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Ardern lays ground for defeat on TPP investor dispute clauses

Friday 10th November 2017

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Prime Minister Jacinda Ardern arrived in Vietnam last night for talks on the Trans-Pacific Partnership today, warning again that New Zealand had "come in very late" with its objections to investor state dispute settlement clauses that the new government would like to see dropped from the trade and investment pact.

Trade ministers from the remaining 11 countries in the grouping of Asia-Pacific nations were meeting in Da Nang as Ardern arrived, saying the talks were "down to the wire" and that her Trade and Export Growth Minister David Parker had reported "tough going" arguing New Zealand's case.

"It’s fair to say it has been tough going and continues to be, particularly the point we are now in when it comes to negotiations but we are continuing to persist along those lines," said Ardern, after a briefing from Parker on her arrival in Da Nang, before he returned to the talks which Foreign Minister Winston Peters, also in Vietnam for the annual APEC  leaders' summit, said "will probably go all night". 

Leaders of the 11 countries still in the TPP are due to meet early afternoon, local time, Friday for a meeting that could determine the fate of the troubled pact, which stalled earlier this year when US president Donald Trump withdrew the US from the agreement.

"These negotiations are now down to the wire. It is still not clear what the outcome will be," said Ardern, but New Zealand was at the table and attempting "to balance our exporters’ needs but also our country’s."

Peters confirmed he had held bilateral meetings with a number of his counterparts, including the Russian foreign minister, Sergei Lavrov.

However, rather than discussing Peters's enthusiasm for resuming free trade agreement talks with Russia, which were included as part of the coalition agreement between Labour and NZ First, Peters said he had discussed "the bigger picture" of the potential for constructive relations between New Zealand and Russia.

The annual APEC leaders' meeting brings together 21 leaders of some of the world's largest economies, including Trump, Chinese president Xi Jinping, and Shinzo Abe, the Prime Minister of Japan.

Ardern, making her first major outing on the global stage, said she had prioritised formal bilateral meetings with leaders from TPP countries, meaning meetings with Xi and Trump may only occur informally as China is not a member of TPP and the US is no longer. 

The US withdrawal was initially assumed to be a death-knell for the deal, but leadership from Japan, Australia and New Zealand under the previous government saw the prospect of a TPP-11 deal revived, with a view to keeping the door open both to the US and potentially other countries in the Asia-Pacific region.

However, Japan has strongly resisted reopening negotiations on the detail of the pact and, as a major international investor, supports ISDS clauses that give it protections from unilateral government decisions such as expropriation of assets. 

Asked whether TPP-11 would survive if a go-forward plan did not emerge this week in Vietnam, Ardern said it was "definitely coming to a head".

"A number of countries do want to see it come to a conclusion. It’s hard to know whether you will be able to maintain your ongoing negotiating position the longer it drags on."

It remains to be seen whether further legislation would be required to allow a revised TPP to proceed, leading to the potential for both the government's support partners, NZ First and the Green Party, voting against it. To forestall that, National Party trade spokesman and trade minister until last month Todd McClay pledged National's support to ensure any TPP-related legislation could pass with support from Labour and National.

Rejecting TPP is a touchstone issue for the left of New Zealand politics, but carries political risks for the new government if New Zealand is seen to have chosen isolation from a major Pacific Rim trade and investment deal.

To try and counter domestic disappointment among its supporters if it signs a TPP-11 agreement with ISDS clauses, the new government has already announced how it will effectively ban sales of existing homes to non-resident foreign investors and signed a side letter with Australia agreeing not to use TPP ISDS clauses against one another.


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