a free trade agreement being negotiated among 11 Pacific Rim countries. It will make business easier for our exporters and since international business accounts for over two thirds of New Zealand's economic activity, freer trade should make us all wealthier.

But there is a lot of work to be done in removing trade barriers. Canada for instance has tariffs on dairy products ranging between 200 and 300 percent.

Opponents worry that under the TPP we will lose sovereignty because foreigners may be able to sue us if we make laws that damage them. This is scaremongering, as is the suggestion that the secrecy of treaty negotiations is somehow sinister.

All TPP signatory countries will lose sovereignty to the same extent - if any do. The US, Malaysian, Canadian and other governments will be giving us the same rights over them as they will gain over us.

Second, the intention is to provide for dispute resolution of unfair treatment such as government confiscation of assets. Argentina and Bolivia are examples of serial confiscators of foreign investments, though neither is currently a party to the TPP negotiations.

New Zealand is already subject to, and can benefit from, international tribunals. We successfully took the Australian government to the World Trade Organisation over their ban on New Zealand apple imports. We would not have got a remedy without that independent body which both our countries signed up to.

It is a valuable advantage to a small country if a larger one agrees to be bound by the decision of an independent arbitrator. But it took a long time for our Government agreed to pursue Australia in the WTO. Action may be taken faster if our exporters like Fonterra can obtain rulings against unfair foreign government behaviour.

It is commonplace these days to have international litigation or arbitration conducted in neutral jurisdictions. Lawyers negotiate contractual clauses about the location of such litigation, what law is relevant and the procedure to be followed.

The TPP could promote more uniform international dispute and enforcement procedures.

There are existing bodies for commercial disputes involving governments, such as the International Centre for the Settlement of Investment Disputes which is part of the World Bank. Argentina has won a slew of ICSID cases against aggrieved investors and also lost a handful.

The TPP is not unusual; it is just a multiparty free trade agreement though it does aim to be a high quality and effective instrument. New Zealand has completed several bilateral free trade agreements, notably with Australia in 1983 and with China in 2008. These countries are now our biggest trading partners. We have also just quietly completed a free trade deal with Hong Kong.

The shrill TPP criticism seems to be driven by anti US sentiment with statements such as "US demands..." and "if the US gets its way". In fact the TPP began as a bilateral agreement between New Zealand and Singapore over ten years ago but has grown to include nine other countries.

Certainly bigger countries will have more influence, as will those earliest at the table. New Zealand diplomats are experienced free trade negotiators. We have an open economy and opening other economies in a similar manner will make us money. Tim Groser recently reported that our exports over the past four years to countries with whom we have a FTA have grown 23 percent while those to non-FTA countries only grew 3 percent.

It is mischievous of Winston Peters to suggest that the public should be involved in negotiating free trade agreements. As a former minister of foreign affairs he should well know that treaties cannot be negotiated in public or by the public. He knows that before the agreement is completed it will be reviewed by our Parliament for an analysis of its advantages and disadvantages.

There is nothing suspicious about a treaty negotiation being done privately. The negotiation of government to government treaties is a delicate process, done by diplomats in confidence. The give and take of negotiations would be seriously damaged if they were conducted in public.

Our small county's negotiating position would especially be harmed if the world was watching as we asked a more powerful country to change its position. It is just silly of academics to suggest that "secrecy in investment talks mocks democracy".

It is true that the TPP will cover more than trade and there will be tricky issues to be dealt with. There will be risks in allowing aggrieved foreigners a chance to raise disputes against us in third party arenas but we should have confidence in the propriety of our government. Making international trade and investment easier reduces costs and therefore prices to the benefit of all consumers. It is a philanthropic mission.

The negotiation of the TPP has been the work of both the Labour and the National party governments. Commentators should better add value to the debate rather than attempt to scare the public with silly and far-fetched scenarios. After all we have had a very broad free trade agreement with Australia since 1983 and what trouble has that caused us?

* Richard Fyers is an Auckland commercial lawyer advising on cross border investment and trade.