Some of the myths that surround the TPP got dealt to yesterday at hearings before Parliament’s Foreign Affairs, Defence and Trade Select Committee.

For a start the committee was told the agreement’s controversial Investor State Dispute Settlement (ISDS) provisions would not be able to be used against any genuine regulation by the New Zealand Government for health, safety or environmental reasons.

And Federated Farmers President William Rolleston told the committee that any international agreement ceded sovereignty.

But it was the verdict on the ISDS clauses from Simon Foote, on behalf of the Arbitrators and Mediators’ Institute of New Zealand that struck directly at a constant theme of opponents of the TPP who have appeared before the committee.

(This week alone over 60 submitters have appeared in front of the committee).

Mr Foote is one of the country’s top arbitration lawyers.

He said that the ISDS procedures could not be used if a government had acted in good faith to regulate for health, safety or environmental reasons.

For New Zealand, that was extended to include acting to comply with the treaty of Waitangi.

He said this applied even if New Zealand Government took any action which effectively expropriated property belonging to a foreign investor, a so-called “indirect expropriation”.

This meant regulating so that the investor retained ownership of an investment but removed the commercial rationale for the investment.


“The TPPA appears to go as far, if not further, that most other investment treaties in setting limits to the obligations and therefore protecting the sovereign regulatory space,” his submission said.

Speaking to the committee, he said an example might be regulations which forced the shutdown of a foreign-owned mine.

“The right to regulate trumps expropriation,” said Mr Foote.

He said there were two provisions that needed to be heeded.

The Government had to be genuine in its regulation and could not single out just one investor to be regulated and it would not be exempt from an ISDS action if it had given the investor an express guarantee that the investment or property would not be expropriated.

And Mr Foote said the ISDS provisions in the agreement provided for the full transparency of any proceedings that took place and that it would be possible (though unusual)  for the result of those proceedings to be appealed.

Mr Foote appeared on behalf of the Arbitrators and Mediators Institute of New Zealand whose submission showed that the core ISDS provisions in the TPP were the same as in seven other trade agreements New Zealand had signed up to,  including with ASEAN and China. 

Three of those – with Singapore, Thailand and China were negotiated by the Clark Labour Government.

The Institute’s submission said that “investor provisions in the TPPA are conservative in favour of states.”

It cited the protection of states’ freedom to regulate in many areas as evidence of this.

“The TPPA is plainly drafted to meet the criticism that such Treaties favour investors and can become instruments of influence over government regulation,” the submission said.

The submission concluded by saying that many of the concerns over the impact of IDS procedures on sovereign power were over stated.

“New Zealand is a good international citizen, governed by the rule of law.

“The ISDS jurisprudence to date has been over state action which falls well short of the standards we hold ourselves to.”

The question of the TPP and sovereignty was also the subject of a debate between Green MP Kennedy Graham and the President of Federated Farmers, Dr William Rolleston.

Mr Graham is a former diplomat and author of a number of books dealing with states and sovereignty.

Dr Rolleston conceded in his submission that the TPP required New Zealand to cede some sovereignty.

“But I remind members that we cede sovereignty with every international deal we make,” he said.

“The Paris agreement on climate change is an example.

Mr Graham agreed that all agreements involve some ceding of sovereignty.

But he said what was different about Free Trade Agreements and particularly the TPP was “the private sector globalised around the world is getting into that space and taking sovereignty and thereby through the threat of high priced litigation having a chilling effect on the Parliamentary sovereignty in the public interest.”

The “chill” argument is one used by many TPP opponents criticising the ISDS provisions.

Their argument is that Parliaments will censor themselves before when they consider legislation.

Oliver Hailes, a judge’s Clerk at the Court of Appeal, told the Committee that Canada referred all legislation to its foreign ministry to see that it complied with its various treaty obligations.

Dr Rolleston rejected Mr Graham’s proposition.

“There may be some chilling effect in some areas as you put it,” he said.

“That’s what international trade agreements do.

“They provide an environment for people to make consistent and rational decisions.

“But when you talk about giving sovereignty to corporations I think you are completely wrong because in fact any corporation that didn’t agree with what the outcome under an international trade agreement does not then make a sovereign decision to force a country to do something.

“It has to go through the courts and that’s where sovereignty lies.”

Dr Rolleson said the agreement was not the best deal New Zealand could have got.

“The international dairy trade is particularly distorted and we would be naïve to think we could fix it in one hit,” he said.

“But at least we are moving in the right direction.”