Digging NZ in Deeper

Opinion piece by Prof Jane Kelsey

Last month New Zealanders got a leaked preview of the demands the Government is likely to face from the European Commission (EC) during the current World Trade Organization (WTO) negotiations on services. The goal is simple: to lock open New Zealand’s services - ranging from water and energy to postal delivery and social science research - to the ownership and dominance of European transnationals.

The US will have its own, extensive hit list. So will Japan, Canada, China and others. Under WTO rules any concessions to one country apply to all.

The leaked document provides concrete confirmation of predictions which critics of the General Agreement on Trade in Services (GATS) have been making since the current talks began in early 2000. To date negotiations have been conducted in secret. Pressure is now on other countries, including individual governments within the EC, to release their demands and responses publicly so people can debate the implications before any deal is signed.

The timetable is tight. WTO members are required to table their requests to other countries by 31 June this year. Responses are required by 30 March 2003. So far our Labour-led government is refusing to make public either its demands or its responses, leaving voters and parliamentarians without any say.

The backroom deals to satisfy the EC’s demands during the WTO ministerial meeting in Doha last November show this cannot be airily dismissed as a wish list, as Trade Minister Jim Sutton sought to do. A far more plausible response came from Stephen Jacobi, Executive Director of the newly formed free trade lobby the Trade Liberalization Network: “Bring it on ! … If it ever came to a choice between retaining New Zealand’s Overseas Investment Commission and obtaining free entry of New Zealand butter and lamb into Europe I know what side my money would be on”.

The same reasoning saw New Zealand make arguably the most extensive commitments on services of any government during the Uruguay Round. These prohibit preferences for local providers of such services as broadcasting and education, posing problems for the current government implementing its mandated policies on local content broadcast quotas and restoring the ‘nation building’ role of tertiary education. In return, it secured only minimal advances in market access for agriculture and saw agricultural subsidies in the OECD double in the three years after the WTO Agreements became effective in 1995.

What do the EU draft documents ask for?

There are some across-the-board requests. They want New Zealand to abandon any vetting by the Overseas Investment Commission (OIC) of services-related foreign investments, including in land. That would cover mining, tourism, media, air transport, health, education, energy, water, and more. Admittedly, the OIC currently rubber-stamps almost all such investments. But this would prevent any future government from ever tightening those rules by conducting genuine national interest assessments. The EC also wants a guarantee that governments will not restrict foreign control of any state assets that are subsequently privatised. Ports are given special mention.

They also want us to reduce or remove restrictions on service personnel entering New Zealand to run their operations here, effectively allowing companies to override our immigration laws. That may include firms contracted from third countries where workers are highly skilled and low paid. Rather than bringing new jobs, new skills and training, and technology transfer, such concessions would mean fewer local jobs and further downward pressure on wages and conditions.

The EC papers then make demands regarding specific services. They want the restriction on foreign owners holding more than 49.9% of Telecom removed, creating the possibility that Telecom could become wholly-owned by one foreign company. Likewise, they want unlimited foreign shareholding and entry of personnel for security services, such as private prisons. And they seek removal of NZ Post’s international monopoly under the Universal Postal Union, which currently provides the trade-off for free rural delivery and guaranteed postage prices (something the New Zealand government has also proposed).

An equally controversial demand is for unrestricted market access and foreign ownership rights over environmental services, including water collection and distribution, waste water, refuse disposal and sanitation. Rights of local government to regulate such services would be seriously undermined, and in some cases removed.

Professional services are targeted, too. Removal of local qualification requirements in aspects of urban planning, tax planning, legal advice and certifying engineers would impact on small businesses and professionals, especially if these were then supplied across-the-border by internet. Clients would have no guarantee that professionals understand the local conditions. Unlimited access to scarce social science, humanities and inter-disciplinary research and development subsidies are listed too.

The GATS is designed as a one-way street; once a concession is made it is extremely costly to retract. Control by foreign transnationals over key services in this country has already left us vulnerable to global corporate strategies. A centre-left government should be looking at ways to extricate us from that situation. It certainly must not dig us into a deeper hole.

Professor Jane Kelsey, University of Auckland.