Labour said restrict not ban

February 15th, 2016 at 9:00 am by David Farrar

Charles Finny facebooked:

Most interesting was an attempt by Labour MP and Trade Spokesperson David Clark to make the case that it was the Government’s fault that bi-partisanship on trade policy had broken down. His argument was that it was convention that Government would be familiar with Opposition policy and ensure that it would stay within the bounds of this policy when determining negotiating positions for FTA negotiations. He stated that Labour had a long standing policy of wanting the right to ban property speculators from abroad and that Labour had campaigned on this policy at the last election. He suggested that MFAT and Ministers must have known about the policy and were remiss not negotiating an outcome that accommodated it.

Now let me explain a little about how TPP was negotiated on services and investment. Essentially TPP has frozen the status quo, and in some cases some liberalisation of the status quo was negotiated. Some countries had policy that allows “bans” on foreign investment in urban real estate. New Zealand has not had such policy. Those TPP members did not actively advocate for this policy. The policy was already there and became “bound” as part of the outcome. “Binding” means that policy cannot become more restrictive than in the past. Policy can change but it can only do so in the liberalisation direction. (In days of old this was also known as “standstill and rollback”.)

Now while existing NZ policy was “bound” what is unusual is that New Zealand – quite late in the negotiation (post Andrew Little’s announcement of his conditions I believe) – negotiated the right to adopt discriminatory taxation policies. This was done to allow a future Government to “restrict” sales to foreigners through a stamp duty or other tax measure (I believe that a very high tax of this type can have the same impact as a “ban” for most investors but accept that it might not deter a super rich person – the exception but not the rule).

Now lets get back to Labour Party policy and what Labour campaigned on at the last election. The policy states “Labour will not support provisions in trade agreements that limit the government’s right to provide, fund, or regulate public services, such as health or education. Trade agreements should not prohibit the government from RESTRICTING sale of land and infrastructure or regulating the sale of state assets.”

TPP is fully consistent with this policy. TPP allows a future Government to “restrict” land sales to foreigners and also fits with the other elements of this policy.

And if you search for transcripts for what Andrew little said in the middle of the year about his pre-conditions for Labour support for TPP, he also uses the term “restrict”.

This concept of ban is more recent, and I don’t think you should expect negotiators to know the policy was really about allowing a “ban” when all official comment was referring to “restrict”.

So the TPP has fully complied with Labour’s five bottom lines. They’ve just tried to find an excuse to oppose it to appease their union overlords.

Dispelling TPP myths

February 1st, 2016 at 2:00 pm by David Farrar

Both Charles Finny and Stephen Jacobi dispel some TPP myths.

Finny in the Herald looks at the false information abut TPP and the Treaty:

Former MP Hone Harawira has stated some complete falsehoods about Trans Pacific Partnership, Maori and the Treaty of Waitangi.

This coincided with publication of a paper by “experts” Dr Carwyn Jones, Associate Professor Claire Charters, Andrew Eruti and Professor Jane Kelsey on “Maori rights, Te Tiriti O Waitangi and the Trans-Pacific Partnership Agreement”.

Days later several Maori elders spoke negatively about the TPP at Ratana and were joined by a bevy of political leaders.

This criticism of the Trans Pacific Partnership (TPP) forced me to reread a big chunk of the TPP and previous free trade agreements and to study every element of the criticisms being levelled against the TPP and Maori.

My conclusions are radically different from the critics’. I believe that rather than being inadequate in its protections for Maori, TPP is if anything a taonga in the way it protects the rights of the New Zealand Government to discriminate in favour of Maori.

This in turn, I think, adds enormous mana to Maori.

Finny has actually read the TPP, and he makes the point NZ is unique in getting protection for the indigenous people in there:

TPP is an agreement between 12 countries. Pretty much all the 12 jurisdictions are home to indigenous minorities – for example, the First Peoples of the United States, Canada, Mexico, Peru, Chile, the Aboriginal people in Australia, the Malays in Singapore and Malaysia, and the Ainu in Japan.

Yet none of these peoples is mentioned in the main text of the deal and none of their Governments has secured agreement from the other members that they should be allowed to discriminate in favour of them.

And further:

TPP’s protection of the Treaty goes even further than earlier FTAs. It states “the parties agree that the interpretation of the Treaty of Waitangi, including as to the nature of the rights and obligations arising under it, shall not be subject to the dispute settlement provisions of this agreement.” This means it is entirely up to New Zealand to determine if any discrimination has occurred because of the treaty (so long as this is not a disguised restriction on trade).

I am frankly amazed the US and others have agreed to this provision. Our ministers and officials have done a great job achieving this. All Maori should be saying: “Well done!”


This image shows the China FTA Treaty clauses and the TPP Treaty clauses.  Again the difference is Labour are just sulking because they didn’t conclude the TPP.

And on the wider TPP issues, Stephen Jacobi responds to Andrew Little’s letter on the TPP:

I agree that the dairy aspects of TPP are not as good as they could have been and as we had hoped. But they are in the view of the negotiators and the dairy industry the best that could have been achieved in the circumstances. Dairy still benefits more than any other sector from tariff cuts in key markets and the establishment of new tariff quotas. The meat deal – specifically beef to Japan – is a significant market opening about which the industry has welcomed. Without this we will not be able to compete with Australia which already has an FTA with Japan. To call the rest “not much” is a serious underestimation – tariff reductions and/or elimination for horticultural products including kiwifruit, wine, wood products and seafood cannot so easily be dismissed. Addressing tariff and non-tariff barriers for manufactured products such as health technologies and agricultural equipment is also significant.

And he deals with Little’s claim one of their bottom lines was not met:

Labour’s clearly signalled “bottom-line” for TPP was it should provide for restrictions on land sales to non-resident foreigners. This is possible under TPP: a future Government could if it wished apply a stamp duty or other tax to restrict these sales. Opinion is divided on whether an outright ban could be introduced, but there is a ready alternative to meet Labour’s policy position.

Labour could set 100% stamp duty of sales to foreigners. They could set it at 10000%. It’s a different method to achieve the same result.

TPP does provide for our partners to make their views known on any measure which may be introduced that could have an impact on trade. But these provisions are far from “unheard of”. They are already enshrined in the World Trade Organisation (WTO) and other FTAs concluded by Labour including the China FTA. They are what make it possible for New Zealand to be consulted on changes affecting our exports to other markets such as subsidies under the Farm Bill or a discriminatory labelling or levy system. Importantly these provisions retain the right of the Government to continue to regulate: the Government may have to listen to the views of trading partners but not necessarily heed them. Bottom line is we do this already and have been doing so for years now.

Almost every international agreement has a provision about consultation, such as the Antarctic Treaty.

Little- “For instance we would have to let Carlos Slim, the wealthy Mexican telecom company owner, vet any regulation of our telecommunications industry.”

Not quite. The Government is required to publish notice of its proposed changes as it does in the Official Gazette, but not advise everyone personally. Mr Slim may offer comment if he wishes. The Government still decides.

So basically the requirement is to publish things in the Official Gazette. This is so trivial, I can’t believe Labour are seriously citing this as a major issue.

The reality is Labour are only against TPP because National concluded the negotiations. If they had been Government they would have got the same deal (or worse) and would be proclaiming it as a great success, as they did with the China FTA (which they did and was). They’re just sore losers because they’re in opposition.

Charles Finny on TPP dispute mechanisms

January 31st, 2016 at 11:00 am by David Farrar

A very informative Facebook post by former trade negotiator Charles Finny on the TPP:

My old University chum Timothy O’Brien asked me yesterday to defend TPP’s dispute settlement provisions.

TPP contains two types of dispute settlement. In the media and political criticism the two are often confused. There is the standard (in WTO and all our FTAs apart from CER – the reason why apples took so long to resolve)provisions which allow parties to the agreement to challenge breaches of the agreement. This is a purely government to government process and applies to the full agreement unless specified (e.g. interpretation of the Treaty of Waitingi the dispute settlement provisions do not apply). Then, in the investment chapter only, there is the investor state dispute settlement mechanism. This allows a company to challenge a government if it believes that government has breached its commitments in the investment chapter only. Many of the critics (who should know better) suggest that governments can be sued for breaches of outside of the investment provisions. This is not possible.

Useful clarification.

It is important to stress that TPP is worded differently to NAFTA and the Australian investment treaties that were used to challenge plain packaging of cigarettes. The critics often cite these agreements as examples of why we should fear ISDS without noting the fact that TPP has been drafted with the sloppy drafting in earlier agreements in mind.

New Zealand has been agreeing (indeed advocating for ) ISDS provisions in investment treaties and FTAs since the late 1980s (see for example the original China NZ Investment protection agreement). To date the NZ Government has yet to face a challenge.

Put simply I believe these provisions provide useful security for NZ investors offshore. Some of the governments we trade with and have FTAs or investment treaties are far more likely to breach these agreements than we are.

Not one challenge in 30 years, yet alone a successful one. Over 3,000 international agreements have provisions for dispute resolution and the number of actual disputes is very small – around one per agreement on average.

There are multiple exclusions (e.g. our Overseas Investment laws) and multiple acceptances of our right to regulate to protect the environment, to protect human health and safety, to discriminate for Maori under the Treaty of Waitangi etc to ensure that TPP will not have the type of chilling effect on policy making that the critics maintain. And, on top of the above protections, tobacco is completely carved out of the agreement so no worries there.

Our negotiators did a very good job getting numerous exemptions.

But is you want to nationalise huge hunks of the economy without compensation – you do have a problem. As you would if you tried to use human health as a justification for a policy if there was no science to justify the policy. Until recently I did not think that future NZ Governments would act in this way. This is why I think we have nothing to fear and that these provisions can only benefit NZ.

I’d say it is more likely a NZ company could use the ISDS against a fellow TPP country, than a US company could use it against New Zealand.

Finny on Five Eyes

September 14th, 2014 at 7:00 am by David Farrar

A guest post from Charles Finny:

On 3 September 1939 a Labour Government in New Zealand declared war on Germany in support of the UK and others following Adolph Hitler’s decision to invade Poland.  Until the war ended in 1945 New Zealand made enormous sacrifices and as we all know, and as happened in World War I a disproportionately large number of New Zealanders were killed and wounded.  From 1941, the war became as much a war in the Pacific as a war in Europe. 

One of the developments of this war was signals intelligence and cryptography.  New Zealand and New Zealanders played as big a role in these areas as we did in the wider conflict.  Because of this, and because of the staunchness of our commitment we found ourselves part of what is now known as the “five eyes agreement”.  As technology has developed we have received the same signals intelligence as the US, UK, Canada, and Australia.  And our own communications have been protected by the highest grade encryption technologies developed in association with these other four countries.  For a pipsqueak little country of only a few million people located in a distant corner of the globe we have been in an incredibly privileged position.

The Labour Government that saw us through World War II, and those from 1957-60, 1972-75, 1984-90 and 1999-2008 have not sought to change our position in “five eyes” because the leaders and senior Ministers of those Governments have realized how lucky we are to be part of this agreement and knew how fundamental the intelligence derived from it was to the security of New Zealand.  Ultimately the most important function of government is to protect the people.  “Five eyes” plays a very important role in our ongoing security.  There was a wobble under Lange which saw New Zealand denied access to some processed intelligence from the US, but access to the raw communications intercepted by the four allies continued throughout.  Under Helen Clark the full flow of processed intelligence resumed.

I cannot believe what I have just heard David Cunliffe saying about GCSB today.  What we now call GCSB is as much a creation of Labour as it is the National Party.  It is crucial to our continuing security.  It protects us against the hostile actions of foreign governments, terrorist organizations, and international criminals.  Of course the same foreign governments, terrorist organizations and criminals hate the ‘’fives eyes agreement” and want it dismantled because it stands in their way.  I can’t believe that a Labour Leader would align himself with these forces and put this agreement and our position in it so much at risk.  If his senior colleagues do not call Cunliffe on this, shame on them too.  Our national security is too important to be put at risk by short term political opportunism.

David Cunliffe is now trying to buddy buddy up to Kim Dotcom and his hired speakers. If Dotcom’s allegations are correct (which of course they are not), then this happened under the Cabinet David Cunliffe sat in. Is he saying Helen Clark lied to New Zealand? or is he just desperately trying to win back some votes on the left?

Finny on MFAT

April 26th, 2011 at 3:00 pm by David Farrar

Charles Finny, a former MFAT staffer, writes at Stuff on changes to MFAT:

I met a former MFAT colleague a few days after Foreign Affairs Minister Murray McCully had delivered his speech on planned changes to the way the Foreign Affairs and Trade Ministry does its business.

I was reminded that many of the proposed changes were actually suggested in the 1989-90 period and about how the MFAT system had been able to muster so much opposition to the proposals that few were implemented. It is therefore with little surprise that I read editorials and op-eds from former diplomats questioning some of what is being proposed.

MFAT has managed to fight off change for many decades.

MFAT has been extremely resistant to change. It has taken longer to embrace new technologies and management systems than pretty much every other organ of government. It is hierarchical and it has never quite come to grips with the tension that exists between specialists and generalists within the organisation. And until Mr Allen took over as CEO, it has never valued experience gained outside the ministry. Those seeking to come back to the ministry after years away were told that they would have to enter at the level they were at when they departed.

MFAT seems to have this strange rule that you can’t be a senior manager there, unless you are also a diplomat.

I agree fully with Mr McCully that competition should be introduced at head of mission level. There are plenty of current and past public servants from New Zealand Trade and Enterprise, Treasury, the Economic Development Ministry, Customs and Defence with the skill-set and experience necessary to do a head-of- mission job. Martyn Dunne, who is about to go off to Canberra as high commissioner, is an example of this type of person. And from time to time politicians will be the right person for an assignment. Mike Moore is doing a great job in Washington DC right now, as is Jim McLay in New York.

Diplomats deal with both diplomats and politicians. Sometimes the best person for the job will be a senior former politician such as Jim McLay. What should cease is the practice of sending politicians such as Graeme Kelly to a senior overseas post.

I am on record calling for even more radical reforms of the head- of-mission appointment process than Mr McCully. I believe those nominated for these important roles should be forced to appear before the foreign affairs and defence select committee and be the subject of questioning on their knowledge and experience relevant to the proposed assignment.

That’s not a bad idea.

Finny not a spy!

December 13th, 2010 at 12:00 pm by David Farrar

Sarah Harvey at Stuff reports:

Former Wellington Chamber of Commerce chief executive, diplomat and Government adviser Charles Finny has been named by WikiLeaks as the United States’ top Kiwi contact.

But Mr Finny denied being a spy and said the “key contact” mentions were flattering. He is quoted often in the US diplomatic cables controversially made public by website WikiLeaks, and in a cable from May 19, 2006, was singled out as a “close [US] embassy contact”.

“I am regularly talking to embassies, high commissions and journalists in New Zealand and around the world, in areas where I have expertise,” Mr Finny said. …

Mr Finny said he often saw important embassy contacts at functions in Wellington.

“You see them at cocktail parties, you have lunches occasionally and sometimes they formally call on you … once every four or five months. But you would probably see them once a week at cocktail parties.

If talking to embassy staff makes you a spy, then I’m a spy for the US, UK, and Australian Governments, plus the European Union.

Part of the job of embassy staff is to gain better understanding of NZ domestic and foreign policy. They do that by chatting to a variety of people. As Charles’ says, mainly at functions, but sometimes also over a meal.

The Tramways Union Survey

October 8th, 2010 at 5:41 am by David Farrar

The Tramsway Union has done a survey of all of the candidates for Wellington Regional Council. Their questions basically were:

1. Earlier in the year Christchurch Bus Company Red Bus lost the tender for 6 routes resulting in 80 drivers being made redundant (see Radio NZ report: If elected what you do to make sure this never happens to Bus Drivers in Wellington?

2. In a recent report released by the Greater Wellington the council wants greater competition in public passenger transport in the region. Given competition has tended to result in driving down the wages and conditions of Bus Drivers will you oppose greater competition?

3. If elected what would you do to improve consultation between Greater Wellington and Workers in the public transport industry.

4. Do you support including minimum standards of employment as part of any tendering process for Public Transport bus services (eg minimum rates of pay, redundancy clause, a reports and complaint process)

5. Would you if elected support the Tramways Union in campaigning for greater public investment in public transport, and as part of this increasing the wages of drivers?

Of the candidates who answered, most tried hard to grease up to the union and say the right things. The most direct and honest response has to be Charles Finny whose response was:

Hi Nick. You have caught me offshore. But my answers are brief:
1. No
2. No
3. No
4. No
5. No
Thanks for taking an interest.

Overseas Visitor Charges

January 3rd, 2009 at 11:00 am by David Farrar

WCC is looking at whether to impose an entry charge for overseas visitors to facilities such as the Cable Car Museum, City Gallery, Capital E! and the Plimmer’s Ark conservation project on Queens Wharf.

I’m certainly in favour of user pays for overseas visitors, so long as the costs of collection were not too high. I also support Charles Finny:

Wellington Chamber of Commerce chief executive Charles Finny said he favoured an amalgamation of local bodies in the Wellington region “rather have that than some sort of discriminatory pricing”.

“We think that having nine councils for a population of 450,000 people is absurd.”

If an amalgamation happened, funding problems would “just go away”.

Indeed Wellington does not need four city councils and five district councils.

Questions on Kyoto

December 27th, 2008 at 9:10 am by David Farrar

Charles Finny has some questions on Kyoto. They are not questions about the basic science that if emissions increase, temperatures will increase. It is about the details behind Kyoto:

Several aspects of the Kyoto Protocol really annoy me.  For a start how can we solve this problem if major emitting economies have not taken on any obligations?  It looks as though the US will take on commitments to whatever replaces Kyoto but there seems no chance off China, India and Brazil etc taking on commitments.

If China and Inida especially do not come on board, it is all a waste of time and money. China has replaced the US as the world’s biggest emitter.

Why is there such inconsistency over points of obligation?  Why are consumers held responsible to the release of GHGs from oil, gas and coal and not the producing countries, when the country that cuts down a tree is held responsible for emitting the full amount of carbon stored in that tree from the time that it is cut down?  An importing country faces the full liability for emissions from gas, oil and coal, but exporting country faces the full liability for wood.  And why does the exporting country face the full liability for its agricultural emissions as opposed to the country that is going to actually consume the product that was produced as a result of all those emissions having been made?  So New Zealand imports oil from country x and bears the full costs of releasing the GHGs from burning that oil in New Zealand.  We export meat to country x, but also face the full cost of producing all the GHGs released while producing this meat.

Kyoto was a very flawed response to climate change. Even if fully implemented, it will only lower average mean temperature by 0.07 degrees by 2050.

Charles also raises some fascinating points over stock and methane. Would be good to see a point by point response to his questions by someone who can.

Learning about your agenda through the media

December 1st, 2008 at 12:00 pm by David Farrar

Wellington Chamber of Commerce CEO Charles Finny blogs:

Many thanks to the Sunday Star Times for telling me something about myself which I did not know.  In his column today (page A11) Chris Trotter advises us all that there is a right wing conspiracy about to re-launch the privatisation agenda (a vehicle for ensuring that the right maintains control – apparently) by cunningly opening a new front – on local Government.  These right wingers are going to use a shadowy front organisation called the Local Government Forum to deliver this evil agenda.

Well it so happens that I know a little bit about the Local Government Forum.  I have been a participant in its work for a couple of years and last week was elected its Chair.  So apparently I am chairing a group that  has an agenda that I don’t know about.  Thanks Chris and thanks Sunday Star Times for conveying this news to me.

I thought the Local Government Forum was about promoting more efficient local government etc. Is the SST saying that the only way to do that is by privatisation? How very defeatist.

Bullshit on Bullshit

April 11th, 2008 at 10:51 am by David Farrar

Winston Peters demanded the media grovel and apologise for the report that Phil Goff had described Peters’ attack on the free trade deal as Bullshit.

The Government then conceded that Goff has used the term “bullshit” but only in relation to criticism of the FTA, but somehow mytically this excludes Winston’s criticism.

Today the NZ Herald reports a business leader on the record confirming that Goff did indeed use the word “bullshit” about Peters’ criticisms of the deal.