7 Feb 2011

Law suit prospects seen in TPP deal

12:15 pm on 7 February 2011

The New Zealand Government could be opening itself to being sued by American multinationals in trade talks - contradicting assurances from Prime Minister John Key.

A top United States trade official says New Zealand is ready to accept investor-state disputes in the nine-country TransPacific Partnership trade agreement (TPP).

Radio New Zealand's economics correspondent says investor-state dispute clause allows multinational companies to sue goverments if they lose profits as a result of new regulation.

They are a feature of US trade deals.

Mr Key last year said it was far-fetched to suggest New Zealand would accept them in the TPP.

But Babara Wiesel, a top US official, says Mr Key's statement has been retracted and New Zealand will agree to the clause.

Professor Jane Kelsey of Auckland University says the clause allows US or Australian companies to sue the Government if it introduces new regulations - even those in the national interest.

But the US-NZ Council says it gives New Zealand companies valuable protection from arbitrary and costly government decisions in TPP countries.