Transnationals’ Profits Down, So Money Actually Stays In Nz

The upside down world: tens of billions of dollars leaving NZ = an improvement?
The news just keeps getting better. Not only did the Overseas Investment Office and the Government refuse the application by Natural Dairy to buy the Crafar Farms but taxpayers got another Christmas present this week with the announcement that the quarterly current account is in surplus for only the third time since 1987 (after decades of an increasingly dire current account deficit). Why? Partly because the profits of transnational corporations fell by $551 million and therefore less money is being sucked out of the country in the form of repatriated profits.

In the upside down world of neo-liberal economics this is seen as being a bad thing and “the experts” fervently wish for the normal scenario of tens of billions of dollars leaving NZ and a soaring current account deficit to resume as the economy “improves” (for whom?). But this unusual state of affairs, just in time for Christmas, has given New Zealand workers and taxpayers a tantalising glimpse of what this country could actually be like if it wasn't run as a branch office of the transnationals and bled dry in the process – money would actually stay in the country, where it could be used in the national interest. What a thought.

Go figure: If not for Canterbury earthquake there’d be a
$1.8 billion deficit for the September quarter
Actually the single biggest reason why the current account is in surplus is because of an estimated $1.7 billion of reinsurance claims from the Canterbury earthquake (that is the amount that NZ insurers expect to claim from the overseas reinsurers). If it wasn’t for that the current account would have a $1.8 billion deficit for the September quarter, instead of a $35 million surplus. So, speaking as one of the 160,000 earthquake claimants, I’m delighted that we’re doing our bit to help out the economy. I’m just sorry that I couldn’t have made a bigger claim and helped it out even more. Oh wait, that would have meant that my house would have been destroyed instead of just suffering moderate damage. Because in the upside down world of conventional economics, a natural disaster is great for business and GDP. Perhaps we should really go to town and have a war. That’s always good for business.
CAFCA Media Release Fri 24/12/2010


Bad luck to all the finalists 
and may the worst man win!

The six finalists for the 2010 Roger Award for the Worst Transnational Corporation Operating in Aotearoa/New Zealand are (in alphabetical order): BUPA, Imperial Tobacco, Telecom, Vodafone, Warner Brothers and Westpac. There is one finalist for the Accomplice Award (accompanying Warner Brothers) – the Government. The quantity of finalists is down from the nine in 2009 but the “quality” of the six in 2010 certainly isn’t. BUPA is a British-owned operator of a chain of retirement homes, one of the very largest in this sector which has become dominated by for profit corporations, with many of them foreign-owned. It was nominated for its shabby treatment of both its residents and workers (one piece of evidence supporting its nomination was a lengthy New Zealand Herald article about a 100 year old BUPA home resident who died of scabies, to the outrage of her family).

Select Committee hearings throw
spotlight on lethally addictive drug
Imperial Tobacco was nominated for all the reasons one would expect a major tobacco transnational corporation (TNC) to make the cut, starting with the fact that several thousand New Zealanders die every year from the effects of smoking. This entirely preventable killer by a legally and lethally addictive drug was put under the spotlight in 2010 by the Select Committee hearings on its disproportionate impact on Maori. This is the first time that Imperial has been a finalist, with the tobacco industry usually having been represented among the finalists by its bigger rival British American Tobacco (the 2008 Roger winner). BAT was nominated again in 2010, so the Award organisers, who select the finalists, were spolit for choice.

Habitual finalist makes
the cut yet again
Telecom remains the only TNC to have been a finalist every year since the Roger Award started, in 1997 (although it has only actually won it twice). It was nominated for a number of reasons but the reason it went through to the finalists yet again was because of something unique to it in 2010, namely the fiasco involving the repeated collapses of its much hyped XT mobile network. Not only did these collapses (occurring over several months) inconvenience several hundred thousand customers; they also knocked out the 111 emergency service on occasion and thus endangered both life and property. That fact alone led to major criticism of Telecom by the public, media and Government.

First timers: 'profiteering, and shabby
treatment of both its workers and customers'
 Vodafone makes its first appearance as a finalist (also marking the first time that both major phone TNCs have been Roger finalists). It is there for different reasons than Telecom, namely its shabby treatment of its workers. Westpac (which was also a finalist in 2009 and was the joint winner of the 2005 Roger) was nominated for a number of reasons, such as profiteering, and shabby treatment of both its workers and customers. It wasn’t the only bank nominated but it was felt that the case against it was stronger than that against the other nominee (ANZ, which won the 2009 Roger). 

The sole Accomplice Award nominee;
The NZ Government for forelock tugging &
Finally, Warner Brothers makes its first appearance in the Roger Award, going straight through to the finalists, because of it providing a textbook example of a big TNC bullying a small country’s film industry and extorting further corporate welfare from a craven Government only too eager to increase the taxpayer subsidy being paid to this corporate bludger for it to deign to continue filming “The Hobbit” in NZ. As part of that nomination, the Government is the sole finalist for the Accomplice Award for its forelock tugging and grovelling to Warners and its local mouthpiece, Sir Peter Jackson; specifically, by changing the employment laws to change all film workers into contractors (with far fewer legal rights) and giving Warners tens of millions of our money to add insult to injury.

The organisers agonised long and hard before choosing these six TNCs as finalists, as there were plenty of other worthy contenders, including two previous winners (BAT and ANZ) and some major corporate villains such as McDonalds.

The winner(s) will be announced at an Auckland event in April 2011. The Roger Award is jointly organised by CAFCA and GATT Watchdog. Full details, including previous winners and annual Judges’ Reports, can be read here

The judging criteria can be found here and this year’s judges here

 Warner Brothers: ‘Bullying and extorting further corporate welfare’
Campaign Against Foreign Control of Aotearoa
Media Release 10/12/2010

The impact of free trade on the financial crisis … and vice versa


Behind the currency wars and the worsening global economic crisis lies a largely unquestioned free trade model that both contributed to the crisis and, without radical reform, is a major obstacle to overcoming it.

“The financial and economic crisis has revealed the fundamental problems of the free trade paradigm: free trade can lead to huge trade surpluses and deficits among countries with unequal trade capacity and unequal trade, economic and social policies. These trade imbalances and resulting current account deficits were first blamed to have contributed to the crisis and are now considered to be an obstacle to recovery of those countries with a trade deficit, such as the US, and create foreign exchange problems for some countries face.”

More ...

 Read Online 


Australian and NZ groups urge PMs to reject US investment demands next week

Philip Morris has used an investor-state dispute process to sue the Uruguayan government when it introduced restrictions on tobacco advertising

Just days before this week’s talks in Auckland on the Trans Pacific Partnership Agreement (TPPA), civil society groups from Australia and New Zealand have sent a joint open letter to their Prime Ministers urging them to adopt a progressive and balanced approach to foreign investment.

The letter, signed by 43 organisations, urges the two governments to reject expected US demands for rules and enforcement mechanisms contained in past US free trade deals.

New Zealand coordinator of the letter, Professor Jane Kelsey, said that the groups who signed the letter applauded the rejection of investor-state enforcement powers by the two governments as an important first step, and urge them to adopt a similarly forward thinking approach by promoting a different kind of investment agreement.

“We are urging the government to jettison the old-style NAFTA model in favour of an agreement among the TPPA parties that is genuinely fit for the 21st century – one that rebalances investor rights with enforceable responsibilities and restores the primacy of national sovereignty and democratic control over investment-related decisions,” she said.

Harvey Purse said tobacco giant Philip Morris has used an investor-state dispute process to sue the Uruguayan government when it introduced restrictions on tobacco advertising, and the company’s submission on the TPPA has again lobbied for this right for investors to sue governments directly.

He said the Australian government’s plans for plain packaging of cigarettes could be subject to the same kind of legal challenge, costing hundreds of millions of dollars, if tobacco companies gained access to investor-state dispute settlement through a TPPA. 

Signatories to the letter include both countries’ peak trade union bodies and other unions, faith and environment groups, the culture sector, investment watchdogs and other community organisations.

Also See

Leaked NZ paper reveals rift with US on intellectual property in trade agreement

Salvadoran Court Drops Mining Company's Charges Against Cabañas Environmentalist

Pacific Rim Mining accused environmentalists of
“kidnapping”, “aggravated robbery,” and “aggravated threats

On November 25, 2010, a district judge in Cabañas, El Salvador, dropped serious charges against seven local environmentalists who were accused by Vancouver-based Pacific Rim Mining of “kidnapping”, “aggravated robbery,” and “aggravated threats” among others. All seven were members of the Cabañas Environmental Committee for the Defense of Water and Culture (CAC); charges of property destruction were referred to a different court.  The charges come four years after 2006 protests at the Santa Rita mine site on the Cerro Limón hill, located in the rural community of Trinidad in Cabañas, which successfully halted activity at the mine.  Read more on the background of the case and the CISPES press release on the trial outcome.

Hearing Begins for Second CAFTA Lawsuit Against El Salvador

On Monday, November 15, proceedings began in the second lawsuit filed by a mining company against the government of El Salvador.  Milwaukee-based Commerce Group is following the lead of Vancouver-based Pacific Rim by suing El Salvador for $100 million in the International Center for the Settlement of Investment Disputes (ICSID), for lost investments and anticipated lost profits based in Chapter 10 of the US-Central American Free Trade Agreement (CAFTA).  Commerce Group filed suit after the Salvadoran government revoked the company’s mining permits on environmental grounds for polluting the San Sebastián River with poisonous heavy metals in the department of La Unión. This first hearing shall determine whether El Salvador's preliminary objections to the lawsuit are valid, particularly that Commerce Group's appeal in the local Salvadoran courts for its revoked permits was not completed until after the company filed its CAFTA lawsuit. One of the requirements for filing a Chapter 10 CAFTA lawsuit is that the company has completed and terminated all domestic court cases. The tribunal will make a decision by January 13, 2011.

Contamination at the Commerce Group San Sebastian gold mine in El Salvador
In response to the lawsuit, over 70 organizations - including CISPES - signed a letter demanding that Commerce Group drop the lawsuit, clean up the contamination the mining operations have caused and pay reparations to local victims of the contamination.  The Midwest Coalition Against Lethal Mining (MCALM), who sponsored the letter, is beginning a broader campaign to fight the lawsuit.

The National Roundtable Against Metallic Mining in El Salvador (the Mesa), in addition to denouncing the legitimacy of such lawsuits and calling on the Funes Administration to confront them head-on, has expressed concern for the dangerous precedent being set that could lead to a series of copy-cat “lost profit” CAFTA lawsuits from other mining companies.  According to the Ministry of the Environment, there are 73 requests for mining permits currently in limbo following Funes’ public refusal to authorize permits.  The Mesa has called on the Legislative Assembly to approve a law to prohibit metallic mining, a priority for the leftist Farabundo Martí National Liberation Front (FMLN) legislative deputies in the Climate Change and Environment Commission.