Critic fears trade agreement threat to SOEs
The Trans Pacific Partnership (TPP) agreement could stop New Zealand setting up new stateowned enterprises for sectors such as public broadcasting or insurance, an academic says.
Auckland University professor Jane Kelsey said a proposed chapter in the controversial trade agreement could also ban special financial or regulatory assistance to existing state-owned enterprises (SOEs) or Air New Zealand-style bailouts.
The chapter would not ban SOEs outright, but aimed ‘‘to constrain governments giving any preferential treatment to state enterprises that private enterprises might see as damaging to their competitive position’’, she said.
The prospects of a TPP agreement being reached jumped this week after just enough Republicans in the United States senate voted to give President Barack Obama the power to ‘‘fast track’’ the negotiations.
Kelsey, a vocal critic of the trade agreement, said her knowledge of the SOE chapter was based on meetings she had with negotiators over the past five years.
A report by the Washingtonbased Wilson Center think tank said US businesses wanted rules in the agreement that would ensure they were not disadvantaged by support for state enterprises in other countries.
It forecast Vietnam, with about 1000 SOEs, would be most affected.
US negotiators had to develop rules ‘‘that limited the potential for trade distortions by other country’s SOEs’’ while protecting its own state-backed firms such as mortgage giants Freddie Mac and Fannie Mae, the think tank said.
Kelsey said the exact rules would not be clear until the wording of the chapter was made public ‘‘but there is no question that this chapter is part of the final deal’’.
The Treasury said that as of June last year, 18,979 people were employed by state-owned enterprises which contributed 2.1 per cent of the country’s gross domestic product (GDP). The Government spent $1.4 billion ‘‘supporting troubled SOEs in the past seven years’’, the Treasury said.
Concerns surrounding the impact of the TPP agreement on New Zealand have centred on the extra rights the agreement is expected to give to multinational pharmaceutical companies and the tightening of other intellectual property rights.
But Kelsey said the possible impact on SOEs was ‘‘a very big issue for New Zealand’’.