Economic and environmental history of Aotearoa - New Zealand

Re MAI

By Makere Harawira
15 February 1998

Makere Harawira <m.harawira@auckland.ac.nz> writes to Breakfast Show, Television One, New Zealand.

The Minister for Trade, Lockwood Smith appears to me seriously misinformed about the nature and intent of the MAI.

1.The MAI is not about investment per se, which has been proceeding quite happily for the past 20 years, it is about the right of governments to determine the level and form of investment within their own countries. The MAI is essentially about the balance of power.

The MAI takes away from governments any and all authority and instead gives power to big business interests to dictate how, when and where they will invest, instead of permitting governments to determine these factors. The provincial government of British Columbia, along with 3 other Canadian provinces, has recognised this and has refused to join because, amongst other things, it limits the powers of the provincial governments to deliver social programs, to negotiate native title and a whole range of other issues.

2. Regarding the fact the 'Maori do not need to worry because the Treaty of Waitangi reservation protects the Treaty', this is a misrepresentation of the facts. The wording of the reservation designed to protect Maori interests in respect of the National Treatment Reservation reads:

"Current and future measures according more favourable treatment to the Treaty Partner in relation to the acquisition, establishment or operation of any commercial or industrial undertaking."

Leaving aside the critical fact of the temporary nature of the reservation, there is no protection for Maori resources and rights outside of those that may be defined as commercial or industrial. This raises serious questions about intellectual and cultural knowledge that may be used other than in these contexts. It raises serious questions about future Maori claims to land or other taonga. It calls into question the rights guaranteed to Maori under the terms of Article II of the Treaty of Waitangi.

3. Regarding removal of reservations, the wording of the MAI makes it very clear that reservations are temporary and must be rolled back over time, and it discusses a number of ways that this might be achieved. The most commonly used methods, according to the document itself, are:

a) pressure being put on governments by foreign investors, and

b) negotiation rounds such as those under the GATT.

It seems most likely that financial pressure would be brought to bear. When all else failed, there is provision for governments to be taken to court to comply with the terms of the Agreement.

4. Lockwood Smith is also misinformed about the number of jobs in this country which, he says are directly or indirectly the result of foreign investment. In Aotearoa (New Zealand) the government has consistently argued that foreign investment directly or indirectly accounts for 1/3 of the jobs within Aotearoa. This is a misrepresentation of the facts.

Since the beginning of the restructuring of the economy in 1984, New Zealand's burden of foreign debt has continued to increase. 60% of the profits made by overseas companies in Aotearoa are sent overseas.

Although overseas companies are estimated to provide half of the operating surplus made in Aotearoa, they provide only 18% of the employment. That is significantly different from the figure of 1/3 being promoted by the government. In many cases, transnational companies bring in their own employees who provide the cheapest possible labour for the maximum amount of profit to the company.

Telecom is just one example of the failure of foreign investment to bring benefits to New Zealanders. After its take-over by foreign ownership which resulted in an enormous loss of jobs due to what is called 'restructuring', Telecom made a capital increase of over 8 billion dollars between 1990 and 1996 (8 times the proposed fiscal envelope for the Treaty of Waitangi settlement of claims). Over 90% of its net profits were paid out in dividends to its overseas shareholders. Despite its huge profits, the cost of having a phone in Aotearoa is 83% higher than than the average price iin OECD countries.

Although new technology makes it very much cheaper toprovide telephone services, Telecom has not been required to pass these savings onto their consumers. Instead they pay out their profits in huge dividends to share holders. So the excess in profits does not benefit the average New Zealander at all.

Here in Aotearoa we also have the example of the car manufacturing industry. Due to the removal of tariffs on foreign cars, it has become cheaper to import cars than to manufacture them here. With related industries also having to close down, that means the loss of 15,000 jobs. It is impossible to justify introducing cheaper cars when it means that the majority of people cannot afford to buy them. However wealthier members of the population will benefit because they are the only ones who can afford to take advantage of these situations.

As trade tariffs are removed, it becomes easier to move manufacturing industries to those countries which have fewer environmental restrictions, lower labour standards and lower pay levels in order to make bigger profits. And those profits do not benefit anyone except the shareholders, who will be overseas investors.