Law suit risk if Pengxin refused, says Prof

“When China’s politicians warned New Zealand politicians last year that the agreement was a two way street it is clear they were referring to their rights as foreign investors under the so-called `trade’ treaty,” says University of Auckland law professor Jane Kelsey.

The New Zealand China Free Trade Agreement was signed in 2008 and government cannot treat applications from Chinese investors differently from similar applications from other countries’ investors, says Kelsey.

Shanghai Pengxin’s application to the Overseas Investment Office (OIO) pointed to numerous purchases of farmland by investors of other nationalities, and claimed that rejection of its otherwise well-founded application would amount to anti-Chinese discrimination.

Prime Minister John Key admitted on Campbell Live on Friday night that the FTA ‘has in it the most-favoured-nation status that means we can’t discriminate’. 

Kelsey says that contradicts paragraph 62 of the OIO advice to ministers that there was no problem under the China FTA in a paragraph that does not address the MFN rule.

“Presumably the Prime Minister got alternative advice from elsewhere.”

Kelsey is urging government to release those documents.

“The government would have pulled out all the stops to avoid a Chinese investor supported by the Chinese State taking it to international arbitration for breaching the FTA, even if it felt it was on strong legal ground.

“Such a dispute would have huge ramifications for New Zealand’s diplomatic and economic relationship with China.

“It would also cast a spotlight on the even greater risks of the more extensive foreign investor rights proposed for the Trans-Pacific Partnership Agreement (TPPA), a debate that the government is desperate to avoid.”

Kelsey says the United States is demanding much stronger protections for its would-be investors in the TPPA than China secured.

“The Key government has apparently rolled over and agreed to them, unlike Australia.

“The popular angst being channelled towards the Chinese needs to become a more principled opposition to deals that sign the sovereignty of our resources over to foreign corporations and who can sue the government in offshore courts if they don’t get their way.”