NZ Joins the Trend for Countries to Say No to ISDS, Must Hold Firm in the TPPA
By Jane Kelsey
‘Yesterday’s announcement that the new government has heeded widespread concerns and taken investor-state dispute
settlement (ISDS) off the table in future trade and investment negotiations is a major step forward’, says University of
Auckland law professor Jane Kelsey.
‘New Zealand joins a growing number of countries who have rejected the controversial process whereby foreign investors
can enforce special protections against governments in private offshore tribunals and claim huge compensation for new
regulations or even court decisions that significantly affect their commercial interests’.
‘The Prime Minister’s stronger language regarding the exclusion of ISDS from the Trans-Pacific Partnership Agreement is
also welcome, but leaves too much wriggle-room to claim it has failed to convince others, and proceed with the original
deal’, Professor Kelsey warns.
Both Viet Nam and Canada are known to want changes to the investment enforcement rules in the TPPA. There are plenty of
precedents and mechanisms available.
The government would also have strong support from the legal community. In 2012 more than a hundred jurists, including
senior retired judges from Australia and New Zealand, signed an open letter calling for ISDS to be excluded from the
The main rationale for leaving the TPPA intact has been to make it easy for the US to re-join.
While no one currently thinks that likely, Professor Kelsey points to a deeper irony: ‘if the current US administration
did re-engage with TPPA, it would require the ability to exempt itself from ISDS!’
‘In the current renegotiation of NAFTA, the US has proposed that each party should be able to opt out of ISDS
altogether. The US Trade Representative Robert Lighthizer told US corporations they should act like all other business
and take out risk insurance to protect their commercial interests.’
Professor Kelsey called on the new government to stand firm in excluding ISDS from the Agreement, but points out there
are many other aspects that remain problematic, including Labour’s own recognition before the election that the
economics of the TPPA did not stack up, and that a broader review of the costs and benefits of the TPPA was necessary.