The end of sovereignty

News and views from New Zealand – Dennis Dorney

Not long ago New Zealand ‘celebrated’ the centenary of the ANZAC landings at Gallipoli. This gave the mass media the opportunity to out-do each other in patriotic fervour. Dying for the freedom of one’s country was obviously the duty of all good Kiwi’s, and on a per capita basis few nations paid a higher price than New Zealand did.

On 6th October New Zealand and 11 other nations reached agreement on the Trans-Pacific Partnership Agreement. The signing of this agreement is a travesty for those Kiwis who have pointed out that our sovereign right to have our own parliament pass the laws which its citizens should obey, will now be subservient to the profit motive of multi-nationals. For the mass media that has consistently backed the TPPA it is a triumph. Democracy, which a few weeks ago was worth dying for is now less important than the profits of our kiwi fruit exporters or, worse, than the profits of the major drug companies.

The poor outcome that New Zealand has suffered is not improved by the irony that this country was a founding member of the original group that morphed into this monster. The TPP is an expansion of the Trans-Pacific Strategic Economic Partnership Agreement, which was signed by New Zealand, Chile, Singapore and Brunei in 2006. At this point the deal was quite benign and could have been an opportunity to create a fair-trade bloc as opposed to the usual free-trade agreements that do more harm than good.

Unfortunately other nations, each with their own agenda, sought entry. By the time that the mega-trading nations, the USA and Japan, were involved NZ was clearly out of its depth.

For this government, getting access to the USA, Canada and Japan for our dairy produce was the main attraction. In a recent article I pointed out that a global glut of dairy produce made this an impossible dream. As negotiations wore on, it became clear that NZ, the originator of these talks, would be lucky to even get their claims heard. And NZ dairy has emerged with almost nothing.

After dairy the dismantling of Pharmac, our pharmaceutical drug purchasing system, was our second greatest fear. It is perhaps the most cost effective in the world and we feared that US demands on intellectual property and patent laws would cause large hikes in drug prices. Hints from Prime Minister John Key and our chief negotiator, Tim Groser, suggested that we should expect the worst. Stories from the negotiating tables suggest that, as it happens, Australia was also concerned about this issue and refused to budge. Although it is hard to foresee how our Pharmac prices will pan out in future, it would seem that without Australia’s resistance the outcome could have been worse.

Chinese Puzzles

It is not impossible that the TPPA could still collapse. Each nation must take the deal back to their parliaments to ratify and there is no certainty that the U.S. executive can get the TPPA through Congress. It will be interesting to see what happens in our own parliament.

Any vote will almost certainly be along party lines, which brings us to the second irony – the Maori Party is part of the government coalition. Apparently (the details aren’t known at the time of writing) a part of the Agreement is a section on the right of foreign investors to buy land in any member nation. I don’t see how the Maori Party, that makes such a song and dance about their special relationship with the land, and fought the pakeha to a standstill in defence of it, is going to explain to its members that they have just signed away their land rights.

However buying land is not the exclusive domain of the TPPA members. As I have mentioned previously, Kiwis are getting restless about the amount of land that is being bought in NZ by foreign investors, especially Chinese investors who seem to be financed by the Chinese government. China is not a member of the TPPA bloc, which has led many to question whether the TPPA is really a trading group or a US political alliance.

Recently the government, anxious about the public mood, has taken the unusual step of rejecting a Chinese bid for a very large area of land. I have previously mentioned that a Chinese company, Shanghai Pengxin, bought the Crafars Farm chain, and have taken out a holding in Synlait Farms, which intends to produce value- added milk products. This time the company has set its eyes on the enormous 13,843ha Lochinver Station, for which it offered $88 million.

All major foreign purchases like this must be approved by the Overseas Investment Office (OIO), which is virtually a rubber stamp and almost never rejects a purchase. As usual it had recommended to the Minister that the sale be approved. For once the government is sufficiently rattled to reject the bid.

Almost simultaneously a Chinese food giant, Shanghai Maling, largely controlled by the Chinese government, has formed a joint venture company with Silver Fern Farms, which is a farmer- controlled co–operative, representing more than 16,000 sheep, cattle and deer farmer-shareholders throughout NZ. The Co-operative has been in financial difficulties for some time.

This is not a sale of land but Shanghai Maling’s half stake ($261 million) in the partnership gives them effective control of the venture, since the board consists of five representatives from each of Silver Fern and Shanghai Maling, which also appoints the chairman. The deal will have to go to the OIO for approval, so it will be interesting to see its response, and that of the government, which has maintained an ominous silence so far.

The puzzles to be resolved will be (a) what happens to these assets if the Chinese offers are rejected but the heavily indebted NZ farming community is unable to buy them? And (b) if we can get into so much strife with China, which is not a signatory to the TPP, what troubles lie ahead regarding our trade with TPP members to which we are umbilically connected?

Dennis Dorney is an ERA member living in New Zealand, and is a regular contributor to ERA Review.