Housing ban doesn't breach trade agreements | The Jackal

29 Jul 2013

Housing ban doesn't breach trade agreements

Today, Stuff reported:

Labour's proposal to restrict foreigners buying New Zealand property could clash with the country's free trade agreements, including its multibillion-dollar arrangement with China, an expert says.


Commercial lawyer and former Act MP Stephen Franks says it could directly contravene the FTA with China, under which New Zealand exported goods valued at $6.9 billion to China last year.

I presume that Michael Fox and Vernon Small attributing the word "expert" to anybody who has been in the Act party is meant to be a joke?

Why the article fails to also mention that Stephen Franks was the National Party candidate for Wellington Central at the 2008 election seems strange. He lost the contest by 1904 votes to Labour's Grant Robertson and clearly has a vested interest in trying to discredit Labour's policy.

Franks said it appeared the proposed New Zealand restriction would clash with the 2008 agreement, signed by then prime minister Helen Clark, which says the signatories cannot discriminate between local and Chinese investors.

Well, if Franks had actually bothered to read the entire Free Trade Agreement Between The Government of New Zealand and The Government of the People’s Republic of China (PDF) instead of just cherry picking the parts that support his defunct argument, he would realise that his reasoning is entirely flawed. In fact one of the main articles in that agreement states:

Each Party shall accord to investments and activities associated with such investments, with respect to management, conduct, operation, maintenance, use, enjoyment or disposal, by the investors of the other Party treatment no less favourable than that accorded, in like circumstances, to the investments and associated activities by its own investors.

That means China is obliged to not limit New Zealander's buying property in China. On the other hand, the New Zealand government is obliged under this agreement to actually limit Chinese nationals who don't have New Zealand citizenship from purchasing property here. China is currently in breach of the agreement, whereas Labours policy would simply give China no less favourable treatment than that provided to New Zealand.

Stephen Franks trying to cover his butt by saying "there might be exemptions I'm not aware of" simply doesn't cut the mustard. He's obviously made up an argument that doesn't stand up to even a blogger's scrutiny, which I might add is like most of the now obsolete Act party's policies. Clearly the idiot Stephen Franks is no expert.


The exemption for Australians arises automatically from the CER agreement, which was signed before the China FTA. The China FTA says that Chinese get any special treatment that any other country gets (known as most-favoured-nation status) EXCEPT for stuff in FTAs signed before the China FTA.

H/T Lightly