CAMPAIGN AGAINST FOREIGN CONTROL OF AOTEAROA Number 69 April 1992 Contents Page New foreign investment rules: anyone but stupid criminals Education and foreign investment: an example Vultures gather - but we ain't dead yet: Auckland conference for foreign investors. There's money in misery: investors eye the health system Can't Pay ... Won't Pay ... Don't Pay Twice . Revealing GATT Intensifying Economic Exploitation: imperialist strategies in in the Asia-Pacific region, by David Small The Professor and the CIA .... Uncle Tom Skinner: U.S. agent F.P. Walsh, the Special Branch and Wolfgang Rosenberg - Cullen's Yankee Junket Legal costs appeals: Warren Thomson, Sue Bradiord & Co. Forestry investors want NZ Economy clearfelled - and Guy Salmon cheers them on : . Star goes into black hole, by Murray Horton Reviews: Global Companies and Public Policy: the growing challenge aL foreign clrect investment, reviewed by Wolfgang Roson- . at Expanding our Horizons: NZ in the Gi ‘ed by Dennis Small Direct Foreign Investment: Changing patterns over the 1980s, reviewed by Bill Rosenberg 51 Overseas Investment Commissio August 1991 to sanuary 1992 decisions... . Obituary: Bishop Allan Pyatt . : : the best magazine on the Phippines : Plunder . ISSN 01710896, Registered at Wellington RO, 85 a magazine. Published by CAFCA, RO Box 2258 Christchurch, New Zealand, { Aotearoa.) The material in this issue may be reprinted provided the source is acknowledged. A copy would be appreciated.2 New Foreign Investment rules: anyone but stupid criminals In December 1991, the Prime Minister announced new criteria for overseas investment. As part of a strategy to encourage more foreign investment it predictably weakens regulation to virtual non-existence, except in "sensitive areas" where it is significantly weaker than before A significant aspect of the strategy is that his own department will “facilitate” large projects with implications in either infrastructure or regulation. This brings back memories of “Think Big” where designer legislation (such as the National Development Act) was created to push foreign investment projects through more quickly and with less public consultation. Foreign investment was named as a principal strategy in the government’s program: "Our success will depend on two major factors - our ability to expand our export marketing effort, and our ability to encourage foreign investors to join us in our effort to develop the rich resources at our disposal." While naming two “of our major growth industries - forestry and tourism” as being in particular need of new capital (up to $8 billion in the next decade), the changes announced are not at all tailored to those industries "Our strategy is based on a new partnership between the government and the private enterprise interests who either seek, facilitate, or regulate foreign investment in New Zealand." The Ministry of External Relations and Trade (MERT) will generally promote foreign investment, while the Trade Development Board’s contribution will "be focused on promoting investment in specific sectors or individual ventures." It is interesting in the light of the GATT negotiations (see article elsewhere in this Watchdog) that a Trade body is taking on investment tasks: it reflects the blurring of the distinction between trade and investment that transnationals are pushing at GATT. “To ensure the public and private sector foreign investment promotion efforts are coordinated to best effect, and investment advisory group has been established. This group, under the chairmanship of Mr Andrew Meehan, chief executive of Southpac and an experienced manager of foreign investment ventures, is private sector-led but includes officials from MERT, Treasury, and my own Department.” ‘The Prime Minister's Department would in fact directly facilitate proposals that are “of exceptional size or scope and there are implications in terms of either infrastructure or regulation.” The new criteria for foreign investment will establish two categories: “General’ and "Sensitive" General proposals for less than $10 million will not require clearance. This is no change from the current position. However, criteria are loosened to the point of letting our pants fall down for proposals greater than $10 million. "The Overseas Investment Commission [OIC] will clear proposals which meet the following criteria 1 The investor has business experience and acumen. 2. The investor is demonstrating commitment to the proposed project by placing his or her own capital at risk. 3. There is no investor with more than a 25% beneficial interest in the proposed investment who has a criminal record that would disqualify him or her from obtaining permanent residence in New Zealand." (3) is probably unenforceable in that any sensible crim worth his/her jail sentence can easily hide his/her interests behind a curtain of holding companies. Even if s/he is found out, it will certainly be well after the investment has been made, probably after-3- any damage has been done, The OFC has shown in the fuss over the Pakatoa Island purchase by a German coninan that it doesn’t, and hasn't the capacity to, investigate any proposal beyond reading the applicant’s glosses. At most, as NZ Property points ‘out Glanuary 1992) the rules mean that "overseas criminals will now only be allowed to buy a 24.9 per cent interest in New Zealand ventures." Up to now the Commission has not even insisted on knowing the registered office and directors of applicant companies. The other two are not criteria at all - they will be taken as being true by definition in every case, There are therefore no restrictions at all in most cases of foreign investment. ‘The PM continued: "For sensitive areas - such as land adjoining coastal areas, lakes ind islands, and rural land - every proposal for foreign investment, regardless of the amount involved, will require clearance. Proposals for sensitive aress will need to meet the three criteria {outlined above] and some additional requirements. The investment in a sensitive area will have to make @ significant contribution 1o New Zealand's growth and development in one or more of the following areas: - the introduction of new technology or business skills - the development of new export markets, or increased market access - the creation of new job opportunities or the retention of existing jobs that would otherwise be lost - added market competition, greater efficiency or productivity, and enhanced domestic service the introduction of additional investment for development purposes - plans to add value to the output of New Zealand’s existing primary production in the form of any onshore processing, ‘The Overseas Investment Commission will be responsible to the Minister of Finance, but decisions relating to foreign investment in sensitive areas will require the concur- rence of the Minister of Lands." ‘These additional requirements are very similar to those previously applying to general investment under the old criteria. On the surface and if applied stringently - they would have a little effect (though almost anything can sneak in under these very generalised rules). But the experience of the last several years under these criteria is that anything goes. The only real protection that remains is a protective Minister of Lands. And that has been little protection as followers of OIC decisions will appreciate Education; the benefits of foreign investment | | ‘One example of overseas investment that never reached the OIC (being below the $10 million limit) tad University staff simultaneously homified and hysterical. The Massey English Language Centre was initially called the Massey University English Language Contre but was forced 10 drop “University” by the NZ Qualifications Authority. It got the “University” in its fname because it was a joint venture between Massey University Vice-Chancellor, Neil Waters (Neil Waters, mind, not the University itself) and Mr Junj K. Kim from Korea. It set itself up | in Auckland, attracting staff because they thought they were working for Massey University. Students (most from Korea) paid $5,000 to $13,500 in fees. Eventually staff became disil- lusioned with academic standards - and pay cheques started bouncing; when staff objected, Managing Director Mr Kim paid them (up to $1300) in $1 and $2 coins! They have now all resigned or been dismissed and in February the Cenue closed, Massey University is trying to disassociate itself from the embarrassment, but is tying to find places for the students. The Association of University Swf is taking action against the Centre on behalf of aggrieved staff.VULTURES GATHER But We Ain’t Dead Yet! April was definitely the month for particularly nasty conferences in Auckland, As well as the “health sector summit," (see “Theres Money in Misery," in this issue) there was also the "New Zealand Investmant Conference," held in the Pan Pacific Hotel, from April 7-10. Subtitled "An Investment for the Future," it was presented by Buttle Wilson, and merchant bankers Potter Warburg and'$.G. Warburg. The principal sponsors were the BN2, Briorleys, Fletcher Challenge, and Telecom. "Associate Bponsora” were Air Now Zealand, Magnum, and the hotel itself. "Contributing sponsors" were American Express, Avis NZ, Canon NZ, Telerate, and TNT Worldwide Express. Essentially it was a glorified auction, aimed squarely at multinationals and Nz big business, All the big guns wore rolled out - Ruth Richardson was the opening speaker, followed by Don Brash. Bolger was the keynote speaker on the second night, with Electricorp chairman, John Fernyhough, on at breakfast the next day; Hugh Fletcher for iunch; and Brierley’s Paul'Collins for dinner The final session wae entitled "New Zealand ~ The Investment Opportunity.” ‘there were fieldtrips to places like Carter Holt Harvey, Fletcher Challenge, Goodman Fielder Wattie, Lion Nathan, and Fisher and’ Paykel. There were presentations on subjects like privatisation, and seminars run by a large number of participating companies And just to show their cultural sensitivity, the organisers started with a powhiri and finished with a hangi. Perhaps a tangi would have been more appropriate. It also featured a regular roster of MPs, “union officials," and media hacks, like Colin James CAFCA was very pleased to support protest action at this cattle market. The Auckland Unemployed Workers’ Rights Centre invited the unemployed, beneficiaries, students, and unionists to join them outside the Pan Pacific for the whole week. Their leaflet was headed "stop the Sale of the Century... Help Us Tell the Government and Business Roundtable.... New Zealand Is Not For Sale....The purpose of the conference is to focus on the opportunities for foreign investors resulting from the deregulation of the NZ economy....We do not want any more of our resources sold off. We do not want a low wage, devnionised economy. We do not want to live ina society where mass unemployment is blandly accepted as an economic necessity. We do want a chance to rebuild our country in a way that will enable all our people to have access to decent work, housing, health and education... Lets show Ruth Richardson and her forty thieves of the Round Table how we feel about their attempts to auction off what’s left of New Zealand’s resources Foreign investment means that the profits from our labour and from our country’s natural resources are taken overseas. We have already lost control of much of our land, forest and fisheries Tt is time to say enough is enough*THERE’ S MONEY IN MISERY The scorched earth policy started by Roger the Hun has been practised with accelerated intensity by the Terrible Twins, Jenny and Ruth. Possibly the only difference between National and Labour, when it comes to devastation,is that the Tories don’t bother trying to coopt the central union leadership into the process. They( correctly) regard them as an irrelevance to be ignored - after first being disembowelled. If we are to believe the maunderings of insufferable bastards like unctuous Upton, then all this pain is for our own good. We have to learn to stand on our own two feet. We mightn’t be able to afford shoes, but never mind, we’ll get used to it. Simple Simon even states that the principal reason for introducing health user part charges is not to generate revenue for the Government, but to make us think carefully aout the cost of health services before we wilfully go out and have that heart attack. This commendable moral dimension doesn’t seem to be uppermost in the minds of the vultures circling the carcass of the public health system, in the wellfounded expectation of making lots of money out of these so-called reforms. There is a major element of foreign capital involved. The Press (7/1/92) ran a fascinating report headed "Health sell- off foreseen." It consisted of a statement by Dr Peter Roberts, spokesman for the Public Health Coalition. “Encouraging debate about core health services is a smokescreen to cover the Government’s real direction towards privatisatio: he public h__care system... Dr Roberts Said the Government also seemed to be assuming there was an alternative to public hospital care, which was not the case in many circumstances. He said the Government seemed to be taking its advice from a group of people from the ‘New Right’ who believed the individual should bear the risk of injury and/or illness. A similar view was reflected in changes to the Accident Compensation Corporation Act, he said.” "A consultancy group, C.S. First Boston, which employs several former Treasury staff, had won 9 of 15 contracts to help implement the health reforms, Dr Roberts said. | The health changes also heavily reflected the views of an American malpractice specialist, Dr Patricia Danzon, who was commissioned by the Business Roundtable last year to draw up a scenario for New Zealand’s health reforms, he said”. "The coalition also says a ‘health sector summit’ being organised by a private company in Auckland in April shows the private health sector is gearing up to make money out of the health reforms... Theconference, to be held from April 6 to 8, is been organised by AIC Conferences, which is part of the Euromoney Company, a worldwide group specialising in financial topics.” "Some of the topics listed include surviving and profiting in ‘today’s business environment,’ effective property management, hospitals as a business, consumer reaction to the changes, managing the impact, INVESTMENT OPPORTUNITIES FOR ‘THE OVERSEAS PLAYER’, and the interactions between the public and private sectors." Speakers at the conference include Roger the Hun and fellow gravediggers from the good old days, such as Helen Clark. Just to make sure the hoi polloi don’t get in, it cost $1518.75 to ttend, Dr Roberts said many of the topics were jargon for how to make money out Of the health system" (all emphasis ours). You're an extremely good diagnostician, doctor. CAN’T PAY...WON’T PAY..,DON’T PAY TWICE If you want to join the fightback against the destruction of the Welfare State in general, and tax funded public health in particular, then join any of the campaigns against the health user part charges. Join any group that is opposing it, or even better, join the civil disobedience campaign that advocates annoying the bureaucracy by delaying payment, or confronts it head on by refusing to pay In Christchurch, CAFCA has been actively involved with the Can’t Pay, Won’t Pay, Don’t Pay Twice campaign since its inception in January. We have been represented at all the meetings, pickets and marches, and we urge our members to get involved. It can be contacted c/o the Canterbury Health Coalition, Box 884, Christchurch, phs (03) 3588495/796970, Donations welcome. If you decide to join the resistance, then it is in your own interest to find out about your position in civil law, But don/t be frightened of the bastards. UNITE AND FIGHT.THIS AFFECTS EVERYBODY!Revealing GATT The leaflet below was published in September 1991 by the coalition GATT Watchdog, of which CAFCA is a member. As the fax following it indicates, it was obviously referred to the Minstry of External Relations and Trade (MERT) for comment by Federated Farmers. Honoured by the seriousness with which we were being taken, we duly made an unsol- icited reply to MERT (reprinted after the fax). No reply has yet been received. However, at the time the letter was sent, it was also released to the news media and various interested groups with a brief press statement. This resulted in considerable coverage on national radio, though deafening silence from most newspapers. The idea that GATT has a side that is bad for us cannot be acknowledged in many quarters. The great GATTs-by! ‘There is increasing concern among a number of people, that the effects of the General Agreement on Tariffs and Trae (GATT) may not be the preconceived idea of many people. These people fail to recognise that GATT wil attect every aspect of our lives. GATT is about more than selling our dairy products to Europe! It is about selling -ontrt over our: labour, education, health care, legislation, environment, natural resources, land rights, sovereignts Up until the second world war, most international trade was through bilateral agreements and trade treaties In 198% the dominant industrial nations (those responsible for most of the worlds trade) signed the tirst General Agreement on Tariffs and Trade (GATT). At this time many of these industrialised countries still had control over colonies 1 the South Inthe past GATT has been mainly concerned with setting rules for trade, and pressing national governments to reduce barriers to trade. The most recent round of negotiations have included powertul transnational corporate interests The measures promoted by GATT, have clearly strengthened transnational corporations’ control over the negotiation process. We are not talking about free trade! We are talking about freedom from restrictions to make 1 tor transnationals to trade, National Sovereignty “The measures under negotiation at the Uruguay round reach deep into the arena of national sovereignty They include giving transnational corporations the right to “national treatment"’ and the “right of establishment” in other countries. ‘*National treatment’” means the host government must treat foreign investors as if they were domestic ms, The “right of establishment” allows transnationals to set up shop or acquire existing businesses without incerference from government. These measures severely curtail peoples ability to use government to direct national development. So legislation governing finance, foreign investment. patents, health services, education, social services, culture, media, professional services, agricultural and development programmes would have to be altered (o implement GATT measures. Governments not amending domestic legislation to GATT specifications. would face retaliation against their exports The sale of our assets to overseas interests has been held up through Maori injunctions. Under GATT. these decisions would be overruled, which is contrary to the Treaty of Waitangi. Legislation governing tobacco advertising would also need to be repealed. GATT includes rules that gives advertisers the treedom to advertise anything, anywhereFood Security ‘The Economic Commission for Atrica, considers the viability of Africa to he dependent on its ability 10 Feed sis own people, from its internal resources. A free trade policy for agriculture, would make it more difficult for developing countries to improve their food self-reliance, GATT wouid force developing countries to abandon barriers and subsidies needed to support domestic agricultural production. These controls are needed in many developing counties to maintain farm incomes and raise production to self-sufficiency levels. Present staple food producers need protection from surplus cereals dumped on local markets by the U.S. and European Community Such dumping drives down prices for domestic staples. This makes it difficult to improve food seit-reliance While GATT will be largely favourable to our agriculture, it will also have some negative effects. Our farmers would 1no longer be able to use “supply management’”, Our fishing industry would need to he reorganised. as fishing quotas would be seen as a subsidy Intellectual Property - Patents During the 1970's the UN suggested that the international convention on patents be changed to help the development of appropriate technology and the transfer of new technologies to the Third World. GATT is a complete turnaround ‘Theproposal to regulate intellectual property would enable transnationals to patent goods and then charge to uve them So, transnational corporations could patent seeds that are indigenous 10 Third World countries, and then charge the countries trom which the seeds originated for the right to use them! Instead of being able to produce generi: drugs to meet basic health needs of the poor majority, developing countries, and ours, would have to pay huge royalties and raise health charges. These are policies a debt burdened South can ill afford. To advocate free trade and then move (0 protect your patents seems hypocritical Environmental Protection ‘The use of export controls (0 protect natural resources is widely used by smaller countries, The banning ot native timber chips exports was aimed to protect South Island beech forest from Japanese paper manufacturers Although ‘ve may justify this ban on environmental grounds. under GATT, this move would be seen as protectionism GATT also proposes to harmonise consumer safety standards between countries. This eliminates the possibility that corporations would have to meet stiffer local standards, or improve their standards. It is also proposed to move the standard setting processes from local or national bodies to an international commission, This makes the decision making process inaccessible to people in their respective countries. In many cases this will mean safety standards will be lowered. For example, the United Nations agency Codex Alimentarius, allows 50 times the DDT on bananas and peaches than the U.S. Food and Drug Administration will permit. Conclusions While countries like ours would benefit by taking out patents for our agricultural expertise, or easter avcess (0 the European market (in theory), it means increased prices tor less developed countries. Much of the rhetoric we have heard in the media has emphasised how good GATT will be for our agriculture. It is what we haven't heard thar should concern us. Many of the policies that have been proposed in the Uruguay round. will have a negative effect. They seem to vater tor transnational corporations in the North, at the expense of developing countries in the South. Parts of GATT are contradictory. Do we fully understand how GATT will effect us? Do we understand the likely etfects on developing countries? 1s GATT really in our interests, or is it serving the needs of transnational corporations? Is free trade tair trade? [f we can answer “yes” to these questions, we might be in a better position to assess the merits of GATT Sources. Catholic Institute for International Relations, Submission to Director General of GATT 20 July 1991 Economic Justice Report, Volume If Number | March 1991. GATT Watchdog Group, Notes trom a Meeting 29 August 1991, Alan Marston, Drive to Destruction? greenstone July August 1991 For further information contact GATT Watchdog Group P.O. Box 1905 Christchurch 1 Produced by Christian World Service-9- GATT & THE DIRT FROM MERT CAFCA has been actively involved in setting up the Christchurch based GATT Watchdog group, which organised the extremely successful December 1991 public meeting on the issue (speakers were Sid Jackson, Jane Kelsey, Rob Steven, and David Small). The group has remained active since then, waging a media and publications battle with the vested interests in this country that argue that GATT is the best thing since sliced bread. This has obviously got up the nose of some of those vested interests and they’ve decided to counter punch. Federated Farmers secured a copy of the group's "Great GATTsby" leaflet and sent it to MBRT ( Ministry of External Relations and Trade) for comment . MERT responded with an undated and unsigned fax to Rob McLagan of Federated Farmers, This is the text: SUBJECT GATT: WATCHDOG GROUP. OVERALL COMMENTS - Paper is highly biased and selective in use of examples and references; - It takes many aspects of UR(Uruguay —_ Round) negotiations out of context. Without the context it will in fact be difficult for people to ‘assess the merits of the GATT’ in a balanced way (p.3) - Paper asks (p.3) whether ‘GATT is really in our interests’, but almost ignores potential benefits of successful UR to New Zealand economy. This should surely be a critical factor for New Zealanders to take into account if they are to make a balanced assessment of whether the GATT is in our interests; - Authors appear to understand the GATT and the UR poorly. SPECIFIC COMMENTS (A) SOVERBIGNTY (p.1) The paper suggests various undesirable consequences of a successful UR services result, but in respect of NZ these are covered by NZ/s services negotiating position, eg social and health services. (B) FOOD SECURITY (p.2) The paper’s argument here is internally inconsistent and in fact does not seem to be aware of the key interests that the developing countries themselves have pursued in the UR. The thinking underlying the comments on food security (egao ‘controls are needed in many developing countries to maintain farm income’) is in fact out of step with current thinking in a growing number of developing countries. Many have rejected import substitution policies because they have not worked. Instead most Latin American countries, Mexico and some North African countries are moving towards free market-oriented policies. - _ Paper recognises dumping of surplus (subsidised) US and EC cereals has been a major disincentive to LDC (Less Developed Country) production; but earlier in same para criticises GATT for seeking in the UR to reduce import barriers and subsidies! = WWCs with few exceptions in fact strongly support subjecting agriculture to standard GATT disciplines. Many have a comparative advantage in agricultural production and want to be able to benefit from this -‘trade not aid’ as Kenneth Kaunda of Zambia said. - Majority of members of Cairns Group are LDCs; - The Harare Communique, issued by the October 1991 Commonwealth Heads of Government Meeting, which is heavily dominated by African and other LDC countries, supported liberalisation of agricultural trade. The relevant section reads: Heads of Government ‘stressed the critical importance of a successful, substantive and comprehensive outcome to the UR, laying particular emphasis on achieving a marked reduction in trade barriers and other distortions in agricultural markets. They drew attention...to the great contribution which freer trade and its influence on financial flows can make to sustained and sustainable development’; - _If the GATT is inimical to the interests of developing countries, why are so many seeking to join the GATT? - It is true that commodity prices may increase following a successful Round (p.3). But this will benefit economic development in many LDCs, as well as being of fundamental importance to New Zealand; = For net-food importing countries, current low world food prices are artificial. They depend on massive subsidies from OECD taxpayers, This will not continue indefinitely. Moreover dumped commodity surpluses do not assure ‘food security’ for nett food importing LDCs because the surpluses and low prices can be eliminated overnight as a result of essentially bureaucratic decisions in Brussels and Washington; - There is more food security in an undistorted world market in agricultural products. This is what NZ and the Cairns Group are seeking.-1e (C) INTELLECTUAL PROPERTY - The paper’s arguments on pharmaceuticals fail to acknowledge that no new lifesaving drugs will be produced unless the companies producing them can see an adequate return on the very large investments required; = New Zealand supports a strong TRIPS (Trade Related Intellectual Property rightS) agreement both for our own interests and as an important part of the overall balance of the UR package. The fact is that the EC and US will not give up current agricultural policies - unless they ‘gain’ Somewhere else in the negotiations. - Nevertheless, New Zealand takes a similar view to other ‘moderate’ countries (Hong Kong, Canada, Australia) on parallel importing and compulsory licensing. (D) ENVIRONMENT Article XX of the GATT includes exceptions covering, among other things, protection of public morals, health, prevention of deceptive practices, conservation of exhaustible natural resources. The only requirement is that national measures are not disguised trade restrictions and do not arbitrarily or unjustifiably discriminate among countries; (E) GENERAL POINTS Paper makes numerous factual errors, eg: Page 1 = ‘Transnational corporations do not have ‘control over the negotiation process’; = _New Zealand’s position on services does not include ‘health services, social services’; - _ Legislation governing tobacco advertising would not need to be repealed; ~ GATT does not give advertisers ‘the freedom to advertise anything anywhere’; - Fishing quotas are not seen as a subsidy ( although they may be a NTM - Non Tariff Measure); 7 New Zealand farmers simply have no need to use the GATT’s supply management provisions, and these provisions add to the distortions in world agricultural markets that NZ is seeking to remove."+12. The following was sent by GATT Watchdog to the Ministry of External Relations and Trade (MERT) in a lester from Bill Rosenberg requesting commens: Reply to MERT letter to Federated Farmers re GATT 1. Overall Comments MERT accuses the GATT Watchdog (GW) paper of being biased and selective. GW was formed in response to the highly partisan view of GATT being fed to the New Zealand public by the Government, MERT and Federated Farmers. The public is largely unaware that there is anything but good that is likely to come out of the Uruguay Round. Most have the impression that the worst that could happen is that the Round should fail. GW is pointing out that the gains to our farming sector in fact will be bought at a cost. The well-being of New Zealanders and our ability to take actions in our own best interests - our sovereignty - will be significantly curtailed by the proposals in the Uruguay Round. Many Third World countries, while making some gains, will on balance lose even more. It is not clear a. To what GW publication the MERT letter refers; we assume it is to our leaflet, “The great GATTs-by!". b. How the letter arose and at whose instigation; ¢. Its date and author, and hence its official standing. GW make the general comment that MERT appears to be overly parochial in its replies to our points, GW includes International Development groups who see the effects of GATT from an international perspective - in particular the effects on people in develop- ing countries. Some of our poinis are aimed at showing the negative effects on New Zealanders. Others, while acknowledging there may be positive effects for New Zealanders, may be disastrous for communities in other countries. ‘The MERT letter and any original comments by GW may be affected in details by the latest Dunkel proposals, to which we do not have access. However, we believe the following reply retains its validity. 2. Specific comments a. __ Sovereignty The MERT reply to GW’s concerns regarding sovereignty is simply to say that they are "covered by NZ’s services negotiating position.” ‘That they are covered by the government's negotiating position does not negate GW’'s concern, NZ is a very minor player in the negotiations. ‘The principal negotiations are between the European Economic Community (EC) and the US, which have common interests in many of the areas that will adversely affect the sovereignty of this country and many other small countries. Their main disagreement is in the area of agricultural trade, The likelihood is that if agreement on agriculture is reached between these two major parties, the rest of the world will be presented with a take-it-or-leave-it package deal covering other issues. ‘These other issues may well be used as bargaining chips between the US and EC to Teach an agreement on the ageoulnwe ine, Our negotiating position will be largely irrelevant. ‘This interpretation is corroborated by NGO observers at some of the talks who com- mented on the dominance of the US and EC in the negotiating process’. It is also-13- acknowledged in the MERT letter itself where it concedes (p.2) that New Zealand has to support a strong Intellectual Property Rights (TRIPS) agreement because otherwise the EC and the US will not give up "current agricultural policies": the EC and US must gain" somewhere else, b. Food Security Firstly, MERT criticises GW for being “intemally inconsistent” in its thinking on food production, As an example it contrasts GW criticism of US and EC subsidies to its Criticism of "GATT for secking in the UR [Uruguay Round} to reduce import barriers and subsidies! [sic]. MERT’s unquestioning advocacy of "free market-oriented" policies has sadly blinded it to the purpose of economic protection mechanisms. They are to protect the weak against the strong. It is perfectly consistent to deplore the use of subsidies by the strong US and EC economies on the world market while defending the rights of the weaker, less advanced countries to protect their industries ‘What GW fears is that if protection of weaker economies is not permitted under GATT, communities in developing countries that are based on agriculture will be unable to survive in competition with other more efficient producers. Whole communities will be destroyed. Hundreds of thousands of people will be forced either to live in poverty in the cities or work as ill-paid labourers on farms producing cash crops for export. This will accelerate a trend that is already well-known in these countries. However, the argument over protection is not limited to agriculture. New Zealand 1s currently’ suffering the effects of having large parts of its manufacturing industry destroyed by removing protection. Protection should remain a permissable option for countries of our small size and economic strength. Secondly, MERT claims that this advocacy of protection is “in fact out of step with current thinking in a growing number of developing countries. Many have rejected import substitution policies because they have not worked.” MERT says "LDCs {Lesser Developed Countries} with few exceptions in fact strongly support subjecting agriculture to standard GATT disciplines. Many have a comparative advantage in agricultural production and want to be able to benefit from this - "trade not aid’ as Kenneth Kaunda of Zambia said." It also quotes the membership of the Caims Group ("the majority are LDCs") and increasing LDC membership of GATT. GW does not dispute that the agricultural sector of this country, as one of the world’s most efficient agricultural producers, will benefit if world trade in agriculture is freed up. So will the export sectors of many LDCs. Those are the interests that are repre- sented in the Caims Group. It is not logical to go on from this to draw the conclusion that general freeing up of trade, intellectual property rights, and investment will be beneficial to each of these countries as a whole. The debate is of course closely bound up with the question of whether "free-market" policies are a viable way to develop a smaller or weaker country. MERT claims as evidence that “a growing number of developing countries" are rejecting protectionist policies, and are joining GATT. GW’s response is that many, probably most, of these countries are being forced into such policies because unfair trade and investment practices, coupled with, in many instances, corrupt governments, have led these countries into desperate indebtedness. In such situations, their policies are largely dictated by their creditors, such as the IMF, World Bank, US Government and private banks, all of which have an interest in supporting free-market policies. Roll-over of debts ‘and new loans are likely to be impossible to obtain without such a change in-44- policy. This does not prove that such policies will work in the interests of the people of those countries. Take the example of New Zealand, It has been represented at the Uruguay Round of GATT negotiations by terminally unpopular governments following radical free-market policies. The best that is being said of these policies is that they are as yet unproven; many New Zealanders will say they are disastrous. ¢. __ Intellectual Property GW has pointed out that proposals for GATT agreements on Trade-Related Intellectual Property (TRIPS) will remove the ability of New Zealand and other countries to challenge monopoly practices by pharmaceutical companies. It will make it very difficult to produce cheaper copies of drugs ("generics") to force prices down. MERT makes the extraordinary claim that "no new lifesaving drugs will be produced unless the companies producing them can see an sdequate return on the very large investments required.” This unfortunately follows the pharmaceutical companies’ tine uncritically. ‘There is considerable research which shows that most new drugs are not discovered by the pharmaceutical companies themselves but in research institutions, that most pharmaceutical company research is devoted to finding "new" drugs that are merely a close copy of known drugs but which avoid patent laws, that pharmaceutical ‘companies spend unusually large proportions of their sales revenue on sales promotion, and that their prices differ widely from country to country to suit the market. This line is aimed at preventing the sale of much cheaper "generic" copies of drugs. ‘There is an interesting internal contradiction here between MERT’s advocacy of a free market in other areas, but protection of the unreasonable monopoly rights of pharma- ceutical companies. It also undermines recent attempts by our own government to import brand-name drugs from cheaper sources than could be obiained from local branches of the pharmaceutical companies, and to make increased use of generic drugs. These attempts foundered after veiled threats of trade reteliation from the US government. GW remains concerned that the NZ Government is willing to allow a restrictive agreement on Intellectual Property Rights in order to make gains in the agricultural arena, 4, Environment ‘The MERT letter quotes from Article XX of the GATT which, it says, allows excep- tions to its free trade rules covering, among other things, the protection of "human, animal or plant life or health", and conservation of exhaustible natural resources. The only provisos are that these should not be disguised trade restrictions and should not discriminate among countries. This is a disputed interpretation of Article XX. The protection of health provisions were intended to protect “quarantine and other sanitary regulations". Steven Shrybman, counsel for the Canadian Environmental Law Association, states that "it is a fundamen- tal tenet of legal interpretation that the meaning and application of an agreement be determined by the intent of the parties at the time that it was concluded or amended.” ‘The conservation provision has yet to be tested. Farther, even if these provisions were to be taken at face value, they would by no means cover all environmental concerns.aoe But most importantly, GW points out that the environment can be a casualty of free trade rules despite any protective provisions. For example, it is reported that Japan has introduced a GATT proposal that would declare impermissible export bans on raw logs. Such bans are a useful way to protect native foresis. They can have the dual purpose of protecting the foresis while allowing small-scale local use that encourages further processing of the timber, Even if Japan's proposal is not accepted, importing countries may claim that a log export ban is not for conservation purposes but for economic protection (against GATT rules). It will often be difficult to draw the line - certainly in the legal system of another country threatening trade retaliation. GATT proposals for equal teatment of foreign and local commercial interests (“National treatment") will make such schemes virtually impossible, ‘The proviso that environmental protections should not be a "disguised trade restriction” hhas far-reaching implications. It will lead towards international standards in environ mental and health protection which will set weak levels of environmental regulation. Any national regulations that are stronger than the international standard could be regarded as a "disguised trade restriction” and be subject to trade retaliation. GW has litle faith that environmentalists or consumers will be allowed sufficient influence in forming such standards: instead they are likely to be strongly influenced by transnational corporations which have a heavy financial interest in keeping standards weak & General Points MERT claims “numerous factual errors". In fact the examples they give are mainly differences in imerpretation The role of Transnational Corporations While transnational corporations (TNCs) may not have direct control over the negot ation process in this country, the effect of the far-reaching changes being proposed in the Uruguay Round is quite transparently designed to make international wade and investment less controlled and more profitable for TNCs. This is confirmed by the widely acknowledged support that transnationals are giving to the negotiations‘, for example through the US-based business lobbying group, the Multinational Trade Negotiations Coalition. ‘The Intellectual Property Committee (IPC), a coalition of thirteen major U.S. companies including IBM, DuPont, General Motors, Merck and Co. and Pfizer, claims to have “played a key advisory role, at USTR’s [US Trade Representatives} request, in developing the official US proposal on intellectual property that the US Government tabled before the GATT TRIPS [Trade-Related Intellectual Property} working groups in October 1987." It says its “close relationship with USTR and Commerce has permitted the IPC to shape the US proposals and negotiating positions during the course of the negotiations." A US agricultural trade negotiator at GATT, Daniel Amstutz, who drafted and presented the US plan for agricultural trade, is @ former senior executive of one the world’s largest food trading corporations, Cargill’ ‘While negotiators may argue that what is good for the TNCs is good for the rest of us, GW cannot agree. Services MERT says "New Zealand’s position on services does not include "health services, social services’”. No such claim was made by GW. However it seems a major weakness in the government's consideration of the effects of GATT if it did not consider its direct and indirect social impacts, We would welcome the release of the New Zealand Position for public scrutiny.-16- Advertisers and Tobacco advertising While we concede that GATT does not explicitly give advertisers "the freedom 10 advertise anything anywhere", an example from Thailand illustrates the pressures that may be brought. Thailand has a state tobacco enterprise, the Thailand Tobacco Monop- oly which produces and sells all cigarettes in the country. Foreign cigarettes cannot be sold except in duty-free shops. Thailand, like New Zealand, also has a ban on cigarette advertising for heslth reasons. Several large US tobacco companies have asked the US Government to impose trade sanctions against Thailand for “unfair wade practices" They want access to the Thai market. Part of their complaint is that the advertising ban should be lifted because the long-standing monopoly of Thailond’s national tobe2co company would give it an unacceptable advantage over imported products. They argue that public health considerations are secondary.’ During the New Zealand debate over our cigarette advertising ban, the advertising industry attempted to argue against it on the grounds of "freedom of advertising.” It is an argument, relating to commercial "freedoms", that closely parallels the philosophy of GATT. Fishing quotas MERT correctly says "fishing quotas are not seen as a subsidy (although they may be a NTM [Non-Tariff Measure))". Whether they are seen as a subsidy (and our farming sector has long argued that the NTM of import controls has been effectively a subsidy to manufacturers) or as a NTM, they are still at risk and subject to trade retaliation Particularly at risk are any restrictions as to New Zealand or Maori ownership of the quotas: GATT may label those as discriminatory. Supply management MERT claims "New Zealand farmers simply have no need to use the GATT’s supply management provisions." Yet our producer bosrds have in effect been practising local supply management for decades: apple and pear sales are @ remaining exampie. More importantly, the Dairy Board, Apple and Pear Marketing Board, Kiwifruit Authority, and ‘Wool Board all either have export monopoly rights granted to them and/or act to manage the supply of produce for export. The Minister of Agriculture has recently been arguing the need for similar errangements in the Meat industry. Perhaps local supply management can he dispensed with, though it will weaken the ability of the Apple and Pear Board to manage exports. But it will be interesting to sce if the producer boards’ powers can survive claims of unfair trade practices under tightened GATT provisions ‘This is an instructive subject on which to conclude, because it shows up the internal inconsistency and double standard of the GATT negotiations. It is estimated thar 30- 40% of world trade is now “intra-firm" trade: trade between branches of single TNCs"? ‘This wade largely escapes market forces: prices are internal ones, set to suit the TNC's bottom line. Such artificial transactions, may also hide supply management (practiced by many firms in 2 effective monopoly position), price collusion (such as that practiced by the oil companies) and many forms of unfair trade practices. Yet GATT has nothing to say on this: it is not government-regulated and it is taken to be beyond the control of GATT. Individual nations have been singularly unsuccessful in regulating such behav- jour, and subject to threats of trade retaliation when they have tried (such as in the case ‘of pharmaceuticals), GATT therefore is heavily biassed in favour of the economic powers where most of the TNCs are owned - the US, EC, and Japan. Smaller economies like New Zealand, must use such trade tactics (as the Dairy Board and Apple and Pear Board have done with outstanding effect for our farmers) to survive -and so must do it by government regulation.7- We will be subject to GATT-ordained trade retaliation while TNCs continue unfair practices unhindered. Even the remedies available under GATT favour the powerful. Trade retaliation is a far ‘stronger weapon in the hands of the powerful than of the weak. As New Zealand found in the Rainbow Warrior affair, threats of trade retaliation by a great power like France take real sacrifice to withstand. But trade sanctions by New Zealand against France, the US or Japan would have all the effect of a flea on an elephant - and risk counter- retaliation, Free Trade is not Fair Trade. GATT Watchdog is a coalition supported by Trade Aid, CORSO, the Development Education Trust, New Internationalist, Christian World Service, Catholic Commission for Justice and Development, and Campaign Against Foreign Control of Aotearoa. lis postal address is P.O. Box 1905, Christchurch. 1. For example, p17, Multinational Monitor, November 1990, an Interview with Martin Khor Kok Pon "The Third World countries have very few diplomatic staff in Geneva compared 10, say, the United States, which has a very big, knowledgeable staff. Those diplomatic staff of the Third World in Genova have to cover not only GATT but also all other inrnational agencies, such as the World Health Organization, the United Nations Center for Trade and Development, the Intemational Labor Organization and so on. [lt is difficult) even to follow ‘what is going on within the GATT negotiations because you may have three of four sub-meetings going on in GATT on the same day. It is beyond the capacity of Third World diplomats.” ‘Similar comments were made by Jane Kelsey, an NGO observer, at a public meeting in Christchurch, 20 November 1991. fecolonization and the Third World: For example, p22, Listener & TV Times, 29 April 1991, "Sweetening the Pills", by Gordon Campbell. 3. p33, The Ecologist, Vol 20., No. 1, January/February 1990, “International Trade and the Environment: an environmental assessment of the GATT", by Steven Shrybman, counsel for the Canadian Environmental Law Association. Shrybman quotes GATT. Analytical ‘index, Noes on the drafting, interpretation and_application of the Adicles of the General Agreement, (ind Edin), Geneva, 116. 4. For example, pts, Finance and Development, June 1991, (publ. IMF/World Bank), "What 1s at Stake in the Uruguay Round?", by H. B. Junz and Clemens Boonekam; . virtually for the first time, businessmen world-wide are making a concerted effort to voice their interest in not allowing the talks to be derailed." 5. 8, Multinational Monitor, November 1990, “Patent Plunder: TRIPping the Third World", by Robert Weissman 6 p30, Rongead Infos, vol 88, 2-3, "The International Rice Trade and Self-Reliance in Food in Asia and Africa." 7. 212, The oologist, Vol 20., No 6, November/December 1990, "Free Trade and Ill Health How the US is Using GATT to Promote Cigarettes", by Pam Simmons. 8p 74-75, "Global Companies and Public Policy - the Growing Challenge of Foreign Direct Investment”, by DeAnne Julius, Royal Institute of International Affairs/Pinter Publishers Lid, London, 1990, 9. p160-161, "Transnational Corporations in World Development, Third Survey", United Nations Centre on ‘Transnational Corporations, United Nations, New York, 1983.-18- INTENSIFYING ECONOMIC EXPLOITATION (This is an extract from a chapter of Third World War, published by Christian Conference of Asia, 1992. Copies available from CORSO, Box 1905, Christchurch.) - David Smal The overriding aim of imperialism remains, as it always has been, to maximise capital accumulation. This imperative requires that all impediments to the free international movement of capital be reduced or eliminated. The two primary obstacles to the achievement of this goal are: national policies which protect local industry from foreign competition; and grassroots resistance to the exploitative practices of transnational corporations. In recent years, imperialist powers have increased their efforts to minimise these obstructive factors to enable them to intensify the process of economic exploitation. One of their main strategies for achieving this is to push for a global regime of free trade. This drive is the basis of the US and broader imperialist agenda for the Uruguay Round of the General Agreement on Tariffs and Trade (GATT). It is also being pursued in incremental stages through the encouragement of regional free trade agreements, such as the North American Free Trade Agreement (NAFTA) and the recently mooted ASEAN free trade area (AFTA). For Third World people, the effect of this process is ever increasing poverty and powerlessness. This article examines some recent developments in imperialist strategy in the Asia-Pacific region, I analyse some of the forces which are dictating an increasingly cooperative economic relationship between the two regional superpowers, the US and Japan. This is followed by a discussion of the role of the Asia Pacific Economic Cooperation (APEC) grouping, a regional forum which is becoming a conduit of the free trade agenda of the US and Japan. US-JAPAN RELATIONS: The Imperative of Conscious Coordination Much is made of the economic rivalry and tension between Japan and the United States. It is becoming increasingly clear, however, that the economic forces which bind these two imperialist powers together are considerably stronger than those which separate them. At the July 1991 meeting between US President George Bush and the then Japanese Prime Minister, Toshiki Kaifu, both leaders emphasised this common purpose. Kaifu noted that the two countries, “sometimes have different interpretations of their (shared) ideals and different approaches in tackling problems," but stressed that they should not "focus on each others differences but rather on economic goals". Bush acknowledged that elements within each country continue "bashing" the other, but commented: "To those in either country that might harbour concerns about the other, let me simply say this. - 19 - relationship is big, it’s broad, it transcends any one issue or another”. This message was reinforced in November 1991 by US Secretary of State, James Baker. Ina lecture on "US-Japan Global Partnership in the Pacific Community," Baker called on Japan to exert more global leadership, not only on economic issues, but also in such areas as "building democracy, respect for human rights (and) stopping the proliferation of weapons of mass destruction." He emphasised "America’s destiny lies across the Pacific as well as the Atlantic and we will only be successful through a full partnership between Japan and the United States." Four days before the Baker speech,a think tank consisting of American business leaders and former cabinet secretaries made a call for the US and Japan to draw up a “Pacific Charter" to govern the relationship among Pacific nations in a post-Cold War world. The Commission on US-Japan Relations for the 21st Century said the two countries should develop a new vision for their security ties. The group said: "With communism in ruin and economics dominating the world agenda, the set of ties between Japan and the United States emerges as critical, not only to the two countries, but to the rest of the world." The tension that has clouded US-Japan economic relations hes given the appearance of a deep antipathy between the two powers. Tt usually takes the form of elements within the US camp accusing Japan of unfair trade practices,such as forcing their own goods onto foreign markets while denying others entry to the Japanese domestic market. However, there is no evidence of an organised effort to keep US goods out of the Japanese market, On the contrary, there is every indication that Japanese corporate leaders wish to accomodate US demands for increased access, but find it genuinely difficult to do so. Much of the anti-Japan sentiment in the US (besides that attributable to underlying racism and unhealed wounds dating back to the Second World War) stems from a misunderstanding of the structural peculiarities of Japenese capitalism, particularly its company-specific distribution system, which make it very difficult for the goods of foreign companies to gain entry tu the Japanese domestic market. The Japanese distribution system is one of the problems nighlighted by the Strategic Impediments Initiative (S11), an attempt by the two governments to address the fundamental structural obstacles to harmonious bilateral economic relations. For the United States, “Fortress America" 1s no longer an option. With its domestic economy dependent on foreign, particularly Japanese firms; with the number of mergers between US and Japanese corporate giants; and with US-based multinationai corporations relying on foreign subsidiaries to generate around 30 to 40 percent of the parent company’s income, the US is wedded to the path of global deregulation. The economic forces which are pressing the US and Japan together are considerably stronger than the tensions which divide them. As right wing analyst Raymond Vernon observes: “neither country= 20- (the United States or Japan) can inflict great harm upon the other without imposing great costs upon itself in the process." Kent Calder agrees: "The US and Japanese political economies are more deeply and fatefully linked with one another than ever before. The stability of the emerging US-Japanese binational economy also is becoming increasingly central to the stability of the global economic system. Interdependence is inevitable, and brings with it the imperative of conscious coordination.” This theme was emphasised in a recent statement by Takakazu Kuriyama, the then Japanese Vice-Minister of Foreign Affairs, who suggested that "the industrial democracies of Japan, the United States and Western Europe must cooperate to assume responsibility in constructing a new international order for the 1990s" and that “the era where the United States could by itself support the international political and economic orders is long past, and the key to world peace and prosperity rests in the cooperative structure of Japan, the United States and Western Europe." The urgency of improving US-Japan economic relations was stressed in a 1991 paper prepared by 21 US foreign policy experts. The group, which includes former cabinet ministers, senators and ambassadors and is headed by former Defence Secretary, Harold Brown, calls for a new, comprehensive Japan policy, It stresses that the goal of such a policy is not to "define Japan in adversarial terms and aim at containing Japanese economic expansion", but to strengthen a cooperative relationship. Another advocate of greater cooperation in US-Japan economic relations, Kent Calder, has expressed a concern that techno~ nationalism (arising from competition in high technology) might endanger the broader bilateral relationship. He suggests: irst, the two nations should consider an expanded range of joint cooperative research and development ventures with broader Social importance, in the environmental, life sciences and related areas. Second, the United States and Japan explicitly should encourage the emerging private sector tendency toward global strategic partnerships that transcend national boundaries in high technology; such partnerships naturally help to reduce narrow techno-nationalistic impulses. Third, both nations need to develop clearer, long range strategies for coping with and neutralising domestic opposition in both nations to cooperative defence research, development and procurement. APEC: Serving US-Japanese Interests Since the Asia-Pacific Economic Cooperation (APEC) forum was first convened in November 1989, it has become increasingly clear that it serves the interests of the United States and Japan more than those of the economically weaker member states of the region. APEC was founded on the principle of opposing protectionist trade blocs and promoting a liberalisation of global trading practices. The US and Japan, after earlier feigning a lack of enthusiasm for APEC, now appeal to it as an already established structure in order to undermine initiatives for other more protectionist forums of regional economic cooperation. In particular, they were disturbed by the December-21- 1990 proposal of Prime Minister Mahathir of Malaysia for the formation of a regional trading bloc, the East Asia Economic Grouping (BAEG) . The US opposes any hint of protectionism in Asia and wants all regional economic agreements to be made within the framework of APEC. APEC enhances the politico-economic influence of the US and Japan by serving as an institutional base from which they can continue to shape regional policies. Now that APEC is a going concern, all proposed alternatives are being measured against it. And there have even been suggestions that, despite the misgivings of some ASEAN countries, APEC 1s eventuaily likely to broaden its focus to include security issues and perhaps develop into a Europe style Conference on Security and Cooperation in Asia (CSCA). At APEC’s November 1991 meeting in Seoul, US officials declared that the grouping’s formal six point agenda was only the tip of the iceberg of what was actually going to be discussed. The US was also pursuing @ host of extracurricular activities, the main one of which was its campaign to force North Korea to open its nuclear facilities to international inspection. EAEG Relentlessly Opposed by US The US and Japan have long wanted to see the formation of a grouping like APEC. Their need for it has become even more pressing with the loss of the unifying value of the "Soviet threat." The importance the US attaches to APEC is revealed by the relentlessness of its apparently successful campaign against Malaysia’s proposed EAgG. Mahathir’s original idea was for EAEG to provide a mechanism for protecting weaker Asian economies in the event of the current GATT round failing and resulting in a global standoff between regional trading blocs. Malaysia’s fears were heightened by the high priority the US has been giving to the creation of a North American Free Trade Agreement (NAFTA). NAFTA, which is likely to be put in place before the end of 1992, groups the economies of the US, Canada, and the rapidly developing Mexico, with the stated aim of enhancing global free trade and not becoming an exclusive protectionist bloc. The membership of EAEG was to have comprised the ASEAN nations (Malaysia, Thailand, Singapore, Indonesia, the Philippines, and Brunei) plus Japan, South Korea, China, Hong Kong and Taiwan in other words, the APEC membership plus China, Hong Kong and Taiwan, and minus the US, Canada, Australia and New Zealand However, the EAEG proposal was met with reservations from within ASEAN, particularly because of Mahathir’s lack of consultation before publicly announcing his idea. Japan adopted a wait and see approach, not wanting to upset either its Asian neighbours or the US. But the US, excluded from the proposed grouping, declared its £irm opposition to the EAEG from the outset. The cool response to the proposed EAEG led to Mahathir modifying his plan to what he described in July 1991 as a "loose consultative forum comprising of countries in Bast Asia" which would be consistent with the GATT, Although ASEAN’s hesitancy,22 - together with the noncommittal response of Japan, made very unlikely the prospect that even the modified version of the EAEG would be established, the US intensified its efforts to destroy the idea completely. On September 23, 1991, US Trade Representative, Carla Hills, stated: “In our view, the Pacific rim,can best prosper by continuing to open markets and promote trade growth both inside and outside the region, and avoid risky and unpredictable schemes allegedly designed to enhance economic leverage". The day after Hills’ dismissal of EAEG, the Malaysian Prime Minister responded with a withering criticism of the US position. In a speech to the UN General Assembly, Mahathir attacked the permanent members of the UN Security Council for being “more equal than others," the Group of Seven industrialised economies for “adversely (affecting) the economies of others" and individuals and the media in developed countries who “consider it their right to tell us how to rule our country." He then raised the issue of US opposition to his EAEG proposal: "In East Asia we are told that we may not call ourselves East Asians as Europeans call themselves Europeans and Americans call themselves Americans. We are told that we must call ourselves Pacific people and align ourselves with people who are only part Pacific, but more American, Atlantic and Europeans. Mahathir said that EAEG was a way of giving voice to small Third World countries in GATT negotiations where meetings are monopolised by the big powers. EAEG was intended to serve as a forum for developing a common regional position on problems “caused by the restrictive trade practices of the rich," he said. “We are perplexed to find that this objective...is being opposed openly and covertly by the very country which preaches free trade," Mahathir added, obviously referring to the US. It was even more surprising, he continued, that there should be such opposition when the North American Free Trade Agreement (NAFTA) itself is being formed on the principle of the right of free association of sovereign nations. “Can it be that what is right and proper for the rich and powerful is not right or proper for the poor? One is tempted to suspect racist bias behind this stance." In the wake of this clash, the October meeting of ASEAN economic ministers further downgraded the Malaysian proposal. In the place of a formal grouping, the ministers agreed on forming an East Asia Economic Caucus (EAEC), a "non~institutional entity” in the form of a caucus within APEC. They also decided to form an ASEAN Free Trade Area (AFTA), which would see the progressive reduction of trade barriers within ASEAN over a fifteen year period. It initially appeared as though the US would not oppose EAEC, a toothless, watered down version of the Malaysian proposal safely= 23- contained within APEC, Hills believed that ASEAN fears had been allayed by her assurances that NAFTA would not be an exclusive trade bloc. Her reaction to BAEC was to remark dismissively that “a caucus is just a group for talking," In the lead up to the November 1991 APEC meeting, however, it became clear that the US would not be satisfied as long as any trace of the Malaysian proposal remained. US Secretary of State, James Baker, sent a memo to the new Japanese Foreign Minister, Michio Watanabe, calling on him to oppose the Mahathir plan. And a few days later, after arriving in Seoul, Baker reportecly glared across the table at his South Korean host and said, "Malaysia didn’t spill blood for this country, but we did!" Within days, Japan and South Korea each declared that they would not be part of EAEC, effectively spelling the end of even the diluted version of the Malaysian proposal. Sensing defeat and angered at falling victim to such an aggressive US campaign, Malaysia downgraded its representation at the Seoul meeting and Mahathir accused the US of becoming "a threat to the future of smaller countries". S_and Japanese Enthusiasm Concealed The current enthusiasm for APEC on the part of the US and Japan stands in marked contrast to their cool responses when the idea was first mooted by then Australian Prime Minister, Bob Hawke, in January 1989. While ASEAN nations, particularly Indonesia and Malaysia, were contemplating the proposa) and voicing concerns about the risk of the new grouping being dominated by Japan and the US, the two regional superpowers, taking care not to jeopardise the proposal by frightening off prospective members, adopted what has been called "a facade of caution" about the APEC idea. There can be little doubt that the US and Japan were both eager to see APEC successfully launched. Only a few months prior to the Hawke announcement, former Japanese Prime Minister Nakasone and US Secretary of State Shultz had each called for the establishment of such a body. But the US wanted to avoid the appearance of “imposing a ‘made in America’ blueprint for a transPacific grouping," while Japan was conscious that memories of its wartime Greater East Asia Co-Prosperity Sphere were still fresh in the minds of its Asian neighbours. Both would have remembered the failure of an attempt to launch an APEC style grouping a decade earlier. In 1979, the initiative had come from the Japanese Committee of the Pacific Basin Economic Council (PBEC), a group formed in 1967 by business leaders from Japan, the US, Canada, Australia and New Zealand. A governmental forum for economic cooperation in the Asia-Pacific region was proposed, to be known as the Pacific Economic Community (PEC). But Asian nations, particularly Indonesia, successfully scuttled the plan out of a concern that Japan was really only interested in establishing a platform for its own power projection in the region, The proposed PEC was abandoned and replaced by the Pacific Economic Cooperation Council (PECC), a loose grouping of current and former government= 24 - officials, private sector businessmen and right wing academics, observers from which now attend APEC meetings. The tensions between the US and Japan on one hand and the smaller Asian economies on the other drew attention to the potential for Australia to take a succesful initiative in the region, As an editorial in the Canberra Times (January 3 1980) noted at the time: Given that the evolution of a Pacific community of whatever nature, becomes accepted as desirable by this nation - and it should be - it would appear incumbent upon Australia, alone or in coalition with one or two other of the lesser regional powers, to take on this task itself: once the US and Japan are excluded, there is simply no more eligible candidate." In initiating APEC, Australia acted as the Judas sheep and achieved what neither the US nor Japan could have done. (If the free marketeers in MERT had been awake, New Zealand might have got to play Judas sheep instead of just following along in the flock). After three meetings, APEC now has a permanence neither of the big powers could have hoped for just a few years ago. And, as Malaysia has discovered, the momentum of APEC will be extremely difficult for smaller countries to slow or direct. There is already talk of establishing an APEC secretariat to coordinate the range of regional projects APEC is initiating. And membership is increasing. China, Hong Kong and Taiwan joined at the Seoul meeting and a host of other countries have either expressed interest in joining APEC or lodged formal applications for membership. These include Mexico, Chile, Ecuador, Argentina, Peru, Mongolia, India, Papua New Guinea (and the former Soviet Union) . Malaysia's stance reflects lingering Asian worries about APEC. But for many other countries, any concerns about US-Japanese domination of APEC are outweighed by the fear of being left out of such a powerful grouping. The stronger APEC becomes, the more effectively it will serve as a conduit of US-Japanese hegemony in the Asia-Pacific region.+ 25+ THE PROFESSOR & THE CIA The flow of dubious American academic "experts" into the country has increased with the advent of the bootlicking Bludger regime. One such surfaced recently. Professor Robert Scalapino, the visiting 1992 Kennedy Memorial Fellow, cropped up on the rubber chicken circuit. He pontificated tiresomely about what little old New Zealand has to do to get back into Uncle Sam’s good books. He was quoted in the Press (17/3/92) as saying: “future perceptions of New Zealand in the United States will depend on whether New Zealand returns to the role of ‘team player’... Professor Scalapino said that in future he believed the Washington view of New Zealand would focus on whether it showed a willingness to play its role in multilateral operations, such as the Gulf war. Leaving aside issues iike the absurdity of Americans lecturing New Zealanders about being team players, just who is this Yank? Funnily enough he crops up in NameBase, our 98,000 entry database on the US intelligence, foreign policy and defence establishment . He features in American ruling elites such as the Council on Foreign Relations, and is cited in books with titles such as How Harvard Rules. Most interestingly, from the NZ point of view, is his appearance in the June/August 1984 issue of Counterspy (which has since ceased publication). We hold a complete set of these, so we could check it out. Lo and behold, Scalapino features in the cover story entitled "CIA Front". It concerns the Honolulu based company of Bishop, Baldwin, Rewald, Dillingham and Wong. Its a long story, and if you're interested in reprising one of the great CIA scandals of the 80s, send us some money and we'll get you a photocopy of the article. Briefly, Rewald is now doing a very long prison term (having earlier attempted suicide) for defrauding investors, The old proverbial hit the fan when he stated in a defence affidavit: "I am, and for the past five years have been, a covert agent for the Central Intelligence Agency.. Additionally, there are 10 or more employees of my company, Bishop Baldwin, who on a full or part-time basis served the Central Intelligence Agency." Rewald blew the company’s cover. It was a Company alright, that being the insider’s term for the CIA. It spied, subverted, stole and sabotaged all round the Asia/Pacific region, and its modus operandi was to cultivate influential figures within local ruling elites. What has this got to do with the hapless Professor Scalapino? According to Counterspy : "Rewald says he was briefed for his trips to Japan and China by Robert A. Scalapino, director of the East Asian Studies Institute and a political science professor at the University of California. Scalapino also set up meetings and contacts, The CIA arranged the meeting with Scalapino. But, Rewald says he did not tell Scalapino he was with the CIA". continued on page 32+ 26 - UNCLE TOM SKINNER: US AGENT An era ended in late 1991 with the death of both Sir Thomas Skinner and Jim Knox, presidents of the former Federation of Labour. Knox will be remembered for at least two things - his hardbitten adherence to traditional trade union values, and his absolute integrity as a working class leader (within the constraints imposed by centralised union bureaucracy). And maybe a third - his astonishing resemblance to Sam the American Eagle in the "Muppets." Tom Skinner was a different story. A wheeler and dealer, the master of the head office sellout, the backroom deals with bosses and governments. He richly deserved his knighthood - for services to NZ capitalism. His lavish New Zealand Herald obituary (13/11/91) was quite accurately entitled "A man of many parts." So he was, and one of them was as a US Embassy informer on fellow unionists. This is no new revelation, CAFCA first published it in 1990 ("Spies amongst us. How the US Embassy saw New Zealand, 1945-60," Watchdog 65). We were supplied with nearly 1000 pages of various US Embassy reports, secured under the US Freedom of Information Act by Wellington historian Malcolm McKinnon. Its worth repeating the relevant references to Skinner. Essentially he was the Americans’ boy in Auckland (as president of the District Trades Council), and FOL president Fintan Patrick Walsh was their boy in Wellington, A March 1957 report state: “We asked Mr Skinner about the secretary of the Auckland Cargo- workers’ Union, a Mr B.Isbey, who is reputed to be a communist and is a member of the executive of the Auckland Trades Council. Mr Skinner said he knew about these rumors but had found Mr Isbey absolutely cooperative and had never noticed that he had any tendency to follow the communist line. He thought that if he were a communist, the best way to find out would be to let him stay on the executive until he showed his hand"... (Eddie Isbey later figured prominently in the 1972-75 Labour government. An April 1958 report quoted Walsh as categorically claiming Isbey to be a communist and unsuccessfully trying to get rid of him). The same March 1957 Embassy report states: “There are more communists in the trade unions in Auckland than in any other part of New Zealand. Mr Tom Skinner, president of the Auckland Trades Council, is a powerful force in keeping them under control but he says they are nevertheless troublesome and are constantly trying to get the Trades Council to adopt resolutions which favor the communist line in international affairs... Mr Skinner told us that the spearhead of the communists in Auckland unions is Gordon Harold ("Bill") Andersen, secretary of the Northern Drivers’ Union... Always manages to have himself selected as a delegate to the annual conference of the FOL and in this role sets out to bait F.P, Walsh, the Federation’s president and chairman of the conference. A tough, vigorous, dedicated communist, he is precisely the kind who would lead the leftwingers into any gap in moderate solidarity opened up by some such incident as the death of Walsh. He is aman to be watchedoT continually"... (our underlining) . Apart from Andersen, Skinner named 5 “communists or fellow travellers who regularly support Andersen at Council meetings." The language used in the report is colourful.Describing veteran communist Alex Drennan, it says: "An old communist dog on a hard road, he nevertheless has an excellent knowledge of tactics and the history of the revolutionary party and the name of Alex Drennan still counts for a lot with Auckland workers." Although these US Embassy reports cover events and people of at least 35 years ago, their revelations are still newsworthy. After Watchdog exposed them, the Evening Post ran a lengthy article on them, Skinner denied nothing, simply claiming he had been doing his bit against communists in the unions. CAFCA repeats our offer from 1990 - anyone wanting copies of these reports will be supplied, for the cost of postage and photocopying. But don’t ask for the lot, they’re far too bulky. Because Of the sensitive personal nature of some of the material, we will assess every request on its merits. ¥.P. WALSH; SPECIAL BRANCH; & WOLF ROSENBERG Further evidence of the bastardry of FOL president Fintan Patrick Walsh has recently come to light. Wolfgang Rosenberg is well known to Watchdog readers, indeed a lengthy book review by him appears in this issue. 40 years ago he, and his writings, were the subject of official surveillance. He has recently been approached by the National Library, informing him that an author writing the official history of New Zealand’s involvement in the Korean War had come across an intriguing file on him amongst the papers of the late Conrad Bollinger. Readers of the Monthly Review were familiar with Wolf's regular material under the pen name "Criticus." It's one he used going back several decades, and for several publications, The file in question concerned his “Criticus" pieces in the Labour Party newspaper, The Standard, in the early 50s. Bollinger’s file identifies Wolf as "Criticus," and carries the handwritten note: "Notes supplied by special Branch to F.P.Walsh on W. Rosenberq when question of his continued employment on Standard being discussed" (our underlining) . The covering letter from the National Library states: "The (Bollinger) collection includes a substantial amount of material originating from F.P.Walsh." Special Branch was a section of the police, which was later28 - replaced by the current Security Intelligence Service. It is fascinating to have proof of a cosy relationship between the spies and the reactionary head of the trade union movement. And what does the "Criticus" file say? Let’s quote some of it "In addition to his position as lecturer in economics, writer and commentator, "Criticus" is engaged in a number of other activities and holds at least one honorary position in organisations which are dubious. He is the Honorary Treasurer of the "Rewi Alley Aid Group" in Christchurch. On February 7th, 1949, wrote a letter to the Christchurch Press and signed himself as such" (Wolf confirms that he held this post). “He was also actively connected with and supported the formation of the Canterbury University College ‘Peace’ Committee, formed in July 195i, a group which has effective control of the University’s paper Canta... (Wolf describes himself as having been simply supporter of the peace group). "Among his speaking engagements in 1948 was an address to a public meeting of the Communist Party Christchurch, when he spoke on the subject of ‘Boom- Crisis-Slump.’ In 1950 he addressed a meeting of the National Council of Women at Christchurch on August the 12th. At that meeting he stated that the methods used by Russia in dealing with her peasants was a lot more than the Commonwealth could offer to settle the problems of Asia..." (Christchurch Press, August 12th, 1950). (Wolf points out, that as an economics lecturer, he was invited to speak at meetings organised by the CPNZ, etc). “Although he has faithfully followed the line of pacifism, World War II saw him in the Royal New Zealand Air Force, in which he served from 1944 to 1946. It is not known what his contribution was toward the war effort before 1944, particularly during 1939-42, when Russia was still out of the war. At ali events he was not in the armed forces" (Wolf confirms nis war record). "\..Mr Rosenberg ieft New Zealand this month for Britain, via Panama... On arrival at Sydney on his way out to Britain, Mr Rosenberg made an unscheduled visit to James Healy, National Secretary of the Australiar. Waterside Workers’ Union and a Communist Party member. (Wolf points out that he could not have simultaneously travelled to Britain via Panama and Sydney.The latter is correct, but whilst there he certainly did not meet with Jim He was with Healy for about two hours. Healy, nor has he ever had any contact with him). The file concludes by detailing "a list and dates of articles which appeared in the People’s Voice and the Standard, at about= 29. the same time and on the same subject. Of course, the contents are not identical, but it is of interest to note that "Criticus" and the People’s Voice have a habit of tackling the same subject at about the same time. (The People’s Voice was the CPNZ newspaper. It’s now the Workers’ Voice, Wolf points out that his "Criticus" column in the Standard was a weekly comment on current events, so it was hardly surprising that the PV commented on the same events). We'll conclude by returning to the US Embassy documents quoted in the above piece on Uncle Tom Skinner. A footnote to a 1950 report reads: "Standard, weekly paper of the New Zealand Labor Party. The opinions of "Criticus", the international affairs commentator, are considerably to the left of the Labor Party in general and should not be taken as expressing the views either of the Standard or the Labor Party Executive. "“Criticus” is understood to be W. Rosenberg, Lecturer in Economics at Canterbury College, Christchurch. We'll leave the last word to our old mate, Frank Corner (the Bmbassy reported on a 1948 private conversation between Frank and a US diplomat. The subject was Labour Prime Minister, Peter Fraser). “Mr Fraser’s favourite newspapers are the New Zealand Herald of Auckland, and the Dominion and Evening Post of Wellington, all Opposition papers. He seldom reads the official organs of the Labor Party, the Standard (Weekly) and the Southern Cross in particular. Not only does he not inspire the editorials in these papers, but he seldom even sees them. It is therefore fruitless to analyze these editorials for some hint of the Government’s policy, except insofar as they echo it after it has been announced. (Since writing this, Wolf Rosenberg has been informed that he was also the subject of a 35 page submission, in his ‘Criticus’ persona! What we have quoted is simply a short memo. He has not yet seen this longer document).= 30- CULLEN’ $ YANKEE JUNKET In October 1991 Mike Moore Market stated that the then Opposition social welfare spokesman, Dr Michael Cullen, was about to depart on a 2 week course at the Aspen Institute in the US. "Dr Cullen’s course is an executive seminar covering basic issues in economics and its relationship to politics" (Press, 19/10/91). The good doctor could certainly do with all the help he can get. Remember, this is the man who once broke a toe after becoming entangled in a sheet whilst getting out of bed. Lo and behold, Cullen was shortly thereafter promoted to Opposition finance spokesman, replacing veteran CAFCA member, David Caygill (sorry David, you can’t have your Watchdogs half price), The Press (9/12/91) revealed that Cullen's trip was paid for by Lion Nathan, at @ cost of about $16,000. "Lion’s chief executive, Mr Douglas Myers, 15 a member of the Business Roundtable, and 1s seen in some quarters as the embodiment of New Right ideology. Dr Cullen said that tne Leader of the Opposition, Mr Moore, had approached Lion for funding for the trip, which was intended to prime Dr Cullen for the finance spokesmanship. Such corporate sponsorship for members of Parliament from both sides of the House was common, he said. ‘The fact that the trip was paid for by a corporate sponsor was disclosed at the time, although it had not been intended that Lion Nathan’s identity be disclosed”. The plot thickened shortly therafter. The #ress (19/12/91) covered questions asked at Lion Nathan’s AGM by “long time shareholder champion, Mr Max Gunn’ “Mr Gunn also queried whether a donation for Opposition finance spokesperson Dr Michael Cullen’s US study had been made by Lion Nathan. Chairman Sir Gordon Tait told the meeting the money had come from Mr_Myers personally. Mr Gunn said he found it ‘alarming’ a political figure such as the Opposition Leader, Mr Moore, could approach a company directly for a handout (our underlining). Right, we've established whe is pissing in whose pocket back here un Godzone: "But what exactly is the Aspen Institute? According to Harpers magazine (July 1980) the Aspen Institute of Humanistic Studies ‘devotes itself to bringing the elite of the business worid (at $US3000 a shot) together with prominent second string intellectuals in the rarefied atmosphere of its Colorado centre, its castle in Berlin, its plantation in Maryland, or some other congenial setting. There, moving their lips slowly, the executives relive freshman year, reading Aristotle and Pascal and indulging in heavy discussions on the timeless relevance of great-31- thinkers to modern corporate ethics...‘ According to Harpers, its not so much what happens at the Aspen Institute but the fact that ‘any exec tapped by his company to Aspen is an exec who’s going places....'." “Interestingly, the Aspen Institute has strong connections with the Bush Administration. Brent Scowcroft, director of the National Security Council, is also a co-director of the Aspen Strategy group, a 20 member think tank. And Condoleeza Rice, director for Soviet (sic) and Bast European affairs on the NSC, is also a member of the Strategy group" (NZ Monthly Review, January/February 1992). Monthly Review got its information from the same source as us (because we made it available to them), That is, our old reliable US database, NameBase. We printed out the references, and then asked Daniel Brandt (who is NameBase personified) to send us the actual clippings on Aspen, which amount to 12. There’s some good stuff in there, none more fascinating than the "think tank’s" 1970's dealings with the Iranian ruling family. The same Harpers piece says: “A better example of the institute’s method of operation is afforded by its wooing of the Empress Farah of Iran. Approached by Joseph E.Slater, Aspen’s president, the then shahbanou did not hesitate. In a twinkling, she had a party of very reluctant Iranians shipped off to Aspen, where they mostly got drunk, behaving like paratroopers on furlough. This was not the happiest cross-cultural meeting on record, but Slater thought it was a wonderful thing, and he expressed bright hopes that the program could be continued, Shortly therafter, the shahbanou’s name made its appearance on the institute’s letterhead, as an honorary trustee". The US Press and Iran (a book by W.Dorman and M.Farhang) states: "A particularly striking example of the willingness of some intellectual entities to rent out their reputations was the liberal Aspen Institute of Humanistic Studies, which in 1975 undertook to organise the Aspen/Iran program... Originally Aspen was to have received $3 million from the Pahlavi Foundation to run the Iran program, but actually only got $750,000 before the revolution severed the relationship. Functioning almost as an intellectual escort service, Aspen named Empress Farah Pahlavi an honorary trustee... In the fall of 1975,the institute organised the Aspen Institute/Persepolis Symposium in Iran, which brought together more than a hundred leaders from fourteen nations to ‘look at values in transition’. At the end of the conference, Slater and Robert ©. Anderson, chairman of Aspen’s board and principal shareholder and chairman of Atlantic Richfield Company, presented Empress Farah Pahlavi with Aspen’s Special Award for Humanism.32 - Of course Cullen’s own Labour Party, in tne form of the benighted 1974/75 Rowling government, grovelled to the Pahlavis, when the Shah brought his family and entourage of thieves, torturers and murderers here on a State visit But will Dougie Myers get value for nis $16,000 (tax deductible, no doubt)? And will Mike Moore Market have a finance spokesperson who has any more of a clue thar. his 2 predecessors? The final quote comes from Harpers, again: "Under the best of circumstances, the institute’s seminars aren’t exactly taxing. Aspen’s treatise on terrorism is six pages long, small pages on which it is explained that terrorism is caused by terrorists causing terror by terrifying means. The tract on ‘governance’ by Slater is fourteen pages iong and contains no big words So for the sake of his own health, and certainly that of the nation, Dr Cullen would be better to stay in bed. If he gets lonely, he could invite Dougie and Mike to join him. Then they could do to each other what they’ve done to the country. From page 25 So, there is no suggestion that Scalapino works, or worked, directly for the CIA. But he obvicusly was a friendly enough academic for it to send one of its key covert agents to for a briefing. Remember these sorts of details when listening rc these US "experts" earbashing us about Uncle Knows Best. And the NZ connection? Weli, in 1983, Bishop Baldwin appiied for permission to set up in this country. Subsequently it became one of the tiny handful of applicants refused permission by the Overseas Investment Commission, on the grounds that it suppiied insufficient information We hold a complete OIC file on it, comp.ete with handwritter comments (and this was before we started our epic battle with the OIC). A May 25, 1984 memo to OIC members from OIC secretary, ©.8 Rampton, states: “Attached is an extract from ‘The Listener’ of 15 March 1984 commenting on the bankruptcy of the company 11. August last year and the involvement of the CIA within the company. In retrospect it 1s not surprising that the company was reluctant to provide information as to the size of its operati.r and the identity of its major clients”. Later in the 80s, the same Honolulu CIA office set up the so called "Maori Loans Affairs". Remember that one? We hold a complete file on Bishop Baldwin, including US media coverage, and actual court documents. And there’s more in our "Maori Loans Affair" file. If you’re interested in refreshing your memory, send us a few dollars for photocopying and postage. You keep strange company, Professor Scalapino, But then, as Shakespeare wrote, you are an honourable man.pase LEGAL COSTS APPEALS 1/ WARREN THOMSON Warren has been an active rank and file CAFCA member for several years now, and is a wellknown veteran activist in the Christchurch peace movement, specifically the Anti Bases Campaign. He has been arrested at Harewood and Waihopai protests in the past. Warren is that rarity, the peace activist who sees the links with other issues. He was the subject of a profile by Murray Horton in the December 1991 Peacelink. Here’s an extract: “Indeed he wrote a particularly trenchant piece in a recent ‘Peacelink’ demanding to know why the peace movement wasn’t involved. He sees unemployment and social polarisation as the greatest internal threats te peace in NZ. He helped organise a bus tour of local MPs’ homes, with a soup kitchen outside Ruth Richardson’s. On another occasion the cops physically removed him from a carpark when he was blocking Ruth’ s car. ‘ I’ve had a ride on her bonnet. I feel bitterness and anger at the social, economic, and educational changes that are tearing this country apart. I sometimes wonder about my commitment to peace when we're faced with the need for a revolution to reclaim the heritage that rightly belongs to the great majority of people’ ." Warren has never been one to shy from any struggle, and he has always put himself on the line. On December 19, 1991 (the anniversary of the benefit cuts) he was one of two people arrested at a protest outside Jenny Shipley’s Ashburton home. (His co-defendant was fined $150 for picking 2 of her flowers!). Warren was charged with disorderly behaviour, for allegedly painting "No Welfare No Hope" on the road. The case was heard in Ashburton on March 2, and we!re pleased to report that the charge was dismissed, on the grounds that police witnesses could not satisfactorily identify the alleged painter. However Warren is left facing a lawyer's bill of up to $300. He is not a rich man, having lost his Hagley High School casual teaching job the same month as his arrest (he now works at the WEA). If you can help, and want to express your solidarity with a leading activist, earmark your donations to the Warren Thomson Appeal, Anti Bases Campaign, Box 2258, Christchurch. 2/ SUE BRADFORD & co. Warren's case got no media coverage. That is not so with the extraordinarily repressive measures taken against Sue and Bill Bradford and others from the Auckland Unemployed Workers’ Rights Centre, There was a whole series of protests and arrests in November 1991, at the Department of Social Welfare and sir Michael Fay's home.-34- Sue and Bill were remanded in custody for several days, and bai: conditions for everyone were fascist - no right to take part in any protest whilst on bail; and non-association with feliow defendants (including family members!) . Things got very nasty on February 27 when unemployment activists from around the country held protests in Wellington, including street theatre outside Bolger’s official residence. To quote from the newsletter of the Auckland Unemployed Workers’ Rights Centre -spolice crashed into the gathering, seeking to arrest Sue Bradford for breaking bail conditions which state she is ‘not to participate in any demonstration or form of protest during the whole of the term of bail’-on pain of forefeiting $3000 and going te prison. Sue was held in police custody overnight and appeared in Wellington High Court on Friday morning The judge there remanded her in custody to appear ir Auckiand High Court later the same aay, and she was flown to Auckland under prison escort." "At 5 p.m. she appeared before Just.ce Tomkins, who expressed some confusion about the very legality of the bail conditions Sue was under, but remanded ner under the same conditions again to appear in the District Court on March 6 "March 6 came round, and Sue appearea it the District court for sentence on the original charge of trespass at the Auckland DSW during the course of a demonstration on November 26,1991. The Crown had stil. not laid a formal charge of breach of bail against ner, and she was sentenced to 100 hours of community service and released. She is now taking legal advice as to the advisability of suing the poitce for damages for false imprisonment". She has also been convicted on the charge of trespass at the Fay mansion, and sentenced to 80 hours community service. Legal costs for the Bradfords and other unemployment activists are already inte the thousands of dollars. If you want to express your practical solidarity with people taking consistentiy militant action on New Zealand’s biggest issue, then send your donations to: Legal Defence Fund Appeal, Auckland Unemployed Workers’ Rights Centre, Box 3813, Auckland 1- 36 - FORESTRY INVESTORS WANT NZ ECONOMY CLEARFELLED And Guy Salmon Cheers Them On N2 forestry has never really recovered from the devastation wrought by Cycione Richard, which saw State forests corporatised and sold off to primariiy foreign owners. It was only the fly in the ointment posed by Maori land claims chat stopped the land under the trees being hecked off as well. Yet. But this was not enough for the local forestry big boys. They want what laughably weak protection NZ has against total foreign ownership removed. The Press (7/2/92) ran a most revealing report entitled: "NZ investment ‘not attractive enough’ ": “Forestry will not boom unless New Zealand is more attractive 1o foreign investors, according to a new study backed by iocal industry giants. For ‘ali sectors uf the economy, the current poiicy mix wili not attract to the country tne sca.e of investment necessary t. realise the social and economic enhancement required, despite the progress made since the mia 1980s’, ‘he report from the Forest Industries uncil said "J..tt founa from a confidentia. poll of senior overseas forestry executives that New Zealand was not particularly attractive for investment. ‘While policy advisers/analysts may applaud New Zealand's low inflation rate, etc, investors require more from New Zealand’, it said. While there were great similarities between New Zealand and Chilean forestry resources and production, Chile was in an investment boom". “an ‘explicit invitation card’ to foreign investors was needed, .nc.uding internationally competitive depreciation rates, more competitive cost structures, and Government .ed efforts against other countries’ trade barriers through bilateral treaties" (our emphasis}. "...Tne package nad te be able to survive changes of Government and would need to be constantly compared with over-seas. ‘Investment in New Zealand is simply a product competing in the international investment marketplace,’ the study said. It warned against subjective ‘loss of sovereignty’ arguments, saying the returns to New Zealand from foreign investment were far greater than to the investor...It called for the Government to hurry up and sell the forests it owns now because it was clouding investment decisions..." (our emphasis) . Interestingly, it offers Sweet FA in the way of jobs. "...It raises doubts about the contribution forestry will make both to economic growth and job creation, despite big increases in wood- 36 - supplies in coming years. Even the most optimistic outlook predicts creation of only about 12,500 jobs by 2001 ~ a far cry from the 350,000 by 2020 touted by the Minister of Forestry, Mr Falloon, last year. These would be partially offset by job reductions in other parts of the industry because of new technology" (our emphasis). In at least one area, the timber wolves are on the same side as the public. "...Continuing competitive advantage from low electricity prices was vital, the study said." The Parliamentary select committee on commerce and marketing agreed, and rejected Electricorps’s application for an increase in the wholesale and retail price of power. This recommendation for the status quo, if accepted by the Government, benefits ordinary consumers as well as Comalco and the pulp and paper manufacturers. Initially the Government didn’t accept it, saying it had no place in Electricorp’s pricing decisions. But then the Government and Electricorp cooked up a facesaving deal, involving a low or zero price increase. Now we’re getting the scare stories about power cuts this winter. Its not particularly surprising to find the comprador capi- talists of the Forest Industries Council supporting open slather foreign investment. They, after all, stand to become personally richer by way of joint ventures or outright sale. However, support has also been proffered from the alleged "other side" of the argument. The Press (29/1/92) ran a report headed: “Global forestry ventures ‘beneficial’ ." “New Zealand could benefit from foreign investment in forestry joint ventures as part of global efforts to reduce the greenhouse effect, said the director of the Marvia Society, Mr Guy Salmon" (our emphasis). "...His comments came after Fletcher Challenge announced that it had sold a 39% share of its Nelson and Marlborough pine plantations to American investors. Mr Salmon disagreed with the secretary of the Nelson Timber Workers’ Union, Mr Ian Brown, who said Nelson people would not benefit from the deal. Increased forest planting would benefit Nelson and New Zealand, he said. ...Substantial earnings could be made in New Zealand and overseas." This sort of thing has become par for the course for Guy Salmon for quite some time now. Under his leadership, the once radical Maruia Society (remember its previous incarnation as NFAC? ~ Native Forests Action Council) has adopted a policy of getting into bed with big business and Rogernomics. All in the interests of saving the environment, of course. Words like "realism" and “efficiency” get bandied about. Salmon, of course, was a prominent participant at that New Right mass debate, the 1989 Mont Pelerin Society Pacific Regional Conference, in Christchurch (along with another fallen icon, Donna Awatere). We got a lovely photo of him having drinkies at the Mona Vale bunfight with his good friend Simon Upton. There might be some who like to think that Salmon is merely a fall guy,-37- but all the evidence points to him genuinely espousing this New Right tripe. And if readers think he is alone in his views within the environmental movement, then we suggest you read the recent Listener feature on Gerry McSweeney (moaning bitterly about the unemployed in Haast, while he can’t get labour for his nature lodge) Important and influential figures within the environmental movement have strayed far away from its original principles. They graphically illustrate both their own class background, and the blinkered nature of single issue politics. Like an endangered species of toad, they’ve changed colour from green to blue. We, the rank and file, are still green, Green about the gills - the name of the condition has been diagnosed as salmonella. . OFFSHORE ISLANDS FOR SALE a QUIET SECLUDED — CHARACTER-PACKED oe EX-WELFARE STATE DESPERATE VENDOR SAYS ‘SELL REASONABLY PRICED SOCIAL SERVICES AVAILABLE. CLOSE TO SYDNEY AND SHOPS ELECTRICITY iN NORTH ISLAND= 38 - STAR GOES INTO BLACK HOLE ~ Murray Horton The Christchurch Star finally died as an afternoon daily, in November 1991, after several years of terminal haemorrhaging, It ended up as something too embarrsassing even to wrap around fish and chips. Ironically it was closed after its Auckland owners Wilson and Horton (no, no relation) had moved it into new premises and spent money on it. The strangest thing of the lot is that they didn’t close it down completely, but instead have kept it alive as a twice weekly giveaway to every house in Christchurch. Having done so, they now claim this glorified junkmail as the biggest circulating newspaper in the South Island. What all this means is that the Murdoch-owned Press now has a monopoly in Christchurch (plus a much wider South Island circulation area). Inherently, this is an unhealthy situation There were times in the recent past when the Star and Press had diametrically opposed editorial viewpoints, and the Star was the more progressive of the two. In the 70s it tackled Muldoon head on,creating national uproar. And then he was not the dear old “elder statesman" of today, but Piggy the rampant tusker charging full boar. During the nuclear free "crisis" of Lange’s early years it consistently supported the policy, while the Press wrote hysterical editorials attacking it(with one comparing NZ to Czechoslovakia in 1948, just before the Communist takeover!) Indeed the Press started 1992 by resuming its editorial attacks on the peace movement . CAFCA and our affiliate, the Anti Bases Campaign (ABC) had a very good run out of the Star. And I should make clear that we have had a very good working relationship with virtually ali the Christchurch media. Indeed the Press features section, when Garry Arthur and Ken Coates worked there, gave our issues the best coverage they’ve ever had, continually running material quite at variance with the paper’s editorial line. Sadly neither still works there(although Ken is still a freelance features writer, as evidenced by his excellent profile of Elsie Locke Garry is now a happy man making his marvellous quirky wooden furniture). And as any political activist knows, a good way t guarantee fast attention from an awkward reporter is to threaten to give it to the opposition. That is no longer the case. Two Star journalists, both made redundant by the closure (welcome to the club, comrades) deserve special thanks from CAFCA/ABC Chris Hutching was a young journo in the Business section when we first met in 1989 - we gave him an exclusive on the imminent Mont Pelerin Society international conference in Christchurch and he handled it magnificently. For the following 2 years we worked with Chris on a variety of stories, channelling him things like our various inside stories on Comalco trying to buy Manapouri. He took journalistic cooperation to a very practical level. In 1990 CAFCA offered to resell, at a nominal cost, the monthly decision sheets that we buy from the Overseas Investment+39. Commission. (For the record, we currently sell them to the Listener, National Business Review, and New Zealand Property). The Star decided, at editerial level, that it would be "unethical" to directly buy material from a group such as CAFCA. So Chris persuaded his bosses that the Star should buy the decision sheets for itself. This saved us money by splitting the cost, and meant that Chris was also regularly annoying the OIC (and by Christ, do they deserve it). Not only was Don Grady a very valuable journalistic contact, he was one of the last of the great characters of an increasingly colourless (and unemployed) journalism. One of the last men in the world to wear a hat (along with Dave Morgan, Cec Blazey and Mikhail Gorbachev), my most vivid memory of Don is from the November 1990 Touching the Bases Tour. Gleefully awoken by Owen Wilkes at 6 a.m. in my motorcamp cabin, Don was ushered in, talking non-stop and in full regalia. | The vastly overrated Marlborough weather was shithouse, and we were taking a party of Filipinos, a Fijian, 2 Bougainvillean, an Australian (and even worse, Aucklanders) 1500 meters up to the US Navy observatory on Black Birch. The cops had already publicly worried that they mightn’t be able to rescue us. It was snowing up the top. Don declined a police offer of a ride (to maintain his impartiality), and dressed in hat, suit, tie and street shoes, walked up and back with us. Don, aman in his 60s, made it, unlike several of our party. And the bastard never shut up. To cap it off, he didn’t publish a word about it. Don was a journo of the old school, and he wanted action, preferably us burning the place down, or somesuch. Simply getting residents of the tropics up @ mountain in a blizzard and coming back alive wasn’t enough. Don and me and Yankee bases on bloody hilltops go back a long way. We first met in my PYM days, when he immortalised me in a Sunday tabloid with the headline: "Mount John Murray: Always Marching." Watchdog 61 ran an obituary for the Weekend Star. Its worth quoting again. "Why should the peace movement mourn the demise of 2 Saturday night tugby tabloid? Because throughout 1988 it gave far and away the best coverage to bases issues, standing head and shoulders over the dailies (including its parent, the Christchurch Star). It gave Black Birch a spread of 2 full pages (front page lead) tying it into Star Wars. This was followed by another full page detailing how Black Birch is in criminal breach of the Nuclear Free Act. After the May Waihopai demo, it gave another 2 page spread (front page lead) on that issue, with its billboard all around the top half of the South Island reading: "Wilkes: We’ll Stop Waihopai"... Following the November demo, it surpassed itself by running an extraordinary 4 full page photo essay..." ",,.Much of the credit goes to veteran journalist Don Grady... He made no secret of his personal interest in Marlborough bases ~ he told me years ago he owns a holiday house in the area, and wants to know if the proximity of Black Birch threatens him with incineration. He actually broke his holiday there to travel to Waihopai to do the photo essay..." The Weekend Star was closed at the end of 1988 (staff were actually recalled from their Christmas party to be given the-40- arse), but staff were redeployed onto the Star, which started a features section.Den continued his interest in Marlborough stories - we gave him a scoop when our OIC files revealed the jealously guarded owner of the proposed Hopai Bay Japanese resort (after the biggest number of objections presented to any NZ local body hearing, the scheme was rejected). We gave him extensive international and domestic materia] on EIE, the gigantic Japanese owner - Don syndicated it around the country, including Granny Herald, Wilson and Horton's notoriously conservative Auckland flagship. He was always after anything we could give him on Asian ownership of NZ land (old Don knew what sells papers). He also ran other features for which I’m indebted - on the 1989 PYM reunion, and on the Christchurch delegates to the 1986/89 Philippines Peace Brigade. He’s gone to Marlborough to write more books (having already won writing prizes) - the Star devoted a feature and editorial to him, when he finished. Other bloody good journos have been lost - Cate Brett who did a definitive series on Japanese investment in NZ; and John Brown, the best education reporter in the country. And reaching further into the past, we should mention that Greg Ansley used to be the best daily columnist in NZ when he had the page 2 slot in the Star, and he consistently ran CAFCA/ABC material fairly, comprehensively and intelligently. While we’re handing out journalistic kudos, we also mourn the mid 1991 closure of the Christchurch office of the National Business Review. Chris Rennie arranged NBR to buy the OIC decision sheets from us; invited me to become a columnist (I wrote one and it was rejected); and to my surprise, was one of the most sympathetic interviewers that Roger Moody encountered on his 1990 tour. So where does all this leave journalists? | (Hutching is freelancing for NBR and tits & bums Pommy tabloids; Rennie has vanished into the lotusland of PR). A large pool of unemployed, those in work cowed by drastically rewritten wages and conditions = its not coincidental that the union officials like Chris Hutching get dumped. And, at the top level, the propagandists mouthing support for New Right fantasies, angling for a lucrative career in corporate PR or, even better, a job as @ ministerial press secretary. The good side of this is that working journalists realise that they’re only disposable units of labour, like the rest of us,and give us a much fairer hearing than we've had in the past.And some of them have put their money where their mouths are, and are helping us practically by pledging money to my upkeep as CAFCA/ABC worker. No names, they know who they are. Many thanks, la lutta continua!-41- "GLOBAL COMPANIES AND PUBLIC POLICY The Growing Challenge of Foreign Direct Investment" (by DeAnne Julius; Royal Institute of International Affairs/ Pinter Publishers London, 1990 - 8 pounds.95p = NZ$30) ~ Wolfgang Rosenberg This is an important book. DeAnne Julius was Director of Economics at the Royal Institute of International Affairs when she wrote the book. It has a conscious objective and an incidental significance for students of the phenomenon of foreign investment in New Zealand and the connected problems of foreign control of our country. The conscious objective of the book is to explain to European, North American and Japanese readers the nature of the globalised capitalist economy of the day from the perspective of international investors. The incidental interest to New Zealand readers of this weil documented book is the realisation that the economics taught in the "metropolitan" countries of Europe, North America and Japan are not applicable to "peripheral" countries like New Zealand. I, he place of "foreign investment" in the economies of the metropolitan world, The main thesis of DeAnne Julius is that foreign investment in the metropolitan world is now more important than foreign trade. She believes in the religion of “free trade" but she demonstrates that the theory of “comparative advantage" (touted by economists as the basis of the benefits of free trade) can no longer be applied on a national/regional basis. She considers that “comparative advantage" is a concept applied to the immovable resources of a nation, However, since capital is now extremely movable, what matters is "national" enterprises including their foreign affiliates to make their way in global markets with their own products, processes and managerial skills. (p71) This new picture is the basic model on which the acceptance of surrender of national sovereignty as a basis for national welfare is erected. The interpenetration of capital between countries of similar economic and political power (the metropolitan countries) is indeed so enormous that there is some justification for the anti-national proclamations of “economists” and their faithful. But the anti-national faith does not have the same factual basis in peripheral countries such as Australia, New Zealand,-42- Latin America, China and India and so on. Foreign Investment and Foreign Tra: DeAnne Julius shows that for the US and Japan, for instance, trade between foreign-owned firms and their home countries, already accounts for half of total trade flows. These trade flows she subdivides into flows to and from affiliates abroad (intrafirm business) and to and from independent foreign owned firms (business between different multinationals). Since the figures she quotes for USA are from 1986 and for Japan for 1983, a substantially larger proportion of trade is liable now to fall within trade between and within multinational concerns, the subjects and objects of foreign investment. Foreign Investment Related Trade us Japan % of all % of all exports imports exports imports within multinationals 32 18 38 40 between multinationals 23 34 7 total 55 Table 4.1 D.Julius op. cit The effect of the power of transnational concerns becomes clearer when looking at certain peripheral countries. In Canada, for instance, US car companies can produce on both sides of the border without paying tariffs. In 1986 Canada’s total exports to USA were valued at $70 billion of which $30 billion came from US owned car producing companies in Canada selling back into their home market. At the same time, total US exports to Canada were valued at $57 billion of which $32 billion represented partially finished goods sent by US companies to their Canadian subsidiaries. Direct investment in this industry accounted for half of total trade between US and Canada. 47% of US imports from Singapore in 1982 and 52% from Malaysia were from US affiliates. In the eighties, Taiwan’s five leading electronics exporters were US owned; five of Australia’s ten largest exporters were Japanese owned and only nine of the top 20 Australian exporters were Australian owned. (p.75) B. Foreign Investment and Local Trade How important are foreign owned companies’ sales in their host countries as a way to reach foreign consumers?- 43. The USA is the largest “host country" for foreign investment. Foreign firms in USA had sales which exceeded all Us imports by 50%. In Germany, local sales by foreign companies were 139% of total German imports, even for Japan local sales by foreign owned firms were 42% of the country’s total imports. Obviously, sales by foreign companies in local markets contain local content. “In USA, however, the local content of foreign investors’ production was only 60%, compared to local content by domestic US firms’ production of 91%. (p.77) Because USA, Japan, Germany, Britain and France are both recipients and distributors of foreign investment, the direct negative development effects of foreign investment ("micro- effects") can be more or less ignored because of the direct positive effects on the owning country. I would doubt, however, that the direct effects on public policy ("macro-effects") can also be ignored. For instance, theories (almost universally accepted in New Zealand) make the exchange rate the stabilising factor in the field of exports and imports (the balance of payments on current account). They assume that a lack of balance in the balance of payments can be secured by adjustments of the exchange rate. However, looking at the whole balance of external activities (including foreign direct investment), if account is taken of domestic and foreign sales of a country’s multinationals, DeAnne Julius correctly says: "Seen from this perspective, it makes little sense to claim that a fali in the dollar is the inevitable consequence - and the necessary condition to correct - the continuing US external deficit." (p.88) She also correctly demonstrates that the "monetarist" fallacy (basis of many of New Zealand’s catastrophic economic and social experiences since 1984) is connected with a lack of understanding of the interlinked nature of the metropolitan capitalist economies: “As markets integrate the ability of national policies to influence the structure of the market or the behaviour of market participants is greatly reduced. If financial markets are open, higher interest rates may simply attract capital from abroad, thereby expanding the domestic money supply. Indeed much of. the disillusion felt by economists who embraced monetarism in the 1970’s can be traced to the fact that national money demand functions have lost their stability in the 1980’s with the integration of capital markets and the proliferation of near~money instruments." (p.94) Julius shows that the loss of nations to determine national policy extends even beyond financial and currency markets. Global companies have an ability to shift their internal pricing systems and, over the long run, even their operations to avoid high tax environments or onerous government social or even only reporting laws.ae She thinks that because of their size and power, the metropolitan countries may look toward further political integration to overcome the debilitating local effects of business global integration. The author of this present review - having recently travelled in Europe ~ doubts that global company formation in the metropolitan countries has no adverse effects. Growing poverty and indeed “immiseration" of the exploited and abandoned lower classes of the population, even in the metropolitan countries seems the fact of the last decade. Be that as it may, DeAnne Julius’ analysis can be used to demonstrate that the poeple of the peripheral world must defend themselves against the takeover by Global Companies. II. The place of "foreign investment" in the economies of the peripheral world, such as New Zealand. er nomic" effects of for ment It is often averred that in less developed areas of the world, foreign investment in production, distribution and exchange is necessary so that a "technology transfer" can be effected. If this was a good reason for foreign investment regulations could be enforced which reserved foreign investment for such situations: but that is not the case in New Zealand. In fact, every application by potential foreign investors is approved. And no application is required for proposals up to NZ$10 million worth. The trouble with foreign investment is that company directors act in the interests of their shareholders. Where the shareholders are nationals, that may be anti-social in circumstances, But to the extent that national shareholders’ savings may be re-invested large profits may lead to national employment in new investment projects. On the other hand, if profits are paid to foreign shareholders (and via licenses and other royalty remittances to foreign residents) the nation is made poorer by profits so remitted. How important this factor is, is illustrated by Deanne Julius who shows that an analysis carried out by a London brokerage house on companies listed on the Stock Exchange demonstrated that the average proportion of their profits earned through exports had fallen from 16% in 1978 to 5% in 1987. Over the same period the proportion of profits coming from overseas sales by their subsidiaries rose to reach 39% - nearly eight times exports - by 1987. The desire to achieve high profits for foreign shareholders, naturally not interested in the welfare of a people thousands of miles distant, can lead to situations of unsatisfactory and indeed Dickensian aspects of exploitation of the foreign "labour-45- resource." Legislation against such practices will be resented by foreign investors and may either lead to evasion or to transfer of the investment to a country less concerned with the welfare of its workers. Taxation is another aspect which may induce a foreign owned company to change its domicile, and indeed, if there are no investment restrictions, may induce local companies to leave. Thus will public finance become a football of companies blackmailing governments that it either “reduce taxation or we leave The choice of production will be made by foreign interests in terms of their global division of labour, and export or local economy "niche" industries cannot be established.' DeAnne Julius emphasises that foreign investment should not be judged on its emloyment effects. Indeed increased "efficiency" is nowadays frequently associated with decreased employment, When a downturn develops in a global industry, a foreign headquarters may lay off workers at its overseas plants more quickly than would a domestic firm in the same industry. (p.101) In some industries size is ao important (such as the need to spread R&D expenditure across large production runs that sometimes foreign competition has to be kept out until the domestic firms have reached the necessary size. (p.63) DeAnne Julius’ arguments that predatory policies of foreign investors can be suppressed by a country’s legislative and judicial system are based on experience in USA and other powerful countries. Unfortunately, a country like New Zealand cannot regulate giant multinationals who have been allowed to operate here. The Telecom Golden Share allegedly prohibiting undue increases in residential telephone charges by Telecom is only one example of such ineffective legislation. Attempts to increase the electricity cost for Comalco have only been partly successful and required the stuborn character of a Sir Robert Muldoon to be implemented. In the long run foreign investment on a large and unregulated basis in a small peripheral country like New Zealand will lead to the adoption of the lowest international common denominator for social, judicial and taxation policies. The New Zealand Government, for instance, by its Employment Contracts Act has already laid the foundation for such lowest common denominator policies and its attacks on social security, accident compensation and protection-of-industry demonstrate to what ‘In view of the underdeveloped nature of our small and distant national economy there is no chance to develop large scale mainline industries in competition with transnationals. "Niche" industries produce goods and services which are not in great demand or supply and can be filled by small and medium sized producers such as are representative of New Zealand industry.pee extent foreign rather than New Zealand interests become the standard of Government policies in a regime of unregulated international commercial, financial and industrial mobility. B. _ Macro-economic effects of foreign investment in _a eri intry like New Zea Perhaps the most significant paragraph in DeAnne Julius’ treatise, for my purpose, appears on page 87. That treatise convincingly points out how far mutual interpenetration of the leading metropolitan economies has gone. She considers that instead of the conventional balance of payments measure to appraise international performance of these advanced industrial countries an “ownership-based" trade measure should be introduced. Such new statistic would show the influence of global companies on a whole range of statistics: trade flows, interest~ profit-dividend flows, equity flows to developing countries, domestic currency demand,exchange rate behaviour, capital markets, labour markets. (p.72) However, in spite of the immense importance of these foreign investment consequences, "because they do not measure cross-border economic flows per se, they would be of little use in monitoring or interpreting the external situation of a developing country with a foreign exchange constraint. Where a country’s currency is not freely convertible or where there are foreign exchange controls, then a residence based balance of payment statement is a better guide to the need for policy action to support the exchange rate or to reschedule debt." (p.87) Thus, there are two worlds: that of advanced and that of developing countries. Indeed, DeAnne Julius admits that particular countries ~ and certainly particular industries - will lose from the greater integration process that greater foreign direct investment implies. She continues: “It is a standard finding in economics that trade-offs between efficiency and distribution can best be handled by maximising efficiency and using some of the benefits generated to compensate the losers (for instance through income and profit taxes) . This works within a national context where transfers can be engineered through the political system. But there is no international mechanism for arranging such transfers." (p.42) This is indeed New Zealand’s position, which cannot afford the profits of business to accrue to foreign residents and its export industries being managed by competing interests. Nor can we socially afford to have our social, taxation and legal system continuously adjusted to the lowest common international denominator until we end up as the Thailand of the Southern Ocean.< a7 DeAnne Julius senses these difficulties in a "developing country" such as New Zealand, Thus she writes (of course disapprovingly, but she writes for international investors ~ p-105): "If it were the case that some countries would lose absolutely in an open foreign direct investment regime, they might wish to close their borders. Even then, however, the foreign direct investment would simply be diverted to other countries and the industries of the country closed to foreign direct investment would face increased competition from imports." (p.42) Obviously, a country like New Zealand which cannot at full or even moderately high employment levels earn enough foreign exchange to pay for imports and profit and interest remittances abroad, if it wishes to achieve full or even merely moderately high employment, must close its borders to additional foreign domination except in the most favourable instances and must protect its balance of payments by import and exchange controls. DeAnne Julius’ book on Global Companies and Public Policy contains much highly enlightening thought and factual material. Many New Zealand "economist" readers, who accept prescriptions from the old and advanced countries for policy purposes for New Zealand, will probably say that this book reviewed makes a good case for absolute non-interference with foreign direct investment by global companies. This reviewer, who believes that New Zealand economics should be targetted towards the aim of full or at least moderately high employment, however, finds DeAnne Julius’ work an extremely valuable illustration of the fact that New Zealand policies must be different from those prescribed by the OECD, World Bank or classical and neo-classical economists. Having followed their lines completely now since 1984 (and partly under Muldoon since 1976) the 300,000 unemployed and the one third of the population who are welfare recipients can feel on their own bodies how fallacious overseas advice has been, Let us move away from this insanity. New Zealand is different and should have economic and social policies different from those advocated abroad.48 - "EXPANDING OUR HORIZONS New Zealand in the Global Economy" by Paul Callister. NZ Planning Council. June 1991. S2pp. - Dennis Small This report claims to put Aotearoa/New Zealand in the context of what it calls "globalisation". The author’s thesis is basically that this is a process which we need to accept and adjust to. But just what is "globalisation?" On page 2, it is described as the “the process in which individuals, companies and governments are increasingly being iinked into production, trading and financial networks outside of the particular country they are located in. These links are being developed willingly as a response to the perceived opportunities the international arena presents, but are also sometimes forced as a reaction to the lifting of protective barriers around domestic markets. Callister acknowledges “the fear that New Zealand 1s going to be ‘taken over’ by international companies and capital is a real one for many New Zealanders" (p.47). He goes on to note that "this fear was exacerbated during the last decade when it seemed likely that the opening up of our economy would leave us exposed to predatory ‘foreigners’ .” In his conclusion, Callister, however handles this central question as he repeatedly handles it throughout the report - in contradictory fashion. On the one hand, he plays down the increase in overseas ownership; on the other, he says it will be necessary to open up our economy much more to foreign investment ' Contradictions indeed permeate the report and thus vitiate tne basic requirement for any reasoned case, the criterion of logical consistency. It is clear that the author’s neo-classical economic assumptions prevent him from grappling adequately with multinational driven market forces. The signs of cultural imperialism are evident enough. Three of his first 10 references are to Economic Impact, one of the US Information Agency’s propaganda tools. Other sources cited in these same 10 references include Time, The Economist, Barclays’ Briefing, Financial Times, and the World Bank. Exeedom for Whom? Freedom is really the major theme of Expanding Our Horizons but the treatment of it is grossly confused. The very title suggests an expansion of the opportunity for choice. Callister emphasises this intended message. "Globalisation" as a term "is not only used to describe freedom of political choice but also freedom of consumer choice, which has strong links into both environmental and economic issues" (p.2). So the process of transnationalisa- tion is even confounded with growing global awareness of- 49 - environmental dangers - dangers so often perpetrated by multinational corporations! An example of consumer choice in action? Callister, amazingly enough, cites the Telecom takeover by US transnationals! The way he summarises this example aptly epitomises the contradiction riven through the report. He states: "The Telecom example then, linked to the idea that the rights of individuals as consumers need to be protected, perhaps indicates that it is not issues of ownership or control of the enterprise that determine whether New Zealanders have more or less control over their economic destinies. Instead, it supports the argument that it is consumer choice, obtained through privatisation, deregulation and opening up of the economy, which gives individuals, rather than companies, New Zealand owned or multinational enterprises, the real power in determining thei: own destinies" (p.42) Callister had already earlier shown that the growth of powerful international companies is lessening the ability of governments to influence these companies’ operations (pp. 11-17). Moreover, he had indicated how big multi-nationals are increasingly collaborating together. So much for market competition! How then could anyone write such rank rubbish about the sale of Telecom? How can Callister support such an argument? Most of the NZ public were clearly against the sale. Again, the corporate colonial link is evident. The author cites approvingly a "Japanese management guru" about the "surviving global corporations" having to serve the needs of consumers. Ultimately, consumers, not governments will supposedly control the multinationals by the choices of what, or what not, to consume. This is all so obviously public relations for the transnational corporations, it should hardly need to be taken seriously. But we do have to continually criticise this sort of argument. People like Paul Callister, Mike Moore and Jim Bolger can apparently even persuade themselves to believe it! "Competition", "choice", "freedom", “consumer sovereignty" - tne hallowed nostrums of capitalist market economics - are a. invoked in defence of the Telecom sale. These terms, or their equivalents, are loosely applied by Callister: "theory" for him suggests the Telecom sell off will help make NZ more internatio- nally competitive, with overall benefit to the public. The problem that Callister and other “free market" ideologues always fail to adequately address is simply this: if foreign investment is encouraged to grow, how can the NZ people ensure they retain decision making capacity over the economic direction of their lives and their society? In fact, Callister blithely wishes this capacity away! In his closing paragraph he says that we have to “accept overseas control of many aspects of our economy..." Foreign control is thus explicitly endorsed, though, as usual, in a muddled way. There is still the implication that somehow we will be capable of keeping control over some important things eg NZ identity.-50- Given lost control over many aspects of the economy, the people must. obviously be left with little effective power over their own lives, Furthermore, having sold off so much, what is still left over is likely to have little value, or at least little strategic significance for the exercise of public influence. As well, what remains must be very vulnerable to continuing takeover within the framework of the dominant foreign presence, One of Callister’s many contradictory arguments is his assertion that the Commerce Commission can prevent monopoly enterprise. Even if one thought the Commission is doing its job, any independence would be eroded by the continuing transnational takeover of the NZ economy. To Regain Control Over Our Lives It is significant, if ironic enough, that “Expanding Our Horizons" shows how much we have lost already. As mentioned above, the NZ Planning Council's report reflects a transnationalised perspective. While there is recognition of increased transnational corporation power over governments, tne atomised individual in the global marketplace is somehow seen as exercising increased power. Transnationalised public relations has worked on the NZ Planning Council (now defunct) just as it has worked on our governments, our media, etc. Only the hopelessiy diffused “power” of unorganised individuals stands . the way of the multinationai juggernaut! Ironically again, government - both e1ected representatives ana bureaucracy - 18 no jonger acting to safeguard our nationa sovereignty, the prime function we demand of them. Instead, they are increasingly the agents of the transnationalisation process, selling off our sovereignty to foreign interests. Callister’s atomised individual consumer 1s pitted against tne planned might of tne transnational with its distorted markets and its manipulations of governments,media and consumers. The fact that markets are more and more contrivances to benefit an international elite is something to be ignored. Instead, consumer demand is facilely assumed to dictate the terms of the market ~ as if so many consumer desires were not created and fostered by mass advertising. In posing the challenge of the global economy, Mike Moore, tne apostle of free trade, GATT and all its works, joined Helmut Schmidt, the West German Chancellor, in attacking national! economic strategies as anachronistic in our present day world, especially for small countries like the Netherlands, Luxembourg and Aotearoa/NZ (The Press, 16/8/88). Mike, too, has rhapsodised about the “internationalised" consumer as he faithfully echoed the themes of the multinational PR machine. Fewer and fewer large corporations are controlling more and more of the world’s production and trade of goods and services. Callister recognises that for our own country, "the outcome of further opening up of the economy over the 1960s, if measured by GDP or employment growth, indicates that for many industries, groups and individuals, the problems created have more than matched the new opportunities offered" (p.3). continued on page 67aoe Review. Defeatist views from a Defunct organisation Direct Foreign Investment: Changing patterns over the 1980s by Paul Callister New Zealand Planning Council, September 1991 Reviewed by Bill Rosenberg This 64 page booklet was almost literally the last public act of the New Zealand Planning Council before it followed most other government bodies giving advice in competition with Treasury: into oblivion. ‘The booklet is a technical supplement to Expanding our horizons - New Zealand in the Global Economy, also reviewed in this Watchdog. CAFCA knew of its existence because we were asked to supply material in late 1990. We are quoted briefly but the publication otherwise shows only passing recognition of our concerns. No-one would expect any radical analysis from this type of publication: but it might at least provide useful information on which to base an alternative view. Though some interesting statistics are brought together, on the whole the Planning Council failed to do this authoritatively Globalisation ‘The booklet is about the “globalisation” of the international economy and the effect on Aotearoa. "Globalisation" is a fashionable word which has been invented as a euphemism for imperialism in its modern form, "Globalisation" is a label for the fact that transnational companies now so dominate international trade and investment that national boundaries and national laws and enforcement are becoming increasingly impotent. No country, says the free market analysis of "globalisation", can withstand the forces of the markets controlled by these transnationals. Since it is futile to resist, we must hand over our right to control our own society by changing our rules to suit their needs. ‘The other view (CAFCA’s) is that if these trends are allowed to take control then we lose our social welfare, employment, clean environment, and political independence: it is worth making a few compromises in "economic efficiency” to create a country designed for the people who live in it ‘The analysis provided by the booklet is very much “on the one hand ... and on the other with few argued conclusions but a general weakness in reproducing the arguments against foreign investment - the second view. I won't look at the analysis in more detail: Dennis Small does in his review of the companion booklet. Statistical indicators Useful statistical indicators of these trends inelude the foreign ownership of our resources and industries (the "stock" of foreign investment in Aotearoa), the degree to which our foreign ade is simply exchanges between branches of transnationals (“intra-firm trade"), and the flow of foreign investment, ‘The last of these is reasonably well covered in this booklet: it is pointed out how foreign investment is increasingly taking place in the "service industries - finance, communications, tourism, transport - rather than manufacturing or primary industries, A weakness is that the effect on foreign exchange holdings - the balance of payments - is barely acknowleged.-§2- Intra-firm trade - one of the most important indicators because it shows to what extent our trade is simply trade within transnationals and not "free trade at all is not even mentioned. It is an area in which very few hard facts are known, and the Planning Council has done nothing (0 remedy this. A tantalising glimpse is given in the claim by the Manufacturers Federation (Press, 26 August, 1991) that Fletchers, Brierieys, Carter Holts, and Comalco represent 50 percent of Aotearoa's manufactured export earnings. On the importing side, all our oil and alumina imports, and most new car imports are likely to be via intra-firm deals In all such commodities, it is very difficult to discover whether we are receiving them at 4 reasonable “market” price, and when the transnational is manipulating prices and margins to its own ends. How much of Aotearoa is foreign owned? The first indicator - foreign investment stocks - would show to what degree our economy is foreign controlled. Official statistics are available 10 the government: it simply has made policy decision not to collate them any longer. The last such statistics were published for 1982-83 (in 1986) as "Companies with Overseas Affiliations” In 1988 I rang the Department of Statistics to ask if they were continuing the series - no, it was too expensive. I could buy them (for several thousand dollars) if I liked. The figures come from Inland Revenue returns, so the information is still available. ‘The Planning Council could have earned its abolition by commissioning an up to date set Instead it overlooked (or ignored) the available information and tried to guess from various surveys and indicators. The Dept of Statistics’ Business Patterns census is the only current official source of relevant information: it only shows foreign ownership broken down by number of employees and number of enterprises, These figures show that 17.5 percent of non farm workers were employed by firms with some degree of foreign ownership in February 1990. These firms were only 2.5 per cent of all firms. Foreign-owned firms are therefore on average bigger, and probably less labour intensive, more capital intensive than locally owned ones. So looking only at bigger firms, in 1987, 42 percent of firms with 100 or more employees had some foreign ownership; by 1990 this had fallen to 35 percent. This could have been due to the increasing concentration of ownership of our industry: it does not necessarily indicate falling foreign ownership of the economy A second source of information used is two studies by the NZ Institute for Economic Research (NZIER). It has surveyed samples of firms for other purposes ("rationalisation” and the effects of deregulation) which tended to be larger firms. The studies found 29 percent and 33 percent of employees were in surveyed firms with some foreign ownership. One study found that foreign equity in the surveyed firms had risen from 12 percent in 1985 to 32 percent in 1990. This is opposite to the trend in numbers of firms found in the Department of Statistics census. None of this tells us what proportion of Aotearoa’s assets are foreign owned. Even if the Council hadn’t wanted to fork out to the Statistics Department, it could have used available statistics to try to estimate current stocks of foreign investment. It would be possible to estimate this using those old statistics on Companies with Overseas Affiliations. Though these don’t give figures on net assets, they do give "paid-up capital", (and older series give shareholders’ funds) which gives some indication (assuming local and overseas owned companies have a similar relationship between their assets and paid-up capital, which may not be true). Some of the figures are given below; bear in mind that they include only companies furnishing returns to Inland Revenue and not exempt from paying tax here. “Overseas companies" are defined as those with 25 percent or more foreign shareholding.- 53 - Up to 1983, it appears that over 25 percent of investment stock was overseas owned; these companies paid proportionately less out in wages than locally controlled companies, and made considerably higher profits. Since 1986 (there is a gap of two years where neither series is available) the proportion of firms that is overseas controlled has remained steady, but their proportion of employees is significantly lower than the wages paid out up to 1983. It is unlikely there was a sudden crash in overseas ownership bringing employment down from 18 per cent to 10-12 percent in those three years (especially as it covers the first 18 months of the Lange/Douglas government). So it appears that, not only do overseas owned companies employ fewer employees, but they pay them significantly higher than average - as would be expected in more capital-intensive industries. Overseas investment stock (if number of employees is a reliable guide) was a reasonably constant proportion of all investment stock from 1986 to 1990, Disregarding the possibility of a sudden drop between 1983 and 1986, it seems likely that overseas investors still control around 25 percent of Aotearoa capital. All this could be confirmed more firmly by someone (like the Planning Council) with the resources to delve (and pay). ‘The 25 percent figure still does not give the complete story. In 1983, 60.8 percent of assets in the primary sector of the economy were controlled by overseas investors, and 39.3 percent of the secondary (industrial) sector. This latter figure is high for an "advanced" economy as the second table below shows. Only developing countries such as Mexico and Thailand have higher overseas control of their manufacturing sector; even the Philipines is not as alicnated. Aotearoa is not far off the secondary sector figure for Canada (46.0 percent in 1985) which has been described as "the most economically occupied country in the indusirial world” (Take Back the Nation, by Maude Barlow and Bruce Campbell, Key Porter Books, Toronto, 1991. 9). In 1983 only 15.6 percent of the assets of the tertiary sector of the economy (mainly service industries) were foreign controlled. That is likely to have changed radically since then: for example, overseas investment income from the services sector has risen from about half of all such income in the period 1976-1980, to 70 percent in 1986-89 (see table below). The proportion of overseas investment income that came from manufacturing halved from 46.6 Percent to 23 percent in the same period. Most of the recent foreign takeovers have been in the services sector: just think of Telecom, State Insurance, Postbank, Air New Zealand and Ansett, NZ Insurance, for example. Many of them have sacked workers in large numbers in the process. So what appears to be happening is that the most dynamic sector of moder capitalist societies, the services sector, is being lost to local control, while the former favourite of the transnationals, the industrial sector, is stagnating and losing foreign investment, While it seems that the total assets in the economy that are foreign controlled have remained relatively static, this can ony be inferred from employment figures. It is likely that the actual overseas control of the economy is understated by employment trends: most of the overseas takeovers have involved massive staff layoffs which have not lessened the importance of those enterprises to the Aotearoa economy.54. Overseas owned companies as percentage of all companies Year Noof Assessable Salaries No of Paid-up to firms Income____and Wages_Employ Mar 80 19 340 179 3) Mar 81 20 313, 182 24) Mar 82 18 365 178 m4 a) Mar 83 Lg 36.8 180 26 9) igures not available for these years) Feb 86 19 122 2 Feb 87 17 120 Q Feb 88 7 102 @ Feb 89 17 105, 2 Feb 90 19 120 (2) (1) Companies with Overseas Affiliations (Dept of Statistics) (2) New Zealand Business Patterns (Dept of Statistics). Only companies with 25 percent oF greater overseas equity are included in the above able, 10 match the definition used in (1) ‘Some international comparisons: Percentage of Assets owned by foreign affiliates Sector Country Primary, Secondary Tertiary Canada: 1985) 460 330 Denmark (1986) 6 Japan (1986) 19 08 Mexico (1986) 416 758 338 New Zealand (1983) 08 393 156 Philippines (1987) 16 319 207 ‘Thailand (1986) 25 825 32 United States 132 Percentage of Employment by foreign affiliates ‘Sector Countr Primi Secondar ar Brazil (1987) 104 242 44 Denmark (1986) 124 : Fiji (985) ng 232 Hong Kong (1987) 19 Indonesia (1980) 109 lretand (1987) 428 Italy (1985) ug Japan (1986) 08 04 Malaysia (1986) 252 39 156 Mexico (1985) 38 22 Netherlands (1987) 140 40 New Zealand (1987) 12 183 87 Paraguay (1985) 03 33 24 Peru (1988) 68 Rep. of Korea (1986) 95 United States (1987) 3 36 ‘Uruguay (1987) ns Source: For all but the New Zealand data: "World Investment Report 1991: The Triad in foreign direct investment United Nations Centre on Transnational Corporations, United Nations, New York, 1991, pp 99-100 New Zealand data from sources quoted above. Income from Private Overseas Direct Investment in NZ percent of income by industry group Average flows 1976-80 1981-85 1986-89 Primary sector 12 03 66 Secondary secvor (manufacturing) 466 355 3B. Tertiary sector (services) 52.2 2 703 Source: Direct Foreign Investment: Changing patierns over the 1980s, p36, quoting data from Department of Statistics,“55° Overseas Investment Commission August to December 1991, January 1992 deci Commentary and index prepared by CAFCA A consolidated index to all 1991 decisions is available from CAFCA, Requests should enclose $5 and specify either printed or on IBM compatible disk (Wordperfect 5.0 or text format). Enclose a suitable disk and specify format if required on disk. CAFCA is now routinely appealing to the Ombudsman all alterations and deletions from decisions released by the Commission. Some new information as a result of this is noted below. August decisions ‘The foreign dominance of our flour and bread industry takes another, almost final, step this month with the absorption of the last sizable independent baker North’s Bakery Ltd by Allied Foods Co Ltd, a subsidiary of George Weston Foods Ltd of Australia, Norths had branches in Otago/Southland, Gore, Canterbury, Christchurch and Auckland. "The acquisition will provide Allied with a nationwide distribution network which result in increased market competition” says the decision, Maruia Springs Motor Inn Ltd is being sold by Garden City Helicopters Ltd to Hotel Shuzan Ltd, of Japan, owned by the Ogino family, for $332,182. The sale of the hotel near the Lewis Pass includes 1.8176 hectares of rural land in the middle of the Lewis Pass National Reserve. "The hotel is at present in a rather rundown condition and ancillary facilities are extremely limited. The intention is that the hotel will be upgraded and facilities improved and extended.” Quality Inn Hotel, Durham St, Christchurch is being purchased by Casuarina Enter- prises Ltd, owned by two Singaporeans, Mr Chee Jeow Foo and Dr Yung Kuan Foo. It is being sold by Citicorp New Zealand Ltd and Citicorp Investment Management Ltd as mortgagee of Durmore Properties Lid. ‘A.ULS. company has approval to operate a regional cable television service in Aotearoa. Comsys Ltd has approval to issue 360 shares 10 Todd International Ltd (240 shares) and Jack Augustinus Maria Van Der Star. "Comsys intends to pursue cable entertain- ‘ment business opporminities in the recently deregulated communications area. The Commission is advised Comsys proposes initially to provide state-of-the-art cable entertainment and telecommunication services to the Southern Coast region of the South Island, and ultimately through the southern region and other regions of New Zealand as opportunities arise. A small number of jobs will be created." ‘The Australian life insurance company National Mutual Life Association of Austral- asia Ltd is king over East Coast Permanent Trustees Ltd and renaming it New Zealand Permanent Trustees Ltd. ‘The National Bank of New Zealand Ltd (a subsidiary of Lloyds Bank PLC, U.K.) is taking over a Lion Nathan subsidiary, Southern Properties Ltd for $13,910,000 as “an integral part of a financial arrangement between the National Bank of New Zealand Lid and Lion Nathan Ltd." Ariadne Australia Ltd appears to be poising itself to make a full takeover of both Kupe Group Ltd and Euro-National Corporation Ltd. The OIC has given permission for this. Ariadne was given consent jointly with Renouf to do this in April 1989, but- 56 - now wants to be able to do it alone. Both Kupe and Euro-National are in severe financial strife. With a justification typically thin enough to be acceptable to the OIC, the Hong Kong company Shriro Pacific Ltd has been given approval 1 acquire up to 50 per cent of Transmark Corporation for $11,191,85647. Transmark was already 42.97 per cent overseas owned. The justification was that Shriro "as yet has no presence in New Zealand and sees the acquisition of a shareholding stake in a company with similar com activities as being the preferred means of entering the New Zealand market. The ot lend set Dene oe of the criteria will result from the propo- ‘Telecom Corporation of New Zealand Ltd has approval to buy out its partner in commercial computer networking company Netway Communications Ltd for approxi- mately $14 million. Netways is currently 50 per cent Telecom owned, the other 50 per cent being owned by Freightways Services Ltd. It is currently “not profitable" Singaporean company, Transco Investments Pte Ltd owned by the Mulani farnity, this month gained approval to increase its shareholding in Salmond Smith Biolab Ltd by up to 13 per cent (formerly 22 per cent). The OIC considered Salmond Smith to be 27 per cent overseas owned before this transaction. According to the Christchurch Press (25 July, 1991), Transco gained its 22 per cent holding from Sun Alliance and AA Insurance in July. These appear to have been acquired without OIC approval because less than the threshold of $10 million was paid for them. On 6 September the Press reported that Transco had raised its shareholding to 24.9 per cont (just below the OIC’s criterion of 25 per cent for control of a company) and Mr Mohan Mulani had gained a seat on its board. In a “group financing transaction”, Ford Motor Company, via its Canadian subsidiary, has acquired 60,000 $1 redeemable preference shares in subsidiary Lydon Industries Ltd for $60 million. In other commercial property, the controversial US-owned City Realties Ltd is acquiring Rural Bank House, 34-42 Manners St, Wellington from Witson Neill. City Realtics is owned by Gulf Resources and Chemical Corporation (more details in the October sheets below). Mirassou Holdings Ltd of Hong Kong has approval to buy Rural Bank House in Cathedral Square (corner Colombo/Gloucester Streets) for $10,075,000. Safe Ocean Ltd, whose country of ownership has been deleted from the released decision, has approval to buy Telecom House, Manukau City for a censored amount. Post Office Bank Ltd, a subsidiary of ANZ, has been told by ANZ to buy for $17,925,000 the 203 Queen Street, Auckland building ANZ has leased since April 1969 from Suecess Fou Holdings Ltd. In mining, Sabminco (NZ) Pty Ltd, subsidiary of Sabminco N.L. of Australia, has approval to carry on business, namely "to investigate the potential for the exploitation of mineral resources in the application area (Thames - Coromandel area). The particular minerals of interest are gold and silver.” Substantial changes are taking place in the ownership of miner United Resources Investment Holdings Ltd. Stewart Petroleum Company Ltd, a New Zealand Oil and Gas Company Ltd subsidiary is increasing its interest in United to 29 per cent (an increase of 7.4 per cent). And GPG PLC (40 per cent Brierleys Investments Ltd, 42 per cent owned by other New Zealand residents), is acquiring up to 44 per cent of United. Although GPG and Brierleys are classed as foreign-owned, the Commission says this purchase will "have the effect of increasing the ultimate percentage of New Zealand ownership of United Resources.”- 87 - McDonalds Lime Lid a 52 per cent subsidiary of Milburn New Zealand Ltd (the Swiss-owned cement company) is buying out its partners in Ries Coalmines Ltd. The other partners in McDonalds are New Zealand Steel Ltd (28 per cent) and FERNZ Corporation Ltd (20 per cent). Ries was formerly 50.66 per cent owned by McDon- aids. McDonalds say they will now be able to provide more capital to make the mine “more viable and efficient” In rural land, two Indonesians are acquiring the remaining 76 per cent they don’t yet own of 2 295.3496 hectare rural property in Ardlui Road, Te Pirita, Canterbury, for $348,000. ‘This land is adjacent t0 a property they already own, which “will give the applicants sufficient economy of scale in landholding to support a management structure necessary to farm the property, and to carry out the artificial insemination and embryo transplant support work and management.” This appears to be contradicted by the statement which follows this: “The vendor has entered into a contract to lease the land which will enable them to stay in the business of farming." See the May 1991 decisions for further details of a scheme which appears to be effectively transferring embryo transplant technology to Indonesia. ‘The development of another golf course near Queenstown continues with further rural land purchases, though apparently on a smaller scale than originally proposed (see the March 1991 decisions). A Singaporean, Peter Fong, via Woodlot Farm Ltd, a 50/50 venture with a New Zealand couple, is trying 10 set up @ golf course on farm land. Woodlot now appears to have 49,18 hectares - down from the 87.915 hectares approved in March. This month saw 8.1427 hectares added to the previous 41.0373 hectare total. The 50 per cent share in Woodlot is valued at $800,000, the new piece of land at $160,000. "A condition is that any golf course developed will be available for domestic and international golfers alike.” ‘A. Singaporean couple with permanent residence and residential and commercial properties in Christchurch are buying a 256.2352 hectare farm on Trigg Road; Oxford, Canterbury for $380,000, which they propose to develop into a deer and tourist farm. New Zealand Farmlands is expanding a Southland property by buying a neighbouring 29.9448 hectare property at Taramoa. ‘A Swiss couple, via 2 company Cuddon Fromm Ltd are purchasing 2 8.43 hectare rural property on State Highway 6 and Godfreys Rd, Blenheim to "establish a winery, manufacturing wine using grapes from the surrounding district... The Fromm family have been involved in the wine industry for over 100 years and will bring a wealth of experience and expertise to the local scene ... Established contacts within the Swiss wine industry will ensure export sales, while new jobs will also be created.” Again in the wine industry, 25 per cent of New Zealand Wines and Spirits Ltd is being sold to Selviac New Zealand B.V., a subsidiary of International Distillers and Vintners Ltd of the U.K., and another 25 per cent to Gebroeders Steur B.V., a subsidiary of Allied Lyons Ple of the U.K., for "approximately" $31,250,000 each. The New Zealand company is 50 per cent owned by Lion Nathan. A partnership of Wines ‘and Spirits Holdings, Selviac New Zealand, and Gebroeders Steur will run New Zealand Wines and Spirits Ltd. September decisions ‘Air New Zealand has gained approval to issue $1 "B" class shares to a number of overseas controlled institutions, mainly financial, but also including Qantas, as follows:58 - ‘Westpac, 1,015,000 shares; National Bank, 1,755,000 shares; Kingfisher Nominees Ltd (subsidiary of Doyle Paterson Brown Ltd), 250,000 shares; Hongkong and Shanghai Banking Corporation, Hongkong, 250,000 shares; Barclays New Zealand Lid, 200,000 shares; ANZ Banking Group, 6,000,000 shares; Qantas Airways Ltd, 27,999,999 shares. It is also issuing 2,683,580 “A" class shares 10 eighteen other companies, mainly finance sector. The largest numbers of shares go to Buttie Wilson (491,690), Colonial Mutuai Life Assurance Society Ltd (691,600 to three associated companies), CS First Boston NZ Custodian Ltd (the consultant recommending the effective privatisation of the Health system, 298,490 shares), National Mutual Life Association of Australasia Ltd (383,500), and NPF (Equities) Ltd ($75,100). In commercial property the Chase group (in statutory management) is selling a property at 50 Anzac Ave. Auckland, and « Singaporean company, Albizia Invest- ments Ltd (wholly owned by Customhouse Building(s) Pte Ltd) has approval to buy it for an undisclosed sum, The OIC approves of this because “it will help to stimulate the currently depressed commercial property market.” Cigna Tower, Mercer Street, Wellington, is being acquired by the Mainzeal Group Ltd and the General Accident and Fire Assurance (U.K.) subsidiary, Sentryback Corporation (1971) Ltd for $19.25 million, General Accident also owns NZI Corporation and 20% of Countrywide Bank In rural land, another subsidiary of the UK giant, General Accident Pie (sce above), Kilburn Enterprises Ltd has approval to buy the 203.397 hectare Glen Oaks stud for around $2,250,000. A Dutch couple, acting through a solicitors’ shelf company, Nico (No. 32] Ltd are buying a 240,6350 hectare dairy/bull beef farm at Heddon Bush, Southland for approximately $810,000, with the intention of operating it, Japanese interests made up of Flying Colour Investments Ltd, Kiyohiko Hibino, and Yasu- hiko Mori are each buying 25 per cent of a New Zealand company, Penbone Services Ltd, for $112,500. The remaining 25 per cent is owned by a New Zealand resident, Dr A. A. Devcieh. Penbone owns an 83,3898 hectare block of land adjacent to the Rakaia River. The OIC says: "The property owned by Penbone is a waste residue area adjacent to the Rakaia River. The proposal involves the development of the property into producing high quality Wasabi (Japanese horseradish) specifically for the Japanese market.” In another Canterbury rural property sale, two Japanese residents, Hiroshi and Kuniko Oishi, are paying $770,000 for a 142.5075 hectare property in Mairaki Downs Road, near Rangiora owned by Roydvale Holdings Ltd, to be renamed Oishi Japanese Exports Ltd. "The Oishi’s propose to use the farm as a base for producing and exporting agricultural and food products to Japan. It is intended that these products will include velvet, pressed venison and other deer products and possibly butter, cheese and wine. The Commission is advised that the Oishi’s are investigating setting up a processing factory for the slaughter and marketing of deer products (which is expected to be well received by local deer farmers). If this eventuates jobs will be created and it is possible that the vendors will manage the farming operations.” Mr Shinnosuke Saito of Japan is taking over the Kiwi Green Istand Ciub Ltd which owns a 264.2533 ha farm and tourist resort, with a view to developing a golf course. Mr Saito has applied for permanent residence with his family. A condition imposed by the OIC is that the resort and golf course remain open to international and local users alike October decisions The Southern Pacific Hotel Corporation Ltd (Hong Kong/U.S) which bought the Tourist Hotel Corporation when it was privatised, is selling the THC Hotel in Queens- town to Mayview Holdings Ltd “owned by Singapore, Malaysia and New Zealand interests" for an amount the Commission refused to disclose. In commercial property, the Queen City Centre complex on Albert and tt Streets in central Auckland is being sold by Chase Securities Investments Ltd (under-59- Statutory management) to Colwall Enterprises Ltd, a subsidiary of Perfect Match Investments Ltd for an amount again suppressed by the Commission. This case is a little intriguing in that the ownership of Perfect Match was also suppressed by the Commission. However, previous consents have been given to Perfect Match in February 1990 and January 1991 to acquire Winstone Pulp Intemational Ltd, the Karioi Pulp Mill, and the Waimarino and Karioi Forests. In February 1990, Perfect Match was said to be owned by two Indonesian residents, and in January 1991 said 10 be Hong Kong registered. We appealed the deletion of this information by the OIC. They advised (28 January 1992) "that due to an oversight the details were withheld.” Their replacement decision sheets give Perfect Match as being Hong Kong registered, owned by two Indonesian residents, The consideration was still suppressed, The U.S. runaway from its environmental responsibilities, Gulf Resources and Chemi- cal Corporation, renewed its permission to mount a full takeover of its partly owned Aotearoa commercial property company, City Realties Ltd. ‘The background to this is that the shareholding of the two companies is being rearranged into an incestuous arrangement reminiscent of pre-Crash company structures. City Realties has acquired 28 Per cent of the shares in its ultimate parent company, Nycal Corporation (U.S.A.) itself owned by the former head of the collapsed Anglo-American group, British businessman Graham Ferguson Lacey), The shares are worth $28.4 million on the share market. It swapped the shares for a $30 million industrial property in the British Midlands, Nycal has bought 35 per cent of Gulf from Inoco, a British company which until then controlled Gulf and City Realties. Nycal now owns 44 per cent of Gulf’s common shares. Gulf has bought up more City Realties shares, and now holds 91 per cent of City Realties (Press Association, e.g. Press, 10 October, 1991), It is interesting that Gulf's application to the OIC stated that it ‘owned only’ 61.4 per cent of City Realties; it therefore has apparently breached the regulations by owning more than it had_ permission for. We queried this with the Commission, who replied (28 January 1992): 1 advise that the New Zealand Press Association report that Gulf Re- sources and Chemical Corporation Gulf) owns 91% of City Realties Limited is incorrect. The actual position is that Gulf only owns 64.1% of City Realties as stated in the Commission’s decision sheet. For your information the 27% variance between the Commission’s decision sheet and the press report relates to the City Realties shares currently owned by Zclas Enterprises Ltd over which Gulf has a morigage as security for funds loaned to Zelas Enterprises in December 1989. ‘That Zelas, a $100 shelf company, is simply a front for Gulf (Press, 27 August 1991), appears not to concern the Commission, The story of the property in the British Midlands is interesting too: according to the Press Association, it was purchased when Inoco controlled the Board of City Realties "City Realties indicated in its interim report that a new board of directors, appointed when Nycal bought into Gulf, had reviewed the investment, "The directors of City Realties, having pursued the preferred route of selling the property for cash, recognised such a sale - if it could be achieved - may have resulted in a significant loss,” City Realties said.” City Realties has also caused “a in the U.K. by purchasing John O'Groats and Land’s End (Press, 3 December, 1991) Two brothers, one of them resident in Australia, have retrospective permission to buy 75 per cent of the mining company Rimu Gold: Ltd "whose only asset was 2AGOn mining licence, providing the two brothers with an opportunity to own their own gold mining licence on the West Coast.” ‘The French winemaker, Veuve Cliequot is buying a 78.46 hectare block of rural land in Brancott Valley, Mariberough for approximately $665,000. Veuve Clicquot (through subsidiary Widow Estates Ltd) “currently owns viticultural land which it has decided is unsuitable for the varieties of grapes it wishes to plant, The land being acquired is situated in a prime viticultural area of Marlborough known as the Brancott Valley. This valley has proved itself as a world renowned grape growing region particularly for the varieties Sauvignon Blanc, Chardonnay and Pinot Noir.” They will sell their current block of land, This sale raises issues of why a French winemaker is necessary to produce wine from land which New Zealand winemakers have already proved. In other rural land sales, a U.S. citizen is buying a 87.1731 hectare Arrowtown farm in Malaghans Road on which he intends to reside for six months of the year; a German National who has expertise in "genetic breeding” technologies has been give approval to increase his ownership in the 1798.2870 hectare Braxton Hill Station near Lumsden from 50 per cent to 75 per cent for $84,012; a 8.4 hectare rural property on Clevedon Road, Papakura, currently a “lifestyle farm’, will be sold to a Japanese company, T. 0. Farm Ltd for $560,000 to develop into “a thoroughbred horse stud and health resort", Telecom is acquiring small pieces of rural land all over the country- side for its cellular phone network (an effect of yuppidom on the landscape): this month 350m? was acquired in Potter Road, Albany, and 2.25 hectare in MeBeths Road, Coromandel; a Dutch migrant family is buying the Himatangi Service Station which is on rural land totalling 6.829 hectares; two British citizens are taking up residence on a 3.18 hectare rural property in the Russell Survey District for which they have paid $800,000; two Australians who intend to reside in New Zealand for six months of each year are buying a 113.835 hectare farm on the Wanaka-Hawea Highway for $326,750, initially to lease to a neighbouring farmer short of feed; and two U.S. citizens are buying a 2.0011 hectare property on Main Road, Omokoroa, Bay of Plenty owned by Tamar Design Ltd for $389,900, with plans to apply for permanent resi- dency and start organic farming, In forestry, a company half owned by Noumea interests, half New Zealand is leasing 4.05 hectares of land including a sawmill from its 50 per cent New Zealand partner, the Udy family. The company, Sawpac Export Company Ltd, is also issuing 25,000 $1 shares to Tradewood Ltd, whose shareholders “are involved in the timber industry throughout the Pacific/South East Asia regions." (In December, this approval was amended to the issuing of 33,000 shares, and owning, rather than leasing, the 4.05 hectares of land. Sawpac Export Ltd will be 80.1 per cent overseas owned.) November d jons ‘The alienation of the ownership of Carter Holt Harvey Ltd is recorded in this months decisions. One of the largest companies in Aotearoa, and one of the largest forest owners and operators, it is now technically an overseas-controlled company (owned more than 25% overseas), This has come about through Brierleys Investments selling its s 32% shareholding in CHH to a joint venture it owns 50-50 with the U.S, Interna: nal Paper Company for $454,3 million, The Carter brothers who head CHH have also announced they are resigning as executive chairman and managing director of the company. International Paper is considering putting one of its staff in as chief. CHH is in some trouble at present, trying to reduce its high debt levels by selling assets. This has included the sale of some of it Chilean assets. Intemational Paper is the world’s largest pulp, paper, packaging and forest products group with subsidiaries in 24 coun- tries, and 2.6m hectares of forest in the U.S, (Press, 23 November, 1991 and 21 January 1992.)-61- The Australian ownership of virtually all ovr flour and bread industry is reflected in a approval relating to Defiance Food Industries Ltd, Defiance is a subsidiary of De- fiance Mills Ltd of Australia which is Goodman Fielder Watties’ chief rival in the Aotearoa indusiry (and Australasia’s third largest). The OIC decision releies to De- fiance’s floating of non-voting preference shares 10 “various ‘overseas persons". It is raising capital without losing full control of the company. It is also raising $18 million by a share issue locally (Press, 14 December, 1991), The Ireland Group is its main presence in Aotearoa, The ownership of the Southern Pacific Hotel Corporation, the purchaser of the Tou rist Hotel Corporation, is revealed a little. Southem Pacific is owned by @ Hong Kong owned, British Virgin Islands domiciled, chain of holding companies ending in Hale Corporation Ltd, We said "a little”. The Japan/tiong Kong owned Millbrook Country Club at Lake Hayes near Queens- town continues to accumulate rural land. It has approval to buy a 0.3445 hectare parcel of land surrounded by their existing 191 hectares which has sub-division approval. It bought it for $60,000. In other rural land, a Tahitian is buying a 20.0925 hectare property off Te Tiki Street, Coromandel ‘Township, for $295,000. She and her husband “intend to develop the property (whose soils are badly degraded and of low fertility) through an extensive tree planting program and the establishment of a small orchard. ‘The property has previously been used as a lifestyle block and has sweeping views of the Coromandel and Hauraki Gulf (the land including one of the largest hills overlooking the township is quite steep in places). The applicant further advises that potential exists for the development of tourist accommodation/restaurant facilities.” The couple “are intending to settle in New Zealand permanently.” Beckitt Hills Ltd, a subsidiary of New Zealand Farmlands, the corporate farmer ‘owned by several insurance companies, is buying a 69.156 hectare rural property on Mathew Road, Benmore for $157,000 to use as an isolation unit for its adjacent farm. A ’model experimental farm’ will be established on a 88227 hectare farm at 120-142 Winters Rond, Christchurch being farmed by the New-China Agriculture and Animal Development Co. Ltd, owned by a number of local residents. Macraes Mining Company Ltd (a subsidiary of Union Gold Mining Company N.L. of Australia) is buying a 7.3996 hectare rural property at Reefton for $50,000 to build a “luge building to process prospecting samples (provided the prospects at Reefton justify it).” December decisions ‘One of the higher profile overseas takeovers features this month. Canwest Global Communications Corporation of Canada and Westpac Banking Corporation both have approval to acquire up to 100 percent of TV3 Network Holdings Ltd. Current control of TV3 is with Westpac which was left holding the baby when TV3 went into receivership shortly after its giant U.S. 15 percent owner, NBC, pulied out. In a surprise, unprincipled move made without public consultation, in March 1991 the government changed the rules for ownership of TV so that foreign interests could own 100 percent. This had been “requested” by Westpac which swapped the debt TV3 owed it for a 40 percent shareholding. It wanted to hold onto this and sell the rest to over- seas interests, Canwest, according 10 press reports, has bought 20 percent (Press, 21 December, 1991).- 62- Meanwhile, other shareholders are being lefi out in the cold, having to fight even for information as to what is happening. The company TV3 Network Holdings Ltd was set up to hold the assets of TV3, leaving existing shareholders with valueless shares. Eccentric Christchurch resident, US gambling millionaire Michael Sherry, who was TV3’s largest shareholder until the collapse, had to take TV3 to court to get informa- tion about the insolvency of the company. And to add injury to insult, a court has found that five high-profile former TV3 employees who were shareholders (George Andrews, Trevor Spitz, Jon Gadsby, David McPhail and Tom Parkinson) have to pay $144,532 for a call on unpaid shares in the worthless company. Lawyers for the five alleged fraud, deceit, the use of secret articles of association, and non-disclosure to the public by NBC. A counter-claim against TV3, NBC and others is being made (Press, 23 September, 1991). The original Broadcasting Amendment Bill on which the public had made submissions, raised the foreign ownership limit for broadcasting from 15 percent to 49.9 percent. There are now minimal safeguards as to quality and local content of our TV - the doormat-like OIC being quoted by the Government as one. TVNZ’s chief executive, Julian Mounter, commented that the 100 percent foreign ownership could prove disas- trous for broadcasting, He knew of no other English-speaking country that had allowed control of a major broadcaster to go to foreign owners. "We are not talking baked beans or tin cans. We're talking heritage, national identity and national culture.” (Press, 22 March, 1991.) Later, in a Listener guest editorial (29 April, 1991), he noted that “TV3 ... started with a whole host of Kiwi programmes, but as they ran into financial problems, the American shareholders, who had 15 percent input, cut back on local programming. Soon after the Americans pulled out, TV3 started putting more effort into local programming.” TV3 had also cost TVNZ 1000 jobs and virtual closure of two stations, Speculation is rife that TV2 will be offered for sale - inevitably to overseas buyers. Norwegian company Vartdal Fiskeriselskap A/S has approval to enter into a joint venture fishing operation with Amaltal Fishing Company Ltd. It is buying out a Talleys Fisheries subsidiary, Vartdal New Zealand Ltd, to cary out the operation. “The joint venture is a commercial fishing operation between Vartdal and Amaltal Fishing Company Ltd (New Zealand company) which will use the former company’s vessel under @ joint venture fishing agreement. Quota will be leased from Amaltal and a business arrangement will be entered into with Amaltal as to the processing and export of that fish, The Commission is advised that the applicant will introduce new technol- ‘ogy which will help improve the quality of New Zealand fish products in our overseas markets.” DFS Holdings New Zealand Ltd (presumably part of Duty Free Shoppers) is chang- ing is parenthood to a company incorporated in Bermuda (though owned in Hong Kong). In December 1989, a subsidiary of Duty Free Shoppers Intemational, Harbinger Investments Ltd, was given approval to take over the remaining 49.9 percent of Miles DFS Lid that it did not already own. (This decision was one deleted from releases to CAFCA by the OIC, but later released after appeal to the Ombudsman.) Both major overseas owned duty free shopping chains use tax havens for their parent companies. In December 1991, the Securities Commission stated that shareholders of New Zealand Duty Free were being given insufficient information about the interests of Worldwide Duty Free in the New Zealand company. "Worldwide Duty Free was a substantial security-holder in New Zealand Duty Free, but ... the commission had been unable to ascertain whether any other person might have a relevant interest in New Zealand Duty Free through Worldwide Duty Free.” A loan by Worldwide Duty Free to New Zealand Duty Free had been secured against New Zealand Duty Free shares. "The-63- (Securities) commission considered that Worldwide had a relevant interest in these shares and had requested that Worldwide give a substantial securityholder notice to New Zealand Duty Free and the Stock Exchange. Worldwide is registered in the Cayman Islands with its business address in Panama City. It holds 47.72 per cent interest in New Zealand Duty Free. [Securities Commission Chief Executive John Farrell] said that because Worldwide was registered in the Cayman Islands, the amount of information usually available to the New Zealand public for New Zealand-registered companies was not available about Worldwide.” (Press, 21 Dec 1991.) In July 1991 the OIC approved the issue of 5,514,000 $0.50 convertible preference shares in New Zealand Duty Free Lid (@ public company) to Worldwide Duty Free Lid (Panama, 3,334,000 shares), Pierson Heldring and Person NV (Netherlands, 1,680,000), and Schroders Asia Pacific Growth Fund (500,000). The OIC had apparently approved a much larger issue (30 million shares) in February 1991 but did not reveal that decision to the public, Sedeo Forex International Drilling Inc. the company contracted by Shell Todd Oil Services Ltd to provide an oil rig to be used in the Maui B project off the Taranaki Coast has permission to carry on business (up to $10 million). "This rig is effectively being used as a support unit as well as a floating hotel... The rig will ensure that Shell Todd Oil Services Ltd can exploit local natural resources, provide new job opportunities for New Zealanders and continue 10 reduce New Zealand’s dependence on imported petroleum." Clearly a solely altruistic operation. Sedco is a wholly owned subsidiary of Schlumberger Ltd, nominally of the tax haven (widely used by US companies), the Netherlands Antilles. Australian company, Spotless Catering Services (NZ) Ltd is taking a 52 per cent shareholding in Taylors Group Ltd (which was previously 7.8 per cent overseas owned, by Sun Alliance Life Ltd) Pan Pacific Properties Ltd are issuing 24,000,000 ordinary $1 shares to Tokyu Corporation of Japan, and S.C. Properties (NZ) Ltd "to inject more long-term capital into the financial structure of the Pan Pacific Hotel project”. Camera, office equipment and electronics multinational, Canon Ine, of Japan through its subsidiary Canon Australia Pty Ltd is taking over the remaining 31 percent of the shares it doesn’t own in Canon New Zealand Ltd. Mining company Orion Resourees NL (Australia) is acquiring 50.57 percent of the share capital of Summit Gold NL and 10 million options. Summit will now be 81.35 percent overseas owned (up from 65 percent). "The Commission is advised that the Principals of Summit and Orion have, over a 15 year period, been associated in senior technical and management positions within the mining and exploration industry.” ‘The UK Ellis Campbell Group have approval to buy two further blocks of land in Marlborough, one in Pelorus Sound, for forestry. In March 1991 we reported the * September 1990 OIC decision that A piece of Marlborough land is being sold to a UK forestry transnation- al because its owners couldn't keep the weeds down. The 240 hectares is being sold to Ellis and Sons Amalgamated Properties Ltd, a subsidiary of the family owned U.K. company, the Ellis Campbell Group, for $140,000 plus GST, for forestry. The Ellis Campbell Group “has been established for over 110 years and has significant forestry holdings in both Scotland and Georgia, USA, with the underlying philosophy of regarding forestry as a long term investment." It is being sold by Mareh- burn Land Co. Ltd because “it is difficult to maintain in pasture because of severe weed regrowth.”- 64 - Ellis Campbell is now buying 656.3 hectares in Yncyea and Four Fathoms Bays for $700,000, sold "because it is no longer an economically viable farming operation with large areas of the farm reverting to bracken and weed", and 151.1 hectares already in forest, cast of the Blenheim/Picton Highway, for $225,000. Two rural and sales are approved for Queenstown, A Hong Kong citizen (through Peak Capital Ltd) whose husband "is employed by Morningside Asia of Hong Kong, a company which has substantial New Zealand investments", and who "will utilise the property as his New Zealand opetational base" is buying @ 4.0646 hectare rural property at Dalefield Road, Queenstown for $295,000 und proposes to spend $150,000 "upgrrd- ing the dwelling”. A US resident has permission to acquire 25.15 hectares of rural land in the Remarkables Station in Queenstown and to develop the winery there. He and his family "are planning to seek New Zealand permanent residency.” In other rural land sales, a couple who are New Zealand citizens who live in the UK and Australia for nine months of the year are buying a 7.9477 hectare rural property in Clevedon for $450,000 "as a lifestyle block for their retirement”. Two citizens of the Netherlands with permanent residence permits have permission to buy a 2.2100 hectare property on Finnis Road, Pohangina, Manawatu for $42,500, on which they intend to build a house. A "UK/NZ” couple are buying a 5.800 hectare "lifestyle block” at 11 Charles Nairn Road, Te Anau for approximately $170,000 and intend to live there.A UK and a Japanese resident are taking 80 percent holding in a company buying a 4.136 hectare vineyard and winery near Blenheim (in receivership), for $286,970 each. Each claims to have export contacts. Two Indonesians who already own or lease over 500 hectares of land at Te Pirita, Canterbury for artificial insemination, embryo transplantation, pastoral and forestry activities, are acquiring a further 586.5238 hectare property in Te Pirita Road adjacent to their existing ones for $700,000. Internal company restructurings include China National Metals and Minerals Import and Export Corporation (of China) - subsidiaries Cheemimet Finance Ltd, China Intemational Engineering and Minerals Corporation, MMI Holdings Ltd, and CEMC (New Zealand) Ltd; Bowater Ple (U.K.) - subsidiaries Norton Opax Holdings Lid, and Bowater Overseas Holdings Ltd; Amcor Ltd (Australia) - subsidiaries Brown and Dureau International Lid and Brown and Dureau (NZ) Ltd; and General Accident Ple (U.K.) - subsidiaries General Accident Life Assurance Ltd, New Zealand Insurance Life Ltd, CFM Holdings Ltd, New Zealand Guardian Trust Company Lid, and Marac Corporation Lid. January 1992 decisions Fletcher Challenge, through its subsidiary Tasman Forestry is selling part of its interest in Crown Forestry Licences in Wairua Forest, Golden Downs Forest, and Rai Forest in Nelson and Marlborough and approximately 13,200 hectares of land to a company owned by U.S. pension funds and “non-profit, charitable and educational institutions", RIT New Zealand Forests I, Ine, which is registered in the tax haven, the British Virgin Islands. "The program is part of an overall programme of capital refinancing by the Fletcher Challenge group of companics. The proposal will allow control of the forests 10 be maintained while introducing risk equity capital to New Zealand 10 allow development of the forest potential”, says the OIC in describing the “benefit” of the transaction. Translated it means that Fletchers are feeling the pinch because things are not going very well, especially in their Canadian operations, so they are trying to reduce their debt by selling what they can, ‘The Kerry Packer empire in Australia, is preparing for a share float of its magazine publishing, printing and distribution business. Its Aotearoa magazines include Metro,- 65 More, North aad South, Woman’s Day, and the Australian Women’s Weekly, Rural Improvements Pty Lid, 45 percent owned by Consolidated Press Holdings Ltd, and percent by Austraiian institutions and public, has approval to acquire Australian Consslidated Press NZ Lid, a subsidiary of Australian Consotidated Press Ltd. Anotl er company, ACP Publishing Ltd, ‘will own all the interests of Consolidated Press Holdings in which shares will be offered in Australia and Aotearoa. The "bene- fits" according 1 the Commission are the continuity of Australian Consolidated Press Ltc’s publishing and magazine distribution business in New Zealand without change to staff or activities." In other words, the benefits (if you can believe them) are. that tothing will change, Impressive. 4 fishing joint venture between Sanford Ltd subsidiary Homewood Marine Ltd and erstwhile suppliers of chariered fishing vessels, Dong Won Fisheries Co Ltd of Korea, has been set up to “facilitate the easier access of fisheries products to the Korean market." Like some of the Japanese deals we have seen, this appears to involve an export partner taking over the firm when it becomes successful. The joint venture company, Jemico Marine Ltd, is 75 percent owned by Dong Won Fisheries and 25 percent owned by Homewood A tourist lodge is planned for Cromarty, southwest Fiordland. A block of land of 2024 square metres on which the lodge is to be built, is owned by a company, Kisbee Holdings Ltd. Formerly owned by A.L. Johnstone, he is selling 40 percent to a 50-50 joint venture company, Fiordland Wilderness Lodge Ltd, which is 50 percent owned by GAK.C. Wuu of Singapore, In commercial property, a Singaporean company, Newmarket Newzealand Ltd (sic) has approval to operate in Aoteaora: it is a holding company for shares in Jotham Developments Ltd which will purchase @ shopping centre at 277 Broadway, Auck- land. The "benefit" from the project has been withheld from public disclosure. In rural tand, a New Zealander resident in Australia is buying a 1676.3 hectare block of land in Horehore Road, Ruatoria neighbouring her brother-in-law’s property, for $228,938, to employ her wo nephews in mining, Union Gotd Mining Company NL of Australia is wansferring its share- holding in Macraes Mining Company Ltd (an Aotearoa listed company, “over 50 percent” overseas owned) t0 six curious subsidiaries: Darah Displays Ltd, Azura Properties Ltd, Emerys Developments, Fergal Industries Ltd, Kalil Designs Ltd, and Samphire Designs Lad. Macracs is named after a gold mine it has established at Macraes Flat in Central Otago, for which it recently reported a profit of $11.18 million for its first full year of mining (Press, 29 Febmiary 1992) and which it intends 10 expand. It recently bought out the Globe Progress Mine at Reefton from CRA (Comal- co's Australian parent), This is a gold mine that was worked until the later 1930's, yielding over 400,000 ounces of gold. Macraes hope to have it working again by the end of 1994, BMW New Zealand Ltd has permission to provide finance to its dealers to help them buy new and used BMW cars and motorcyeles. General Accident Fire and Life Assurance Corporation Ple (U.K.) the owner of the NZI group, is rearranging the ownership of several of its subsidiaries: NZI Bank, Merac Financial Services Lid, NZIMD Acceptances Lid, NZI International Finan. ciat Services Ltd, NZI Securities Lid, Sentrybank Corporation (1971) Ltd, and Armegh Properties Lid. Write to CAFCA if you require a copy of the index for the August 1991 to January 1992 ONC decision sheers.- 66 - OBITUARY Bishop Allan Pyatt ~ Murray Horton Bishop Pyatt, who died in November 1991, aged 75, was undoubtedly the most progressive Anglican bishop in the history of Christchurch. He held the post from 1966 to 1983, a period which spanned years of turbulent social change in New Zealand. Despite being one of the central pillars of the Canterbury Establishment, he was never afraid to stick his neck out on the major issues of the day. He spoke out against N2’s involvement in the Vietnam War, against apartheid and domestic racism, and against increased powers for the SIS. A WWII tank commander, he outraged the National government of the early 70s by preaching a courageous sermon comparing the Vietnamese “Viet Cong” to the French Resistance fighters of WWII (along the lines of “one man’s terrorist is another man’s freedom fighter"). Arm in arm with his Catholic counterpart, the late Bishop Brian Ashby, he marched in the front row of the big 1981 Tour marches. 1 had personal dealings with him over 2 decades. In the early 70s the Progressive Youth Movement (PYM) resolved that one of our members (Grant Mawson, later a CAFCINZ activist) would stage a weeklong hunger strike in a tent in the Cathedral grounds, in protest at NZ's involvement in Vietnam. The Dean, the Very Reverend Michael Underhill, refused permission - so, sacrilegiously, we waited until Sunday services were in progress and bunged up the marquee. The Dean called the cops, who promptly dropped the tent and evicted us (the hunger strike did its full week - in Keith Duffield’s van, in the Square). So that night, PYM, in the full flush of youth, marched into the Cathedral holding aloft placards such as "The Dean is a fascist pig" (ah, those were the days). Cops with dogs were on hand, and murder in the Cathedral seemed likely. From memory, it may have been the very night that Pyatt preached his famous "Viet Cong” sermon, He calmed the whole situation down, treated us to tea and bikkies (which "Socialist Action" reported with great malicious glee), and clad in his bishop's robes, personally drove home myself and my then partner, Christine Bird. From 1970-72 inclusive, PYM led highly controversial annual protests at Anzac Day services, in protest at NZ’s involvement in Vietnam (this is covered in detail in the video "Rebels in Retrospect", Vanguard Films, Box 3563, Wellington). Because the War Memorial is in the Cathedral grounds, the C of E got involved. Bishop Pyatt and I were among participants in a Wellington conference, convened by the National Council of Churches, to try and sort it out. (Other celebrities attending were Sir Hamilton Mitchell, Dominion President of the RSA; Neville Pickering, Labour Mayor of Christchurch; and Attorney General Dan Riddiford, who kept reciting Abraham Lincoln’s Gettysburg Address) .Despite living in the baronial splendour of Bishopscourt (since sold), Allan Pyatt was very much a man of the people. As a lifelong cyclist, I admired this impressively big man who pedalled around with @ "sissy" besket on his handlebars. The "picycling bishop" was such a fixture he featured on the nightly montage preceding TV’s local news programme, We ran into each other in a corner dairy once. He/d just returned from the Middle East, and was so engrossed in telling me about Yasser Arafat and the Palestinians that he overlooked being a few cents short. I covered the deficit (which reminds me, I must file a claim against the estate). I last saw him at HART’s party for the 10th anniversary of the 81 Tour. He was in fine form, and I had the splendidly ecumenical experience of simultaneously talking to both him and Catholic priest John Curnow. Both died within a few months of each other. Their respective churches are much the worse for their loss, and so is the broader community. I don’t normaliy mingle with bishops, nor have much good to say about them. Allan Pyatt was the exception, a progressive bishop and an exceptiona: man. He was widely respected, and even more important, widely loved. He will be sorely missed. Fron page 50 But tne message of Expanding Our Horizons is to press on into the Brave New World of the Transnational: "In New Zealand, we must be aware of these changes and look for ways of adapting to them" (p.5). Callister notes, "As globai firms search to expand their territory, there is potential for a particularly rapid buildup cf investment in New Zealand" (p.2”). We stand warned. To regain centro! over our own lives, we must realise, as Orweil made clear, that the use of language is vital to the defence of freedom, When our Health Department was struggling against the drug companies, the United States and other countries backed their multinationals with the taunt, "Hey, are you a banana republic or what?!" (Listener, 29/4/91, p.22), Here is the ultimate perversion of language. The very label “banana republic" arose out of the exploitation of the countries of Central america by US multinationals! If the people of Aotearoa/NZ are to prevent their corntry becoming yet another banana republic, we will have to urgently step up the campaign against the inroads of foreign control. The NZ national identity will be lost unless we fight for it.- 68° SOLIDARIDAD the Best Magazine on the Philippines ~ Muzray Horton CAFCA has been receiving Solidaridad semi-regularly for over a decade (we exchange Watchdog for it). In my humble opinion it is far and away the best source about the Philippines, particularly for outsiders. It is in English, quarterly, and extremely comprehensive, Ezch issue has a theme. We first got in touch when CAFCINZ was researching NZ military activities in the Philippines, in the early 80s. It was essentially our only source on the Philippines for several years. My first personal contact with Filipino activists was when I visited its editorial office in Tokyo, in 1984 (in the Marcos years, it operated from abroad). One of the highlights of the August 1991 ecumenical Mass for John Curnow, in Manila, was meeting leading figures from Solidaridad, people with whom I’d only previously corresponded. The magazine comes from an honourable lineage. The original, La Solidaridad, was the journal of the bourgeois nationalists who led the revolution against Spanish imperialism in the late 19th century (which was replaced by American imperialism). Now Solidaridad is mounting a major drive for new subscribers. Each issue costs §NZ6. Payment must be made by international postal money orders or bank drafts in $US, preferably from a US bank. Address all correspondence to: Solidaridad Foundation, Box 10344, Broadway Centrum, 1112 Quezon City, Philippines. PLUNDER We've still got copies left of Roger Moody’s superb book, the definitive study of Rio Tinto Zinc, ultimate owner of our very own Comalco and much else besides, on every continent on Earth except Antarctica (give them time). Right now we’re getting warnings of midwinter power cuts. The last time that happened in a big way was in the mid 70s, and attention focussed on the fact that Comalco’s Bluff aluminium smelter got priority with uninterrupted electricity, Nothing has changed, except now that Comalco wants to get its hands on the power supply at Manapouri. The book costs $20 to members (as opposed to $25 for the public) . If you have contacts in bookshops, the price to them is $15. There is no charge for post or packaging.