[asia-apec 1590] Bill Rosenberg (CAFCA/GATT Watchdog researcher) oped piece on Singapore-NZ FTA

[APEC Monitoring Group]

Policy Implications of the Singapore Agreement
Thursday, 21 September 2000, 9:04 am
Opinion: Bill Rosenberg

NOTE: The following appeared in the Evening Post 20/9/00 in a slightly
edited form.
Policy and constitutional implications of the Singapore agreement
By Bill Rosenberg

There are vital constitutional and policy implications in the controversy
over the Singapore free trade agreement (officially called a "Closer
Economic Partnership" because the words "free trade" have had a bad press
lately).

Yet the public is being given only nine days by the Select Committee hearing
submissions, to obtain, read, understand, analyse and make submissions on
the complex 192 page document, which was secret until 11 September.

There has been much comment on the agreement's Treaty of Waitangi provision.

Article 74 of the agreement allows "more favourable treatment to Maori",
including measures "in fulfilment of [New Zealand's] obligations under the
Treaty of Waitangi".

There have been vehement arguments for and against the Article. Labour says
it is necessary to allow for social policy to "close the gaps". The
opposition say it is divisive.

What is important is that both sides of the argument acknowledge that the
agreement will have long term effects that bind future governments. That is
why the debate is taking place.

Whatever your views of the agreement itself, this constitutional aspect
sounds loud warning sirens. How can today's government bind future
governments?

Actually it is worse than that. Currently, Cabinet has the power to ratify
international agreements, with only token reference to Parliament. Cabinets
can bind future Parliaments.

Surely Cabinet is accountable to Parliament and shouldn't be able to tell
the current Parliament what to do, let alone Parliaments yet to be elected?
That is a basic constitutional convention.

Admittedly in this case, Helen Clark has magnanimously assured us that
Cabinet will abide by Parliament's vote - though uninformed by a proper
Select Committee process. But if things don't go her way, and the Singapore
agreement does not get approved by Parliamentary vote, she can still go back
and get Cabinet to ratify it.

Future, less charitable, governments can, without a word to the public,
return to giving Parliament only a token role by exercising Cabinet's
extraordinary power.

Ratification would force changes in a number of pieces of legislation. The
most important is one which reverses Labour/Alliance policy on freezing
tariffs with respect to trade with Singapore.

More importantly, it would prevent future Parliaments from changing many
current policies without first getting the agreement of Singapore. For
example, we must

* Accept tariff-free imports designed, checked and packed in ingapore with
60% of the value potentially created in appalling, low wage conditions, in
an Indonesian free trade zone, perhaps putting people here out of work
Accept tariff-free seafood caught anywhere in the world by vessels
"registered or recorded" (not necessarily owned) in Singapore

* Retain the higher threshold of $50 million for proposals from
Singapore-based investors which require approval by the Overseas Investment
Commission, rather than the previous $10 million

Leave the fast money from Singapore's financial dealing rooms, which may
destabilise our currency or balance of payments, uncontrolled except after a
crisis has hit

* Avoid favouring local over Singaporean suppliers in local and central
government contracts worth more than $125,000.

Yet Singapore retains the right to considerably stronger measures, such as
controls on foreign investment, various types of incentive payments, and a
very powerful collection of government-controlled companies, which own some
of the $1.2 billion of Singaporean investment in New Zealand.

This agreement is designed to be a precedent-setter for New Zealand and the
rest of APEC - a "Trojan Horse" in the words of Asia 2000's head, Tim
Groser. If this one is ratified, the government hopes to apply it to a more
ambitious programme of negotiations with the rest of Southeast Asia, South
Korea, Chile, Canada and the United States.

That means these issues will only grow in importance. They will remove
further options that this and future governments have for managing our
economy, our social divides, and our relationship with the rest of the
world.

At a time when the wisdom of purist free trade and investment policies is
being questioned in the streets, in United Nations human rights reports, by
World Bank economists, and in many eveloping countries, the fervour with
which these agreements are being pushed seems strange.

It is particularly strange for a government elected to turn around the
excesses of the free market and favour local development.

More appropriate would be a thoughtful review of the economic and social
effects of such policies, and development of a proper constitutional
process.

That process should acknowledge that international agreements are like
entrenched legislation. Almost constitution-like, they are difficult to
change and bind future Parliaments.

The process must be based on careful scrutiny in open and consultative
procedures like those used for often less important legislation.

The Singapore agreement must be subject to such a process too.

AUTHOR NOTE - Bill Rosenberg researches and writes on foreign investment and
New Zealand's economic relationship with the world.