We hear that Fran O'Sullivan was seen talking to Auckland Univiersity and international economic law expert Jane Kelsey in Hong Kong the other day. Kelsey was aparently already onto the consistency of recent decisions by the NZ Government and our WTO obligations. Fran O'Sullivan doesn't report on this but she does have a look at the implications of the China FTA for our investment regime.
It's a bugger's muddle about to be made even more complex by the "national treatment" and expropriation settlement provisions in the China free trade agreement.
The relevant clause speaks for itself.
"Each party shall accord to investments and activities associated with such investments, with respect to management, conduct, operation, maintenance, use, enjoyment or disposal, by the investors of the other party treatment no less favourable than that accorded, in like circumstances, to the investments and associated activities by its own investors."
In certain circumstances this could set the scene for compensation to be paid to Chinese investors if the Government shifts the regulatory landscape for reasons other than "may be reasonably justified in the protection of the public welfare, including public health, safety and the environment".
One trade expert I canvassed put forward these three hypothetical "what if"' scenarios.
What if the Government had turned down the Auckland Airport bid after the FTA had come into force? Any Chinese investors would have had many millions of value wiped off their shares.
There would be a clear potential for a case for compensation under the Investor State dispute settlement provisions.
What if the Government decides next year that Vector is a strategic asset and can only be sold to New Zealanders?
This would be a breach of the National Treatment provisions of the FTA because, at the time of the agreement coming into force, no determination had been made that Vector was a strategic asset.
It was not a non-conforming measure until after the agreement came into force.
What if the FTA had been in force on January 1 this year? The Government could not have stopped the Auckland Airport sale to Chinese interests if they wanted to buy. The OIO regime existed prior to the agreement so will still apply. It is only where changed policy is involved or where there is no policy that the agreement will kick in.
Time for more clarity please.
