Trade as a Trojan horse
India’s position on trade and investment was the focus of a recent meeting in Auckland, as Indian negotiators argued for a gradual approach to opening up their economy. They came under pressure from other countries to drop their tariffs and agree favourable rules for foreign investors. However, India is right to be cautious about these complex treaties.
These issues are controversial, particularly with regards to the US-led Trans-Pacific Partnership Agreement (TPPA). Public opinion polling in New Zealand has shown a majority of the public oppose the TPPA and there have been concerns expressed by legal experts, economists and academics. The TPPA has yet to be ratified by the NZ Parliament and is in trouble in the US where it is opposed by both Presidential candidates.
There was also controversy when the Regional Comprehensive Economic Partnership (RCEP) met in Auckland for negotiations, their 13th round since starting in November 2012.The RCEP grouping is led by China and consists of India, Japan, South Korea, Australia and New Zealand and the 10 Southeast Asian countries in ASEAN. Most of the debate was about the speed of tariff reductions—India is calling for a gradual approach to protect its domestic businesses and agricultural producers—but there was also discussion about investor rights in services, investment, patents and copyright.
The key issue in both the TPPA and RCEP is not whether or not New Zealand and other countries should trade with each other—trade is important to business and the economy—but whether agreements such as the TPPA should include far-reaching rights for foreign investors, including the right to sue governments over laws that adversely impact their profitability.
The growing number of cases taken by large multinationals against governments gives cause for concern. This week, TransCanada filed a claim against President Obama for not approving the KeystoneXL oil pipeline and Imperial Tobacco threatened a claim against New Zealand if the government proceeds with plain packaging of cigarettes. These issues are important to the environment, climate change, public health and national sovereignty.
The small economic benefits from tariff reductions in agreements such as RCEP are the Trojan horse. The rights for foreign investors are the dangers hidden inside. There needs to be more public information on these agreements. Unlike negotiations in the World Trade Organisation, the drafts are confidential and governments are not accountable for their proposals.
India has faced 17 challenges from multinationals and has proposed safeguards on the rights of foreign investors in the RCEP, as has the EU has in other negotiations. India and other governments should be supported to go further, and exclude extreme measures to favour foreign investors. We need to achieve a balance that supports small and medium companies, allows flexibility to meet challenges such as climate change, and protects the rights of government to act in the public interest.
India’s position on trade and investment was the focus of a recent meeting in Auckland, as Indian negotiators argued for a gradual approach to opening up their economy. They came under pressure from other countries to drop their tariffs and agree favourable rules for foreign investors. However,...
India’s position on trade and investment was the focus of a recent meeting in Auckland, as Indian negotiators argued for a gradual approach to opening up their economy. They came under pressure from other countries to drop their tariffs and agree favourable rules for foreign investors. However, India is right to be cautious about these complex treaties.
These issues are controversial, particularly with regards to the US-led Trans-Pacific Partnership Agreement (TPPA). Public opinion polling in New Zealand has shown a majority of the public oppose the TPPA and there have been concerns expressed by legal experts, economists and academics. The TPPA has yet to be ratified by the NZ Parliament and is in trouble in the US where it is opposed by both Presidential candidates.
There was also controversy when the Regional Comprehensive Economic Partnership (RCEP) met in Auckland for negotiations, their 13th round since starting in November 2012.The RCEP grouping is led by China and consists of India, Japan, South Korea, Australia and New Zealand and the 10 Southeast Asian countries in ASEAN. Most of the debate was about the speed of tariff reductions—India is calling for a gradual approach to protect its domestic businesses and agricultural producers—but there was also discussion about investor rights in services, investment, patents and copyright.
The key issue in both the TPPA and RCEP is not whether or not New Zealand and other countries should trade with each other—trade is important to business and the economy—but whether agreements such as the TPPA should include far-reaching rights for foreign investors, including the right to sue governments over laws that adversely impact their profitability.
The growing number of cases taken by large multinationals against governments gives cause for concern. This week, TransCanada filed a claim against President Obama for not approving the KeystoneXL oil pipeline and Imperial Tobacco threatened a claim against New Zealand if the government proceeds with plain packaging of cigarettes. These issues are important to the environment, climate change, public health and national sovereignty.
The small economic benefits from tariff reductions in agreements such as RCEP are the Trojan horse. The rights for foreign investors are the dangers hidden inside. There needs to be more public information on these agreements. Unlike negotiations in the World Trade Organisation, the drafts are confidential and governments are not accountable for their proposals.
India has faced 17 challenges from multinationals and has proposed safeguards on the rights of foreign investors in the RCEP, as has the EU has in other negotiations. India and other governments should be supported to go further, and exclude extreme measures to favour foreign investors. We need to achieve a balance that supports small and medium companies, allows flexibility to meet challenges such as climate change, and protects the rights of government to act in the public interest.
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