An opinion poll shows a clear majority of New Zealanders reject the concept of foreign investors having any ability to sue the government offshore if is sets stronger environmental standards.

New Zealand is currently negotiating a free trade agreement with ten other countries called the Trans-Pacific Partnership (TPP).

61% of those surveyed believe that New Zealand should not sign the TPP agreement if it contains any clauses that allow foreign investors to sue the government in an offshore tribunal over new laws intended to protect the environment.

Of those that have an opinion, six times as many favour standing aside from any deal that would impose these terms, versus those that would still sign up.

The poll was conducted by Consumer Link for the Sustainability Council and indicates that just 9% of New Zealanders think securing this free trade agreement is important even if it could allow foreign investors to take such legal action against the government, while 30% have no opinion. The margin of error is 3.3%.

A leaked draft of the TPP text reveals how overseas companies would have the right to seek compensation if their expected profits are significantly reduced by stricter environmental requirements. The provisions are known as Investor State Dispute Settlement (ISDS) terms and some 70% of cases brought under the North American Free Trade Agreement (NAFTA) have involved claims over natural resources or the environment.

The government maintains that clauses in the TPP text will preserve New Zealand’s ability to make stronger environmental laws without fear of the claims being successful. But there are recent investment arbitration cases where these clauses have failed to protect the public interest.

The poll cuts right through this legal interpretation issue as it shows most New Zealanders simply reject the ISDS concept when it comes to new laws intended to protect the environment.

The Australian Productivity Commission found in 2010 that such rights for foreign investors were not in Australia’s interest. It stated that: “There does not appear to be an underlying economic problem that necessitates the inclusion of ISDS provisions”. And at the time it reported, no Australian firm had ever used them.

What the Commission did find was that including such rights risked a “chilling effect” on a government’s willingness to undertake reforms to protect the public interest. In other words, governments become scared to raise environmental standards for fear of being sued.

As current demands on the environment often exceed what is sustainable, such protection for foreign investors paves the way for the government to hold back on setting proper limits. It seeks to create environmental property rights for foreign investors that no New Zealanders have, or should have.

 

Note: Consumer Link conducted the poll from November 14th to 21st over a sample of 500 people and the margin of error was 3.3%. The full question and response rates are as follows:

Q. The New Zealand Government is negotiating a free trade and investment agreement called the Trans-Pacific Partnership with 10 other countries on the Asia-Pacific rim, including the United States. This agreement may contain clauses that allow foreign investors to claim compensation through offshore tribunals if the government makes new laws intended to protect the environment. Which one of the following best describes your attitude towards this?

01. Securing this free trade agreement is important, even if it could allow foreign investors to take such legal action against the government. Score: 9%

02. If the agreement contains any clauses that allow foreign investors to sue the government in an offshore tribunal over new laws intended to protect the environment, then New Zealand should not sign it. Score: 61%

03. I have no opinion on this matter. Score: 30%