CPTPP clauses which stop corporations suing our government "narrowed" - but not removed completely

Source: 1News

Foreign corporations would still be able to sue New Zealand's government under principals agreed to by the government, but those circumstances have been considerably narrowed, Trade Minister David Parker says.

Mr Parker, is in Da Nang in Vietnam where the APEC summit is the venue for negotiations between 11 countries on the newly-renamed Comprehensive Progressive Trans Pacific Partnership (CPTPP) agreement.

He said New Zealand has been able to reach consensus on "four and a half out of five" of the main things the Labour government wanted from the TPP.

One of those issues, the Investor-State Dispute Settlement (ISDS) clauses, has caused concern, as it could allow foreign corporates to sue our government in a foreign court if they felt they had been disadvantaged by New Zealand law or changes to those laws.

One example would be a tobacco company potentially suing New Zealand for lost income if tobacco became illegal.

Mr Parker said consensus around a considerable narrowing of the ISDS clauses have now been achieved, including a "side-deal" with Australia which completely eliminates ISDS clauses between Australia and New Zealand, which makes up 80 per cent of potential CPTPP trade.

"We've effectively got 80 per cent out, we've got some bilateral negotiations outside of the text that are ongoing, that we haven't yet concluded - but we're still trying our best to conclude," Mr Parker said.

However, speaking this morning to TVNZ 1's Q+A programme, Mr Parker said the remaining 20 per cent of trade with the other 10 CPTPP countries did currently still include ISDS provisions, but only for unhappy investors to use New Zealand courts.

"As the text stood, if a big multinational was building a big infrastructure project in New Zealand under contract with the Government and they became dissatisfied and had a dispute, until the narrowing, they could have used these ISDS clauses to take that dispute to an international tribunal - they now no longer can," Mr Parker said.

"If they've got a breach of a contract like that, they've got to sue the New Zealand government in the New Zealand courts - just like a New Zealand company would have to."

Mr Parker also said that New Zealand will retain the power to modify its own legislation and governmental systems without fear of corporations suing them.

"If we changed the regulation relating to taxes or environment or labour laws or public health or did anything with our public schooling system or our public health system, no they could not [sue New Zealand]" but "there are some narrower areas where they could still make a complaint under these ISDS clauses," Mr Parker said.

"We have instructed our negotiators not to agree them [ISDS clauses] in future, but we haven't been able to successfully remove them completely from this agreement."

Mr Parker called the ISDS clauses implementing international tribunals "an example of where the investment protocols and trade and investment groups have gone too far".

Prime Minister Jacinda Ardern said that this new CPTPP is a different agreement that the previous iteration.

"This is a different deal than what was being negotiated at the time when the United States was at the table," she said.

"A different agreement than what TPP 12 was - not least because there have been a number of suspended clauses which were important to New Zealand in particular."

In a statement this morning, Mr Parker said the 11 ministers concerned have now confirmed "the core elements of the deal are now agreed, with just four issues requiring further technical work and discussion".

"There will be no change to the goods market access outcomes contained in the original TPP," Mr Parker said in the statement.

"This is a now an improved deal for New Zealand ... The overall outcome satisfies the five conditions that the Labour-led Government laid out for a revised TPP."

Mr Parker said those "four issues" will likely mean further talks among the 11 ministers will be required "in coming months" to sign the agreement.


- It achieves meaningful gains in market access for farmers and supports the more than 620,000 New Zealanders whose jobs depend on exports. The CPTPP will also provide New Zealand for the first time with preferential market access into Japan, the world’s third-largest economy, as well as Canada, Mexico and Peru;

- It upholds the unique status of the Treaty of Waitangi;

- It preserves New Zealand’s right to regulate in the public interest. We have also retained the reciprocal agreement with Australia, which is the source of 80 per cent of our overseas investment from this new grouping, that ISDS clauses will not apply between our countries. We continue to seek similar agreements with the other countries in this new Agreement. In addition, the scope to make ISDS claims has also been narrowed;

- The Pharmac model continues to be protected. Further improvements now achieved include suspension of patent extensions which could have increased the cost of medicine to the government; and

- The ability to control the sale of New Zealand homes is being preserved by separate legislation in New Zealand.