Most Favoured Nation?

Signed, Sealed, Delivered: The signing of the China-New Zealand Free Trade Agreement was hailed as the Clark-led Labour Government's crowning foreign policy and trade achievement. It is simply inconceivable that the Labour Party has forgotten that agreement's "Most Favoured Nation" clause guarantees China the same rights as our other trading partners - including the right to purchase New Zealand farmland.

AT THE RISK of being branded a “traitor”, I’m declaring my support for the Crafar Farms sale. Not because I like seeing productive New Zealand farmland pass into the hands of foreigners, I don’t. The reason I’m in favour of the sale is because I believe New Zealanders should keep their promises and fulfil their undertakings.

In 2008 this country ratified a Free Trade Agreement (FTA) with the Peoples’ Republic of China. That agreement was hailed as the most important foreign policy and trade achievement of the Helen Clark-led government of 1999-2008. Not only was it the first such agreement to be signed between China and a western-style democracy, but it also offered New Zealand businesses immense economic opportunities.

Those opportunities were, of course, reciprocal. The Chinese have been merchants and traders for the best part of three thousand years. They needed no reminding that in this world you don’t get something without giving something in return. And what we gave China was “Most Favoured Nation” (MFN) status.

In the context of the Crafar Farms Sale, MFN means: “If it’s okay to sell New Zealand farmland to Americans, Englishmen, Germans and Indonesians, then it must also be okay to sell farmland to the Chinese.” Under the terms of the NZ-China FTA, the Peoples’ Republic is legally entitled to no lesser consideration than that shown to the most favoured of our trading partners.

That’s what Prime Minister John Key meant when he said “our hands are tied”. It’s what New Zealand’s leading critic of the NZ-China FTA, Professor Jane Kelsey, meant when she stated:

“If the New Zealand government had declined the Shanghai Pengxin purchase of the Crafar farm it could have faced an international law suit for breaching its free trade agreement with China […] The government cannot treat applications from Chinese investors differently from similar applications from other countries’ investors under what is known as the ‘most-favoured-nation’ or MFN rule.”

And that’s not all. Had the application from Shanghai Pengxin been declined by the Overseas Investment Office that decision would almost certainly have been challenged in a New Zealand court. And rightly so. We’d have broken our own rules.

It was all the more perplexing, then, to hear Opposition Leader, David Shearer, declaring his and the Labour Party’s opposition to the Crafar Farms sale. It’s simply inconceivable that Mr Shearer is unaware of the MFN prohibition against denying China the same right to purchase land as the nations that purchased upwards of 650,000 hectares of our national patrimony exercised when Helen Clark was Prime Minister, and Mr Shearer’s friend (and former boss) Phil Goff was the Minister of Trade.

To avoid the inevitable charges of rank hypocrisy and populist opportunism, Mr Shearer needed to accompany his statement opposing the sale with an announcement that Labour was committed, immediately upon regaining office, to repudiating the NZ-China FTA and tightening-up the legislation regulating overseas investment.

I’m still waiting for those other shoes to drop. And, frankly, I think I’ll go on waiting. Why? Because I simply don’t believe Labour is about to abandon its long-standing commitment to free-trade. Nor am I confident that Mr Shearer is any more willing to court the fury and retaliatory trade restrictions of the Chinese Government than Mr Key. Both men are well aware that this country’s future prosperity is inextricably bound up with China’s.

If foreign ownership of New Zealand land was something successive New Zealand governments wished to restrict, then they should have legislated against it before they embraced the doctrine of free-trade. And if we, the people, were serious about preserving our patrimony, then a majority of us would’ve voted for the political parties – the Alliance, NZ First, the Greens, Mana – which promised to do exactly that. But, the closest the New Zealand electorate’s come to voting against free-trade (27 percent) was the election of 1993. In 2011 the anti-free-trade vote was just 19 percent.

It’s a little late, now, to shout: “Stop!”

This essay was originally published in The Dominion Post, The Otago Daily Times, The Waikato Times, The Taranaki Daily News, The Timaru Herald and The Greymouth Star of Friday, 3 February 2012.

Farmers - Not Peasants

To lose land is to lose sovereignty: This was the lesson Maori learned from Pakeha. Are all New Zealanders about to be taught the same lesson by the Chinese?

THE OUTRAGE was as plain as a Chinese pikestaff. Responding to Agriculture Minister, David Carter’s, comment that the sale of sixteen dairy farms to the Chinese-backed Natural Dairy (NZ) Ltd was "unlikely to go through", the company’s vice-chairman, Graham Chin, cut straight to the chase.

Not only were the Minister’s comments "completely unacceptable", snapped Mr Chin, but they also raised "serious questions as to how genuine and understanding the Minister of Agriculture is in relation to New Zealand’s trading and investment relationship with countries such as China."

Forget the "such as". Mr Chin was bluntly reminding our government that, along with all the international kudos and commercial opportunities, New Zealand’s highly prized Free Trade Agreement with the Peoples Republic of China also included a number of fundamental obligations and responsibilities.

Foremost among these is the New Zealand Government’s obligation to ensure that the same commercial opportunities made available to New Zealand investors in China are fully reciprocated in relation to Chinese businesses seeking to invest in New Zealand.

China will not tolerate a trading partner who attempts to have it both ways. If Beijing is willing to open doors for Fonterra, then Wellington must be equally hospitable to Mr Chin and his Hong Kong backers.

And it would be very foolish to suppose that Chinese officials will be fooled by New Zealand politicians attempting to wash their hands of all responsibility by pointing to the "independence" of our Overseas Investment Office (OIO). China’s ambassador will know as well as the Campaign Against Foreign Control of Aotearoa (CAFCA) spokesperson, Murray Horton, that the OIO hasn’t turned down a land purchase application in twenty years.

Once Natural Dairy’s application is granted, however, New Zealand’s farmers, and the politicians who represent them, are going to have to do some very serious thinking.

China’s purchasing plans for New Zealand are unlikely to stop at the Crafar family’s former properties. Indeed, Natural Dairy (NZ) Ltd’s principals have made it clear that their long-term objective is to construct a New Zealand-based, wholly-Chinese-owned, vertically integrated dairying operation in direct competition with Fonterra.

It must be as obvious to Chinese business interests as it is to this country’s Australian-owned banks that for more years than we care to admit, New Zealand’s dairy farmers have been in business not to sell milk, but to realise the enormous capital gains engendered by the ever-rising price of rural land.

With the global financial crisis having brought New Zealand’s rural property boom to an abrupt halt, a great many dairy farmers (and their bankers) are now stuck with properties their cows’ udders can no longer finance. Overextended in their rural lending, the Australian banks want to effect a quick exit from our agricultural sector with the minimum possible damage to their bottom-lines. They are looking for buyers of agricultural land, and, as luck would have it, the Chinese are looking for anyone with agricultural land to sell.

What is a Kiwi cow-cockey, technically insolvent and unable to borrow, supposed to do when Natural Dairy (or something like it) comes calling with an open cheque-book? As one veteran farmer of my acquaintance put it recently: "If a Chinese buyer offers me $3 million, cash, for my property – I’m not going to turn him down."

There’s only one way New Zealand can avoid losing, farm by farm, its core agricultural assets, and that is to make it illegal to sell agricultural land to anyone except the Crown.

Like the Maori before us, we face the prospect of seeing our most valuable taonga, land, and the key resource which will soon be worth even more than land, water, being sold out from under us. Only then will we discover, as they did, that losing one’s treasure means losing one’s sovereignty.

Turning our farmers into Crown Tenants, or, if they bridle at that term, into "Stewards" of the nation’s most treasured resources, would allow them to do what they do best: grow protein. Rather than farming for capital gain they could, once again, farm to feed a hungry world.

And to China’s inevitable protests our response should be:

"As a people, you have known the humiliation of being brought low by foreigners, but also the exhilaration of rising, proudly, to your feet.

"We are happy to be China’s farmers – but we will not be her peasants."

This essay was originally published in The Dominion Post, The Timaru Herald, The Taranaki Daily News, The Otago Daily Times and The Greymouth Evening Star of Friday, 28 May 2010.