Reprinted from The Common Good, No 13, Spring 1999

www.catholicworker.org.nz

 

Why APEC should worry you

Bill Rosenberg

APEC leaders meet in Auckland in September in a multimillion dollar extravaganza completing a year of meetings of officials, ministers, and top business representatives in New Zealand and elsewhere. Largely a scripted production, in which little new will be decided, the leaders’ meeting is nonetheless designed to boost the importance of the free trade and investment agenda for which APEC stands. But the APEC agenda will still be used by governments to justify the domestic neo-liberal agenda that has caused so much damage in New Zealand and elsewhere, and to pressure others to open their markets and sell further assets to transnationals. Investment, at least as much as trade, is part of that agenda.

Loved the electricity reforms? APEC wants more of it. Hoping for more privatisation and deregulation of other services? Thrilled with increasing overseas ownership of New Zealand’s assets? Raved about the discredited Multilateral Agreement on Investment (MAI)? Then APEC is for you.

APEC is not just about trade. In its often impenetrable jargon, APEC’s purpose is ‘trade and investment liberalisation and facilitation’.

We hear a lot about its trade side. Think of closed car assembly plants, and reducing tariffs on footwear, clothing and textiles, which will cost several thousand jobs. Think about initiatives in forestry and fishing that were put in APEC’s ‘too hard’ basket and handed to the WTO.

But APEC is just as much about foreign investment. As its missionaries say: ‘APEC means business.’ J. Spero, U.S. Undersecretary of State of Economic, Business and Cultural Affairs, told a U.S. Congress Committee that ‘APEC is not for governments. It is for business. Through APEC, we aim to get governments out of the way, opening the way for business to do business’. One of its most influential bodies is the APEC Business Advisory Council (ABAC). There are no parallel bodies for representatives of workers, consumers, subsistence farmers or indigenous people, who make up the great majority of its peoples, so APEC’s emphasis and intent is clear. In the unlikely event they were created now, their effect could only be minimal.

APEC has ‘non-binding investment principles’ which, though ambiguous, read like a prototype for the rejected MAI. If put into effect they would have many similar consequences. Foreign investors would have to be given at least as favourable treatment as New Zealanders, so the Plunket Society would find itself competing with huge health service transnationals and could not be given preference. Foreign-owned companies could not be required to use local resources, or maintain or expand employment opportunities.

APEC’s main investment emphasis is on infrastructure – the essential services traditionally provided by government: electricity, roads, hospitals, water, waste disposal, and so on.

Its approach is to restructure and privatise. To quote the APEC leaders’ 1996 declaration in Manila:

‘APEC members are committed to increased participation of the private sector in the construction, management and ownership of infrastructure facilities.’

Subsequent leaders’ meetings have made this a priority. Electricity is an explicit focus, along with transport and other forms of energy.

The 1999 New Zealand ‘Individual Action Plan’ (IAP) – the government’s offer to APEC on our behalf – includes:

‘New Zealand will continue to assess, and where necessary improve, the regulatory regime for infrastructure and utility businesses including those owned and operated by local government. New Zealand will continue to consider the scope for further privatisation of State-owned businesses and assets where there are no public policy reasons for continued taxpayer ownership.’

It boasts about the electricity reforms, along with other examples of current and planned deregulation and privatisation, such as the Producer Boards. It also welcomes foreign direct investment ‘as a vital contributor to New Zealand’s economic development’.

In a country now the most dependent on foreign investment of any in the OECD, the Government needs to justify this mantra with hard facts. The record (TransAlta’s record in electricity retailing is one example) does not support it. Indeed, greatly increased foreign investment has developed alongside worsening unemployment, inequality and poverty.

Look at three examples:

Jobs. Less than 18% of jobs are in overseas companies, though they own half to two-thirds of the commercial economy. Recent foreign ‘investment’ has been overwhelmingly by takeover rather than by creating employment. Forty percent was privatisation alone. Many takeovers, such as Telecom and Tranz­Rail, led to large-scale layoffs of employees.

Investment. There is a major leakage of companies’ savings to overseas owners. Over 70% of income from foreign direct investment went overseas and was not reinvested in New Zealand between 1989 and 1998. Much of our capital requirement is due to the cost of servicing existing foreign investment – now using over a quarter of our income from exports.

Exports and international competitiveness. New Zealand’s exports have grown more slowly than the OECD average since 1984. Labour productivity grew more slowly in the 1990s than in the 1980s. We have fallen behind the rest of the world despite huge increases in foreign investment.

To allay concern, the government may say that it is only offering APEC what it was going to do anyway. But doesn’t that undermine the very basis of democracy? If international commitments have been made that are practically irrevocable, future governments cannot make changes they have been elected to carry out.

On the other hand, if nothing has been committed to, then isn’t APEC, as the Sunday Star-Times (25/10/98) put it, ‘a scandalous waste of money’?

Bill Rosenberg researches and writes on foreign investment and New Zealand’s economic relationship with the world for GATT Watchdog and the Campaign Against Foreign Control of Aotearoa. The full text of his extended APEC article is available from:

CAFCA, P.O. Box 2258, Christchurch.