CAMPAIGN AGAINST FOREIGN CONTROL or AOTEAROA

Number 69

April 1992

Contents

Page

New foreign investment rules: anyone but stupid criminals 2

Education and foreign investment: an example 3

Vultures gather - but we ain't dead yet: Auckland conference

for foreign investors 4

There's money in misery: investors eye the health system 5

Can't Pay ... Won't Pay ... Don't Pay Twice . . . . . . . . . . . .. 6 Revealing GAIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 7 Intensifying Economic Exploitation: Imperialist strategies in the

Asia-Pacific region, by David Small 18

The Professor and the CIA 25

Uncle Tom Skinner: U.S. agent . . . . . . . . . . . . . 26

F.P. Walsh, the Special Branch and Wolfgang Rosenberg 27

Cullen's Yankee Junket 30

Legal costs appeals: Warren Thomson, Sue Bradford Be Co. .. 33 Forestry investors want NZ Economy clearfelled g and Guy

Salmon cheers them on ...,................. 35 Star goes into black hole, by Murray Horton . . . . . . . e • • • • • 38 Reviews:

Global Companies and Public Policy:. the growing challenge of foreign direct investment. reviewed by Wolfgang Rosen-

berg 41

Expanding our Horizons: NZ in the Global Economy, review-

ed by Dennis Small 48

Direct Foreign Investment: Changing patterns over the 1980s,

reviewed by Bill Rosenberg 51

Overseas Investment Commission: August 1991 to January

1992 decisions ...............,........... 55

Obituary: Bishop Allan Pyatt 66

Solidaridad, the best magazine on the Philippines . . . . . . . . . 68

Plunder 68

01110896.

Christchurch, the source is

Published by CAFCA~ PoQ Box 2256 issue may be reprinted provided

· 2 ..

New Foreign

rules: anyone but stupid

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 effon 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 crirn 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

any purchase any out (January buy a 24.9 per cent not even insisted on

fuss over capacity

most, as

criminals now only be allowed to

New ventures." Up to now the Commission has

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 and islands, and rural land - every proposal for foreign investment, regardless of the amount involved, will require clearance, Proposals for sensitive areas will need to meet the three criteria [outlined above] and some additional requirements.

The investment in a sensitive area will have to make a significant contribution to 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 Minister Finance, but decisions relating to foreign investment in sensitive areas will require the concurrenee 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 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 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

foreign investment

One example of overseas investment that never reached the Ole (being below the $10 million limit) had University staff simultaneously horrified and hysterical. The Massey Engtish Language Centre was initially called the Massey University English Language Centre but was forced to drop "University" by the NZ Qualifications Authority. It got the "University" in its name 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 disillusioned 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 Centre closed. Massey University is trying to disassociate itself from the embarrassment, but is trying to find places for the students, The Association of University Staff 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 sBctor su,,"rrdt, it (see There's Money in Misery, .. in this issue) there was also the "New Zealand Invest.ment 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 S.G. Warburg. The principal sponsors were the BNZ, Brierlays, Fletcher Challenge, and Telecom. "Associate sponsors" were Air New Zealand, Magnum, and the hotel itself. "Contributing sponsors" were American Express, Avis NZ, Canon NZ, Telerate, and TN'!' Worldwide Express.

Essentially it was a glorified auction, aimed squarely at multinationals and NZ big business. All the big guns were rolled out - Ruth Richardson was the opening speaker, followed by Don Brash Bolger was the keynbte speaker on the second night, with Electricorp chairman, John Fernyhough, on at breakfast the next day; Hugh Fletcher for lunch; and Brierley's Paul Collins for dinner. The final session was 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, deunionised economy. We do not want to live in a 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. It is time to say enough is enough".

THERE'S

IN

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 about 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 sel1- 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 erivatisation of the public health 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 I' who believed the individual should bear the risk of injury and/or i LLriee s , 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 coali tion also says a lheal th sector summi t I' being organised by a private company in Auckland in April shows the erivate health ftecto£ is gearing up to make money out of the health reforms... The

conference, to be held t rom Apr_il 6 to 8, i s been organised by AIC Con i e rerice s , which is part the Euromoney Company, a worldwide group specialising in financial topics,"

"Some of the topics listed include survi ving and profi ting in 'today's business environment r I effecti ve property management, tio sp i t el s as a business, consumer reaction to the changes, managing the impact, INVESTMENT OPPORTUNITIES FOR 'THE OVERSEAS PLAYER' r 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 doni 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, j o i n 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 Christchurch, phs (03) 3588495/796970. Donations welcome.

If you decide to JOln 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!

", 7 ~

The leaflet below was published in September 1991 by the coalition GATT Watchdog, which CAECA 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 unsolicited 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 Tarrfts and Tr ,IUe (GA IT) may not be the preconceived idea of many people. These people fail to recognise that GA TT wrl] art c': I every aspect of our lives. GKIT is about more than selling our dairy products to Europe! It is about selling .lHHf,'1 over our: labour, education. health care, legislation. environment. natural resources. land rights. sovereigru ,

Up until the second world war, most international trade was through bilateral agreements and trade treaties In 194X the dominant industrial nations (those responsible for most of the worlds trade) signed the first Genera! Agreement on Tariffs and Trade (GATI). At this time many of these industrialised countries still had control over colorues .n the South.

In the past GA TI 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 powerful transnational corporate Interests The measures promoted by GATT. have clearl y strengthened transnational corporations' control over the negotiation process. We are not talking about free trade! We are talking about freedom from restrictions to make It easier 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 firms. The "right of establishment" allows trans nationals to set lip shop or acquire existing businesses without interference 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 to implement GAIT measures. Governments not amending domestic legislation to GA TI specifications. would face retaliation against their exports.

The sale of our assets to overseas interests has been held up through Maori injunctions. Under GA TT, these decisions would be overruled, which is contrary to the Treaty of Waitangi. Legislation governing tobacco advernsing would also need to be repealed. GATT includes rules that gives advertisers the freedom to advertise anything. anywhere

Food Security

The Economic Commission for Africa, considers the viability of Africa to he dependent on its ability to feed 1\5. 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 would force developing countries to abandon barriers and subsidies needed to support domestic agricultural production. These controls are needed In many developuig countries to maintain farm incomes and raise production to sel f-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 self-reliance.

While GA TI will be largely favourable to our agriculture. it will also have some negative effects Our farmers would no longer be able to use "supply management". OUf fishing industry would need to be reorganised. as fishing quotas would be seen as a subsidy

Intellectual Property - Patents

During the 1970'5 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, GA TI is a complete turnaround The proposal to regulate intellectual property would enable transnationals to patent goods and then charge to llse them So. transnational corporations could patent seeds that are indigenous to Third World countries. and then c~arge the

countries from which the seeds originated for the right to use them! Instead of being able to produce generic drlJg~ to meet basic health needs of the poor majority. developing countries. and ours. would have to pay huge royalneand raise health charges. These are policies a debt burdened South can ill afford. To advocate free trade and then move to protect your patents seems hypocritical

Environmental Protection

The use of export controls to protect natural resources is widely used by smaller countries. The bannmg ot nauve timber chips exports was aimed to protect South Island beech forest from Japanese paper manufacturers Although we 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 possibil it)' 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 beneflt by taking out patents for our agricultural expertise, or easier access to the European market (in theory), it means increased prices for less developed countries. Much of the rhetoric we have heard in the media has emphasised how good GA Tf will be for our agriculture. It is what we haven't heard that should concern us.

Many of the policies that have been proposed in the Uruguay round will have a negative effect. They seem to cater for transnational corporations in the North, at the expense of developing countries in the South, Parts of GATT are contradictory. Do we fully understand how GA TI will effect us? Do we understand the likely effects on developing countries? Is GA TI really in our interests, or is it serving the needs of transnational corporations') Is free trade fair trade? If we can answer "yes" to these questions, we might be in a better position to assess the merits of GA Tf

Sources. Catholic Institute for International Relations. Submission to Director General of GATT 20 July 1991 Economic Justice Report, Volume U Number I March 1991. GATT Watchdog Group, Notes from 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

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 MERT ( 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) SOVEREIGNTY (p.l)

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

~ 10 .

'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!

LDCs with few except ions 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 LDes;

The Harare Communique, issued by the October 1991 Commonwealth Heads of Government Meeting, which is heavily dominated by African and other LOC 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'i

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 LOCs, as well as being of fundamental importance to New Zealand;

For net-food importing countries, current low wor Id food prices are artificial. They depend on massive subsidies from OECO 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.

(C) INTELLECTUAL PROPERTY

The paper's arguments on pharmaceuticals acknowledge that no new lifesaving drugs will be unless the companies producing them can see an return on the very large investments required;

fail to produced adequate

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;

Page 2

GATT does not give advertisers 'the freedom to advertise anything anywhere';

Fishing quotas are not seen as a subsidy they may be a NTM - Non Tariff Measure);

although

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 was sent

Trade (MERTJ in a

Farmers

1. Overall

MERT accuses the GATT Watchdog (OW) paper of being biassed and selective. OW was formed in response to the highly partisan view of OA'IT 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 OW publication the MERT letter refers; we assume it is to our leaflet, "The great GA TIs-by! II,

b. How the letter arose and at whose instigation;

c. Its date and author, and hence its official standing.

OW make the general comment that MERT appears to be overly parochial in its replies to our points. OW includes International Development groups who see the effects of GAIT from an international perspective - in particular the effects on people in developing countries. Some of our points are aimed at showing the negative effects on New Zealanders. Others, while acknowledging there may be positive effects for New

Zealanders, disastrous for communities other

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. Speciflc comments

a. Sovereignty

The MERT reply to 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 OW'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 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 reach an agreement on the agriculture issue. OUf negotiating position will be largely irrelevant.

This interpretation is corroborated by observers at some of the talks who cornmented on the dominance of the US and EC the negotiating process'. It is also

- 13 -

the letter itself where it ,",v',,,,,"'''''''

Intellectual will not

that New because otherwise

pVA"",,,,,, • the Ee must

Food Security

Firstly, MERT criticises OW for being "internally inconsistent" in its thinking on food production. As an example it contrasts OW criticism of US and EC subsidies to its criticism of "OA IT for seeking 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 OW fears is that if protection of weaker economies is not permitted under GAIT. 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 wen-known in these countries.

However, the argument over protection is not limited to agriculture. New Zealand is 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 sire 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 OA IT 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 Cairns Group ("the majority are LDCs") and increasing LDC membership of GA'IT.

OW not dispute that agricultural sector of this country, as one of world's

most efficient agricultural producers, will benefit if world trade in agriculture freed

up. So will the export sectors of many LDCs. Those are the interests that are represented in the Cairns 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 GAIT. OW's response is that many, probably most, of 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 IMP, World Bank, US Government and private banks, all of which have an interest in supporting free-market policies. Roll-over of debts new loans are to be impossible to obtain without such a change in

- 14 -

not

in the interests

Take the example represented at the Uruguay of

negotiations terminally unpopular governments following radical free-market

policies. The that is said of these policies is that they are as yet unproven;

many New will say they are disastrous.

c. Intetlectual Property

OW has out that proposals for GA if agreements on Trade-Related Intellectual

Property 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 adequate return on the very large investments required." This unfortunately follows the pharmaceutical companies' line 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 hut 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, hut protection of the unreasonable monopoly rights of pharmaceutical companies.

It also undermines recent attempts by our own government to import brand-name drugs from cheaper sources could be obtained from local branches of the pharmaceutical companies, and to make increased use of generic drugs. These attempts foundered after

veiled threats of retaliation from US government'.

OW concerned that the NZ Government is willing to allow a restrictive agreement on Intellectual Property Rights order to make gains in the agricultural arena.

The MERT letter quotes from Article of the GA'IT which, it says, allows exceptions 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 fundamental tenet of 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. ,,3

The conservation provision yet to be

even provisions were to be taken at face value, they would by no

means cover all environmental concerns.

- 15 '"

can a

it is reported that

export on raw

a the dual purpose

protecting the forests use that encourages further

processing of 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 treatment 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" has far-reaching implications, It will lead towards international standards in environmental. 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. OW has little 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,

e. General Points

MERT claims "numerous factual errors". In fact the examples they give are mainly differences in interpretation.

The role of Transnational Corporations

While transnational corporations (TNCs) may not have direct control over the negon 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 trade 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 Representative's] request, in

developing the official proposal on intellectual property that the US Government

tabled before the TRIPS [Trade-Related Intellectual Property] working groups

October " It says its "close relationship with USTR and Commerce has permitted the !PC to shape the US proposals and negotiating positions during the course of the negotiations." A US agricultural trade negotiator at GAIT, Daniel Amstutz, who drafted and presented the US plan for agricultural trade, is a 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 OW. However it seems a major weakness in the government's consideration of the effects of GAIT 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 -

."u,~ou,';.. has a state all cigarettes

"Y{""<Ant in Thailand, New also has a ban on

advertising for health reasons. Several large US tobacco companies have

Government to sanctions against Thailand for "unfair trade

They want access to the Thai market. Part complaint is that the

should be lifted because the long-standing monopoly of Thailand's national tobacco 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 GATT.

Fishing quotas

MERT correctly says "fishing quotas are not seen as a subsidy (although they may be a NTM [Non-Tariff Measurej)". 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 simply have no need to use the GATT's supply management provisions. II Yet our producer boards have in effect been practising local supply management for decades: and pear sales are a remaining example. More

importantly. the Dairy Apple and Pear Board, Kiwifruit Authority,

Wool Board all either have export monopoly rights granted to them and/or act to

manage supply for export The Minister of been

arguing the need for in the Meat industry. Perhaps supply

management can dispensed it will the ability of the Apple and

Pear Board to to see if the boards;

powers can tightened GATT provisions

This is an instructive subject on to it shows up

inconsistency and double standard of the GATT It is estimated

40% of world trade is now "intra-firm" trade: branches of single TNCs8.9

This largely escapes market forces: prices are internal ones, set to suit TNC's bottom line. Such artificial transactions, may hide supply management (practiced by many in a 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 to be beyond the control of

Individual nations have singularly unsuccessful in regulating such behav-

iour. and subject to threats of trade retaliation when they have tried (such as the case

of pharmaceuticals),

""'"""",'!-n',""" is heavily biassed in favour the economic powers where most of the

are owned - the US, Ee, and Japan. Smaller economies like New must

use such trade tactics (as the Dairy Board and Apple and Pear Board have done with outstanding effect for our farmers) to survive so must do it government regulation.

.. 17 ~

will be subject to practices unhindered

trade retaliation while TNes continue

Even the remedies available under GAIT favour the powerful. Trade retaliation is a 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 counterretaliation.

Free Trade is not Fair Trade.

GAIT 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. Its postal address is P.O. Box 1905, Christchurch.

1. For example, p17. Multinational Monitor, November 1990, "Recolonization and the Third World:

an Interview with Martin Khor Kok Pen":

"The Third World countries have very few diplomatic staff in Geneva compared to, say. the United States, which has a very big, knowledgeable staff. Those diplomatic staff of the Third World in Geneva have to cover not only GATT but also all other international agencies, such as the World Health Organization, the United Nations Center for Trade and Development, the International Labor Organization and so on. [It is difficult] even to follow what is going on within the GAIT negotiations because you may have three or 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.

2. 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 GAIT", by Steven S hrybm an , counsel for the Canadian Environmental Law Association. Shrybrnan quotes GATT, Analytical Index, Notes on the drafting, in~tiQn and application of the Articles Qf the General A~1ll,_ (3rd Edition). Geneva. 116.

4. For example, pIS, Finance and Development, June 1991, (publ. IMF/World Bank), "What IS at Stake in the Uruguay Round?", by H. B. Junz and Clemens Boonekamp:

" ... 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. p8, 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. Ii

7. p212. TIle Ecologist, Vol 20., No 6, November/December 1990, "Free Trade and HI Health:

How the US is Using GATT to Promote Cigarettes", by Pam Simmons.

8. P 74-75, "Global Companies and Public Policy . the Growing Challenge of Foreign Direct Investment", by DeAnne Julius, Royal Institute of International Affairs/Pinter Publishers Ltd. London, 1990.

9. pl60-161, "Transnational Corporations in World Development, Third Survey", United Nations Centre on Transnational Corporations, United Nations, New York, 1983.

- 18 -

ECONOMIC EXPLOITATION

(This is an extract from a chapter of Third WorJd War, published by Christian Conference of Asia, 1992. Copies available from CORSO, Box 1905, Christchurch.)

- David Small

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 compet it ion; and grass root s resistance to the exploitative practices of transnational corporations.

In recent years, imperialist powers have increased their efforts to minimi se these obst ruct i ve fact o r s to enable them to intens i fy 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-JAPA~ RELATIONS: The Imperative of Consci.ous Coordin.Sl.il..Qn

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 meet ing be t we e n 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

• 1 9 -

relationship is o i q , It s broad, It transcends anyone issue or another",

This message was reinforced in November 1991 by US Secretary of State, James Baker, In a 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 c o n s i st .i nq 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 communi sm in agenda, the set of emerges as critical, rest of the world."

ruin and economics dorru n a t Lnq the war Id t i e s between Japan and the un i t ed States not only to the two countrles, but to the

The tension that has clouded US -Japan ecunomic relat ions has given the appearance of a deep antlpathy between the two powers. It 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 marke t . On the contrary, there is every indication that Japanese corporate leaders wish to accomodate US demands for lncreased access, but find it genuinely difficult to do so. Much of the anti-Japan sent iment in the US (bes ides that at t r ibutable t a under 1 y i ng racism and unhealed wounds dating back to the Second World War) stems from a misunderstanding of the structural pecullarities of Japenese capitalism, particularly its company-speclfic distribution system, which make it very difflcult for the goods of foreign compani.es to gain ent ry t u the Japane se domest i c market, The Japanese distribution system lS one of the problems highlighted by the Strategic Impediments Initiative (SII), 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 multinational 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

(the Un1 ted States or Japan) can inflict great harm upon the other without imposing great costs upon itself in t eSB." Kent Calder agrees: "The US and Japanese political economies are more deeply and fatefully 1 inked with one another than ever before 0 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 19908" 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 e c o n orru.c relations, Kent Calder, has expressed a concern that technonationalism (arising from competition in high technology) might endanger the broader bilateral relationship. He suggests:

"First, 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 I long range strategies for coping with and neutralising domestic opposition in both nations to cooperative defence research, development and procurement."

APEC: Servin~_US-JaQanese Intere~

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 Prlme Minlster Ma h a t.h i r of Malaysia for the formation of a regional t rad i nq b Lo c , the East Asia Ec onom i c Grouping (EAEG)

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 suggest ions that I despi te the misg i v ings of some ASEAN countries, APEC 1S eventually likely to broaden its focus to include security issues and perhaps develop into a Europe style Conference on Security and Cooperation in AS1a

(CSCA). At APEC's November 1991 meeting in Seoul, US officials declared that the grouping's formal SlX pOlnt agenda was only the tip of the iceberg of what was actually going to be discussed. The US was also pursuing a host of extracurricular activities, the main one of which was its campaign to force North Korea to open its nuclear facilitles to internatlonal lnspection.

~AEG 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 un i f y inq 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 EAEG.

Mahathir's original idea was for EAEG to provlde 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 comprlsed the ASEAN natIons (Malaysia, Thailand, Singapore, Indonesla. 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 wlthln ASEAN, particularly because of Mahathlr's lack of consultation before publicly announcing his idea. Japan adopted a wait and see approach, not wanting to upset elther its ASlan neighbours or the US. But the US, excluded from the proposed grouping, declared its firm opposition to the EAEG from the outset.

The cool response to the proposed EAEG led to Mahathir modifY1ng his plan to what he described in July 1991 as a "loose consultative forum comprising of countries in East Asia" which would be consistent with the GATT. Although ASEAN's hesitancy,

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 "mo r e 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 partly 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. II

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

contained within APEC. Hills believed that ASEAN fears had been allayed 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 a r r i ving in Seou 1, Baker reportedl y glared across the table at his South Korean host and said, "Malaysia didn't sp i 11 blood for thi s count ry, but we did I II 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".

US and JaQanese 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 Prlme Minister, Bob Hawke, in January 1989. While ASEAN nations, particularly Indonesia and Malaysia, were contemplating the proposal 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 Ii impos ing a 'made in Arner 1 ca' bl uepr int 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 ne i q hb o u r s . Both would have remembered the failure of an attempt t.o 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 1961 by business leaders from Japan, the US, Canada, Australia and New Zealand. A governmental forum for economic cooperation in the As i.a-Pac i f i c region was proposed, to be known as the Paciflc Economic Community (PEC). But Asian nations, particularly Indonesiap 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 Pac if ic Economic Cooperation Council (PECC) ~ a loose grouping of current and former government

officials, private sector businessmen and right wi 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:

academics,

"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.

THE

& THE

The flow of dubious American academic "experts" into the country has increased with the advent of the bootlicking Bludger regime. Orie such surfaced recent Ly . 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 ~ike 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 Arner ican r u l ing e1 i tes such as the Counc i 1 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 SOsr send us some money and we'11 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 -t ime basi s 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. Buts Rewald says he did not tell Scalapino he was with the CIA".

continued on page 32

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) I and FOL president Fintan Patrick Walsh was their boy in Wellington. A March 1957 report states:

"We asked Mr Skinner about the secretary of the Auckland Cargoworkers' Union, a Mr E.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 cooperat i ve 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. ~~ 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 con£erence. 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 a man to be watched

(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 artie Le 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.

F.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 famlilar 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 "C'r i t.Lcu s " pieces in the Labour Party newspaper, The Standard, in the early 50s. Bollinger's file identifies Wolf as "Criticus," and carries the handwritten note:

".tlQ_tes supplied by Special Branch to F.P.Walsh on W. Rosenberq when question of .. ~hi§ continued employment on Standard beinq discussed" (our underlining) .

The covering letter from the Nat ional Library states: liThe (Bollinger) collection includes a substantial amount of material originating from F.P,Walsh."

Special Branch was a section of the police, which was later

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 "Cr i t Lcu s " file say? Let's quote some of It.

"In addition to hlS position as lecturer 1n econom1CS, writer and commentator, "Cr i t a cu s " 1S engaged in a number of other act i vi ties 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, he 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 Unlversity College 'Peace' Committee I formed r n July 1951, a group which has effective control of the University's paper Canta ... (Wolf describes himself as having been simply a supporter of the peace group) .

"Among h1S s pe a k a nq engagements i r: 1948 was an address to a public meeting of the Communist Party at Christchurch, when he spoke on the subject of 'BoomCrisis-Slump. I In 1950 he addressed a rne e t r nq 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 meetlngs organised by the CPNZ, etc).

"Although he has faithfully followed the line of pacifism, World War II saw him in the Royal New Zealand Ai r Force, in which he served from 1944 to 1946. It is not known what his c orit r Lbu t i on was toward the war effort before 1944g particularly during 1939-42, when Russia was still out of the war. At al~ event s he was not in t he armed f o r c e s " (Wol f conf 1 rms his war record) .

" ... Mr Rosenberg ieft New Zealand t h i s 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 Australia~ Waterside Workers' Unlon and a Communlst Party member. He was with Healy for about two hours." (Wolf paints 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 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 ... n

(The People f s Voice was the CPNZ newspaper. It I S now the Workers' Voice. Wolf po i nt.s 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 Execut i ve. "C'r it I cu s " 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 Embassy 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 PartYI 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 "Cr i ti i cue ' persona! What we have quoted is simply a short memo. He has not yet seen this longer document) .

CULLEN I S YA.NKEE 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 che US. "Dr Cullen's course is an executive seminar covering baslc 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 Davld, 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 a 20St of about $16,000.

"Lion's chlef executive, Mr Douglas Myers, 1S a member of the Business Roundtable, and lS seen in some quarters as the embodiment of New Right ldeology. Dr Cullen said that the Leader of the Opposition, Mr Moore, had approached Llon for fundlng for the trip, which was intended to pr1me 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 tlme, although lt had not been lntended that Llon Nathan's ldentity be disclosed",

The plot thickened shortly therafter. The Press (19/12/91) covered quest ions asked at Lion Nathan's AGM by "long t i me shareholder champion, Mr Max Gunn":

"Mr Gunn also quer led whether a donat r cn 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 Myer§ personall~. 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 establlshed who lS pissIng in whose pocket back here In Godzone:

"But what exactly IS the Aspen Institute? According to Harpers magazine (July 1980) the Aspen Institute of Humanist ic St udies 'devotes i tsel f to br inging the elite of the busIness world (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 ethic ... ' According to He xpe x s , its not so much what s at the Aspen Institute but t fact that 'any exec tapped by his

company to exec who's going places .... f."

"Interestingly f the Aspen Inst it ute 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 East 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 He rpe r s 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... Or iginally 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 lnstitute/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 0, Anderson, chairman of Aspen I 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 the form of the benighted 1974/75 Rawling government, grovelled to the Pahlavis, when the Shah brought his family and entourage of thieves, torturers and murderers here on a State vlsit.

But will Dougie Myers get value for hlS 516,000 (tax deductlble, no doubt)? And wlil Mike Moore Market have a flnance spokesperson who has any more of a clue t riar. h1S 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 long and contains no big words ... n

So for the sake of h i s own health, and c e r t a a n Ly that of the nation, Dr Cullen would be better to stay 1n bed. If he gets lonely, he could invite Dougle and Mlke to join him. Then they could do to each other what they've done to the country.

r-rOM page 25

So, there is no suggest i or: that Sc a Lap a n o works, or worked, directly for the CIA. But he obviously was a friendly e.n o uqr, academic for it to send one of ltS key covert agents to far a briefing. Remember these sorts of details when I i s t en i r.q r c these US "experts" earbashlng us about Uncle Knows Best.

And the NZ connection? Well, in 1983, Bishop Baldwin applled fa! permission to set up in thlS country. Subsequently it became one of the tiny handful of applicants refused pe rm i s s i or. b1 the Overseas Investment Commlssion, on the grounds that lt supplled insufficient information.

We hold a complete Ole f i I e on It, complete with riandw ri t t er comments (and t h i s was before we started OUI ep i c battle with t.ne OIC). A May 25, 1984 memo to orc members from Ole secretary, C,B. Rampton, states: "Attached 1S an extract from 'The Listener' of 15 March 1984 comment ing on the bankrupt cy of the company 1 L August last year and the involvement of the CIA w i t.h i.n the company. In retrospect it IS not surprIslng that the company was reluctant to provide information as to the Slze of its operat1~~S and the identity of its maJor cl1ents".

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 coverageu and actual court documents. And there's more in our "Maori Loans Affair" file. If you I r e interested in refreshing your memory I send us a few dollars for photocopying and postage.

You keep strange company I Professor Scalapino, Shakespeare wrote, you are an honourable man.

But then, as

~ 33 -

LEGAL COSTS APPEALS

1/ WA.RREN 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 to 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 tear ing this country apart. I somet imes 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 ball conditions for everyone were fascist - no right to take part 1n any protest whilst on bail; and non-association with fellow defendants (including famil y mernbe r s l ) "

Things got very nasty on February 27 when unemployment activIsts from around the country held protests in Wellington, Lnc Lud i nq street theatre outside Bolger's official residence. To quote from the newsletter of the Auckland Unemployed Workers' Rights Centre.

" ... police 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 dur a nq the whole of the term of bail/-on pain of forefeiting $3000 and going to 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, Auckland HIgh Court later the same oay, and she was flown to Auckland under prIson escort."

"At 5 p.m. she appeared before .rus t i ce I'omk i n s , whc expressed some confUSIon about the very legalIty of the ball condit ions Sue was under I but remanded her under t he same c orid i t ions aga 1 n to appear Hi the District Court on March 6."

"March 6 came round, ana Sue appeareo if] the D1.str let Court for sentence on the original charge of trespass at the Auckland DSW during the course of a demonstration on November 28,1991. The Crown had stil~ not laid a formal charge of breach of bail against ne r, 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 police 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 actlvlsts are already into the thousands of dollars. If you want to express your practical solidarity with people taklng consistently militant action on New Zealand's biggest issue, then send your donat ions to: Legal Defence Fund Appeal, Auckland Unemployed Workers' Rights Centre, Box 3813, Auckland 1.

· 35 .

FORESTRY n~V"ESTORS WANT NZ ECONOMY CLEARFELLED

Salmon Cheers Them On

NZ forestry has never really recovered from the devastation wrought by Cyclone Rlchard, which saw State forests corporatised and sold off to primarlly foreign owners. It was only the fly in the ointment posed by Maori land claims lhat stopped the land under the trees being hocked 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) r an a most reveal ing report entitled: "NZ lnvestment 'not attractive enough''':

"Forestry w i LI not boom unless New Zealand is more attractive :'0 fore gn Investors, according to a new study backed by I oc a l industry giant s . For 'all sect ors o f r. he economy I the cur rent po i i cy mix wi 11 not a t t r a c t toe he count ry toe s c a , e of investment necessary t re a Li s e the social and economic enhancement reqUIred, despIte the ~rogress made since the mlO 1980s', ·he report from the Forest Industries CouncIl saId."

" ... It f o uno rr orn a c on f i de rrt i a ... poll of SenlO! 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, i nve s t o r s r equ i r e more from New Zealand' fit said. Whi le there were great similarities between New Zealand and Chllean forestry resources and production, Chile was in an investment boom" .

"An "e xp l s.ci t: s rivi ter i on 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) .

" ... The package (lad to be able to su rv i ve changes of Government and would need to be constantly compared with over-seas. \Investment in New Zealand is simply a product competlng in the internatlonal investment marketplace I I the study said. It warned against subjecti ve 1108S 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 hUCI"Y 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. Ii ••• It raises doubts about the contribution forestry will make both to economic growth and job creation, despite big increases in wood

supplies in coming years" Even the most Lmi.s c i:c outlook

cts creation only about 12;500 jobs by 2001 a far cry

:from the 350,000 2020 touted by the nister of Forestry, Mr

Fe l.Loon , last year. These would be partially o ttset: 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. II The Parliamentary select corrunittee on commer-ce and marketing agreed, and reject.ed 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 capitalists 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 I 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 Maruia 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. . .. Substant ial 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 ti

into bed with big business and Rogernomics. All in the interests of saving the environment, of course. Words like "realismll and "efficiencyll get bandied about.

Salmon, of course, was a prominent participant at that New Right mass debate, the 1989 Mont Pelerin Society Pacific onal Conf e r erice , 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 pOlnts to hlm genulnely 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.

I t ,

I

D~$PSRAiE V~NDOR GA 'f~ 'S '~

ReA$ONABI... Y PRlceo sac I A L S~RV\CSS AVAt\"'A8~E. C~OSE

TO 5YDN6'{ ANP SHO?S. ELe;CTR\C\TY iN NORtH ISLAND

· 38 .

STAR

INTO BLACK HOLE

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 charglng 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 Czechos lovakia 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 all 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 mater .i a l 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 actlvist knows, a good way to 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 of red to resell f at a nominal cost f the monthly decision sheets that we buy from the Overseas Investment

· 39 .

Commission. (For the record, we current ly sell them to the Listener, Ne.t Lon e L Bu si iie s s Review, and New Zealand Property) , The Star decided, at editorial 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, a 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 malntain his impartiality), and dres sed .i n hat, suit, tie and st r e e t shoes, walked up and back with us. Don, a man 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 resldents of the tropics up a 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 a Saturday night rugby 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 ... n

", .. 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 ... n

The Weekend Star was closed at the end of 1988 (staff were actually recalled from their Christmas party to be given the

arse), but staff were loyed onto the Star, which started a

features section.Don cant nued his interest in Mar stories - we him a scoop when our ore 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 material 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 1988/89 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 1n 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 offlce of the National Business Review, Chris Rennle 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 a ministerial press secretary. The good side of this is that working journalists realise that they're only sposable 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, 1a lutta continua!

· 41 "

AND PUBLIC POLICY

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. 'rhe place II foreign investment" in the economies of the metropolitan world.

The main thesis of DeAnne Julius is that foreign investment in the metropol i tan 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 incl udinq. their. for.e.ign 0ffiliates to make their way in global markets with their own products, processes and managerial skills.

(p. 71)

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 Zealandg

Latin America, China and India and so on.

A. Foreign Investment and Foreign Trade

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 (intra-firm 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
% of all
exports imports
within
multinationals 32 18
between
multinationals 23 34
----_ .... - ---- -
total 55 52 Japan

% of all exports imports

38 40

3 17

41 57

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)

~ 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 I s a.le s by foreign c ompan i e s in local markets contain local content. In USA, howe ve r I the local content of foreign investors' production was only 60%, compared to local content by domestic US firms I product ion 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 ("microeffects") can be more or less ignored because of the direct pos.itive 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 fall 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, hlgher 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,

She thinks that because of their size and power I the metropolitan countries may look toward further pol ieal 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 eeripheral world must defend themselves against the takeover by Global Companies.

II. The place of "foreign investment" in the economies of peripheral world, such as New Zealand.

A. "Micro-economic" effects of foreign investment

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$lO 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 ant.Lvsoc Le I 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 si tuat ions of unsatisfactory and indeed Dickensian aspects of exploitation of the foreign "labour

· 45 -

resource." Legislation against by foreign investors and may transfer of the investment to a welfare of its workers.

such practices will be resented either lead to evasion or to country less concerned with the

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.1

DeAnne Julius emphasises that foreign investment should not be judged on its emloyment effects. Indeed increased "~fficiency" is nowadays frequently associated with decreased employment. When a downturn develops i.n a global industry, a foreign headquarters may layoff workers at its overseas plants more quickly than would a domestic firm in the same industry.

(p.lOl)

In some i ndus t r Le s size is ao important (such as the to spread R&D expenditure across large production runs sometimes foreign competition has to be kept out until domestic firms have reached the necessary size. (p. 63)

need that the

DeAnne Julius' arguments that predatory policies of forelgn investors can be suppressed by a country's legislative and judicial system are based on experience in USA and other powerful countries. Unfortunately f a country 1 ike 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 Lmp Lemerrt.e d .

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

lIn 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.

extent ign rat r than New aland interests become the

standard of Government policies in a regime of unregulat international comme r ci a l , financial and industrial mobil Y»

.!i.:....._ Macro-economic effects of foreign Jnvestment peripheral country like New Zealand

in

a

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, interestprofit-dividend flows, equity flows to developing countries, domestic currency demand,exchange rate behaviour, capital markets, labour markets. (p.72) However, in spite of the irr®ense importance of these foreign investment consequences, "because they do not measure cross-border economic flows per se , they would be of little use 1n 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 Jul ius admits that part icular countries ~. and certainly particular industries ~ will lose from the at.e r 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 unt i 1 we end up as the Thai land of the Southern Ocean.

" 47 .

DeAnne Julius senses these c ourrt ry " such as New Zealand. disapprovingly, but she writes p,105):

difficulties in a Thus she writes for international

"developing (of course investors

"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 I 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. II (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 lmports 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 I who believes that New Zealand e c oriorru.c s 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 "

by Paul Callister. NZ Planning Council. June 1991. 52pp.

- 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 "global1sation?" 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 w i.Ll i nq Ly 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 15 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 "thi s 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 I ...

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 the 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 Economistp Barclays' Briefing, Financial Times, and the World Bank.

Freedom 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 "d s 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 transnationalisation is even confounded with growing global awareness of

· 49 .

environmental dangers dangers so

multinational corporationsi

Jften perpetrated by

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 cholce, obtained through privatisation, deregulation and openlng up of the economy, which gives individuals, rather than companies, New Zealand owned or multinational enterprises, the real power in determining thelL 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 I he had indicated how big multi-nationals are increasingly collaborating together. So much for market competition ~ How then could anyone wr 1 te 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 8f argument. People like Paul Callister, Mike Moore and Jim Bolger can apparently even persuade themselves to believe it!

"Compet. i t a on ", "crio i ce " p "freedom", "consumer sovereignty" - toe hallowed nostrums of capitalist market economics are a .. ~ invoked in defence of the Telecom sale. These terms, or thelL equivalents, are loosely applied by Callister: "theory" for him suggests the Telecom sell off will help make NZ more internatIOnally competitive, with overall benefit to the public.

The problem that Call.ister and other "free market" a de o Loque s always fail to adequately address is simply this: if f o r e i qn 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 hlS 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.

Given lost control over many aspects of the e anomy, the aple 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 litt e value, or at least little strateg c 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, 1f Iron1C enough, that "Expanding OUI Horizons" shows how much we have lost already. As merrt r one d above, the NZ Planning CounCIl's report reflects a transnationallSed pe r ape c t a ve . Wrnle there is r-e c oqn i t a on o f increased transnational corporation power 0ver governments, the atomised individual in the global marketplace 1S somehow seen as exerciSing increased power. Transnatlonallsed publIC relatIons has worked on the NZ PlannIng Counc 11 (now defunct) just as j t has worked on OUI governments, our medIa, etc. Only the hope less ly di ffused "power" of unorgan 1 sed 1 rid i v i dua l s stands ,r the way of the multlnational juggernaut'

Ironically again, government - both e~ected representatives ana

bureaucracy IS no longer act r nq to safeguard our nat i on a

sovereignty, the prlme function we demand of them. Instead, they are 1ncreasingly the agents of the transnationalisation process, selling off our sovereignty to forelgn interests.

Callister's atomlsed lndlvidual consumer 1S pitted against the planned might of the transnational with Its distorted markets and its manipulations of governments,media and consumers. The fact that markets are more and more contrivances to beneflt 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, the apost le of free trade I GATT and all its works I joined He lmut 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 18 I 88). Mike, too I has rhapsodi sed 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 1980s, if measured by GDP or employment growth, indicates that for many industr ies, groups and individuals, the problems created have more than matched the new opportunities offered" (p.3).

continued on page 67

~ 51 .

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 include the foreign ownership of our resources and industries (the "stock" of foreign investment in Aotearoa), the degree to which our foreign trade 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,

trade - one most it shows to what extent our

trade is simply trade transnationals and not

It is an area in which very facts are known. and the Planning

nothing to remedy this. A tantalising glimpse is given in the claim by the Manufacturers Federation (Press. August, 1991) that Fletchers, Brierleys, 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-fum deals In all such commodities, it is very difficult to discover whether we are receiving them at a 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 to the government: it simply has made a 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 nor exempt from paying tax here. "Overseas companies" are defined as those with 25 percent or more foreign shareholding.

" 53 .

Up to 1983, it percent of investment stock was overseas owned; these

companies out in wages than locally controlled companies, and made

considerably profits. Since 1 (there is a of two years where neither series is

available) 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 2S 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 alienated. 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 industrial world" (Take Back the Nation, by Maude Barlow and Bruce Campbell, Key Porter Books, Toronto, 1991. p9).

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 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

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 modem capitalist societies, the services sector, is being lost to local control, while the former favourite of the transnarionals, the industrial sector, is stagnating and losing foreign investment. While it seems that the total assets in the economy that are foreign controlled haveremained 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 .

Year

No of

Overseas owned companies as percentage of all companies

Assessable Salaries No of Paid-up

Mar 81 Mar 82 Mar 83 (figures not available for these years)

Feb 86 1.9

Feb 87 1.7

Feb 88 1.7

Feb 89 1.7

Feb 90 1.9

(l) Companies with Overseas Affiliations (Dept of Statistics)

(2) New Zealand Business Patterns (Dept of Statistics). Only companies with 25 percent or greater overseas equity are included in the above table. to match the definition used in (1)

(1)
(1)
(1)
12.2 (2)
12.0 (2)
10.2 (2)
10..5 (2)
12.0 (2) Some international comparisons;

Percentage of Assets owned by foreign affiliates Sector

Country

Primary

Secondary

Tertiar!

47.6 60.8 7.6 152.5

46.0 11.6

1.9 75.8 39.3 31.9 82.5 13.2

33.0

Canada (1985) Denmark (1986) Japan (1986) Mexico (1986)

New Zealand (1983) Philippines (1987) Thailand (1986) United States

0.8 33.8 15.6 20.7 43.2

Countrl

Primary

Percentage of Employment by foreign affiliates Sector Secondary

_.Tertlarl

Brazil (1987) Denmark (1986) Fiji (1985)

Hong Kong (1987) Indonesia (1980) Ireland (1987) Italy (1985)

Japan (1986) 0.8

Malaysia (1986) 25.2 43.9

Mexico (1985) 3.8 20.2

Netherlands (1987) 14.0

New Zealand (1987) 1.2 18.3

Paraguay (1985) 0.3 3.3

Peru (1988) 6.5

Rep. of Korea (1986) 9.5

United States (1987) 7.3

Uruguay (1987) 11.9

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.

10.4

24.2 12.4 23.2

4.4

71.9

11.9 10.9 42.8

11.8 0.4 15.6

4.0 8.7 2.4

3.6

Income from Private Overseas Direct Investment in NZ percent of income by industry group

A verage flows

1976·80 1981·85 1986·89

Primary sector 1.2 0.3 6.6

Secondary sector (manufacturing) 46.6 35.5 23.1

Tertiary sector (services) 52.2 64.2 70.3

Source: Direct Foreign Investment: Changing patterns over the 1980s, p36, quoting data from Department of Statistics.

1 1,

1

decisions

Commentary and Index prepared by CAFCA

A consolidated index to 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 Enterprises 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 Ltd.

A U.S. company has approval to operate a regional cable television service in Aotearoa. Comsys Ltd has approval to issue 360 shares to Todd International Ltd (240 shares)

Jack Augustinus Maria Van Der Star. "Comsys intends to pursue cable entertainment business opportunities 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 A small number of jobs will be created."

The Australian life insurance company National Mutual Life Association of Australasia Ltd is taking over East Coast Permanent Trustees Ltd and renaming it New Zealand Permanent Trustees Ltd.

The National New Zealand Ltd (a subsidiary of Lloyds Bank PLC~ U.K.) is

taking over a subsidiary, Southern Properties Ltd for $13,910,000 as

"an integral part of a financial arrangement between the National Bank of New Zealand Ltd and Lion Nathan Ltd."

Ariadne appears to be poising itself to make a full takeover of both

Kupe Group 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

now wants to financial

to

Euro-Naticnal are

severe

a justification typically thin to be acceptable to

company Shriro Pacific has been given approval to acquire up to 50 per cent

Transmark Corporation for $11,191,856.47. Transmark was already 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 core activities as being the preferred means of entering the New Zealand market The Commission is advised net benefits in terms of the criteria will result from the "l"n,nn" saL"

Telecom Corporation of New Zealand Ltd has approval to buyout its commercial computer networking company Netway Communications Ltd for mately $14 million. Netways is currently 50 per cent Telecom owned, the other cent being owned by Freightways Services Ltd. It is currently "not profitable".

Singaporean company, Transco Investments Pte Ltd owned by the Mulani family, this month gained approval to increase its shareholding in Salmond Smith 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

(25 July, 1991), Transco gained 22 per cent holding from Sun Alliance and

Insurance in July. These appear to have been acquired without Ole approval less than the threshold of $10 million was paid for them. On 6 September the Press reported that Transco had raised its shareholding (0 24.9 per cent (just below the Ole'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 has acquired 60.000 $1 redeemable preference shares subsidiary Lydon for $60 million.

In other commercial property, the controversial US~owned City

acquiring Rural House, Manners Wemngton from Wilson

Realties 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 Cathedral Square (corner Colombo/Gloucester for

$10,075,000. Safe Ocean Ltd, whose country of ownership been deleted the

released decision, approval to Telecom Manukau City a

amount. Post Office Bank Ltd, a subsidiary of ANZ, has been told by ANZ to $17,925,000 the 203 Queen Street, Auckland building ANZ has leased since 1969 from Success Fou Holdings Ltd.

In mining, Sabminco (NZ) Ltd, subsidiary of Sabmlnco N.L. of Australia, has approval to carryon business, namely "to investigate the potential for the exploitation of mineral resources in the application area (Thames - Coromandel area), The minerals of interest are gold and silver."

Substantial changes are taking place in the ownership of miner United Investment Holdings Ltd. Stewart Petroleum Company Ltd, a New

Gas Company subsidiary is increasing its interest in United to 29 cent (an

increase of 7.4 per cent), And GPG (40 cent Brierleys Investments

per cent owned by other New Zealand residents), is acquiring up to 44 per cent United. Although GPG and Brierleys are classed as foreign-owned, the Commission this purchase will "have the effect of increasing the ultimate percentage of New "-"",.u .... ,, ... ownership of United Resources."

· 57 -

subsidiary of Milburn New Ltd (the

is out partners in Ries Coalmines Ltd. The

are New Zealand Steel Ltd (28 per cent) and FERNZ cent). Ries was formerly 50.66 per cent owned by Melsonwill now be able to provide more capital to make the mine

In rural two Indonesians are acqumng the remaming 76 per cent they don't yet own a 295.3496 hectare rural property in Ardlui Road, Te Pirita, Canterbury, for $348,000. This land is adjacent to 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 to set up a 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 neighbounng 29.9448 hectare property at Tararnoa.

A Swiss couple, via a company Cuddon Fromm Ltd are purchasing a 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 U,K., and another 25 per cent to Gebroeders Steur n.v., a subsidiary of Allied Lyons Pic 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.

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:

It is also issuing

companies, finance sector. The largest numbers of shares go to Battle

(191,690), Colonial Mutual Life Assurance Society (691,600 to three associated

companies), CS First Boston NZ Custodian (the consultant the

effective privatisation of the Health system, 298,490 shares), National Life

Association of Australasia Ltd (383,500), NPF (Equities) Ltd (575,100).

In commercial property the Chase group (in statutory management) is a property at 50 Anzac Ave. Auckland, and a Singaporean company, Albizia Investments Ltd (wholly owned by Customhouse Buildingts) Pte Ltd) has approval to buy it for an undisclosed sum. The Ole approves of this because "it will help to stimulate the currently depressed commercial property market." Clgna 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 Pic (see 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 240.6550 hectare dairy/bull beef farm at Hedden Bush, Southland for approximately $810,000, with the intention of operating it. Japanese interests made up of Flying Colour Investments Ltd, Kiyohlko Hibino, and Yasuhiko Mori are each buying 25 per cent of a New Zealand company, Pen bone Services Ltd, for $112,500. The remaining 25 per cent is owned by a New Zealand resident, Dr A. A. Devcich. Pen bone owns an 83.3898 hectare block of land adjacent the Rakaia River. The Ole 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 Rangtora owned by Roydvale Holdings Ltd, to be renamed Oishi

"The s propose to use the farm as a base for producing

and exporting agricultural and products to Japan. It is intended that these products

will include velvet, pressed venison and other deer products and possibly butter, ... ,,'"','"'''''''

and wine. Commission is advised that Oishi's are investigating

processing factory the slaughter and marketing of deer products (which is

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 Shlnnosuke Saito of Japan is taking over the Kiwi Green Island Club Ltd which owns a 264.2533 ha farm and tourist resort, with a view to developing a golf course. has applied for permanent residence with his family. A condition imposed by the Ole is that the resort and golf course remain open to international and local users alike.

October decisions

The Southern Pacific Hotel Corporation Ltd Kong/UiS) which bought the Tourist Hotel Corporation when it was privatised, is selling the THe Hotel in Queenstown to Mayview Holdings Ltd "owned by Singapore, Malaysia and New Zealand

interests" an amount the Commission refused to disclose.

City Centre complex on Albert

is being sold by Chase Investments

Elliott (under

statutory management) to Colwall Enterprises a subsidiary of Perfect Match

Investments Ltd for an amount suppressed by the Commission, This case is a

little that the of Perfect Match was suppressed by the

consents have been given to Perfect Match in February

1990 and January acquire Winstone Pulp International Ltd, the Karia! Pulp

Mill, and the Karioi Forests" In February 1990, Perfect Match was said

to be owned by two residents, and in January 1991 said to be Hong Kong

registered. We appealed the deletion of this information by the Ole. They advised (28 January 1992) "that due to an oversight the details were withheld." Their replacement

decision sheets give Match as being Hong Kong registered, owned by two

Indonesian residents. consideration was still suppressed.

The U.S. runaway from its environmental responsibilities, Gulf Resources and Chernical 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);

I advise that the New Zealand Press Association report that Gulf Resources 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 Zelas Enterprises Ltd over which Gulf has a mortgage 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 Inoeo controlled the Board of City Realties. "City Realties indicated in its interim report that anew 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 stir" 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 Goldrnlning Ltd "whose only asset was a

· 60 -

mining

to own their own

The French winemaker, Veuve Clicquot is buying a 78A6 hectare block of

in Brancott Valley, Marlborough for approximately $665,000, Veuve Clicquot (through subsidiary Widow Estates Ltd) "currently owns viticultural land which it has decided 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, valley has proved itself as a world renowned grape growing region particularly for the varieties Sauvignon Blanc, Chardonnay and Pinot NOlL" They will sell their current block of land. This sale raises issues of why a French winernaker is necessary to produce wine from land which New Zealand winernakers 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 III "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. O. 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 countryside for its cellular phone network (an effect of yuppidorn on the landscape); this month 350m2 was acquired in Potter Road, Albany, and 2.25 hectare in McBetbs 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 Wanak8mHawea Highway for $326,750, initially to lease to a neighbouring fanner short of feed; and two U,S, citizens are buying a 2.00U hectare property on Main Road, Omokoroa, Bay of Plenty owned by Tamar Design Ltd for $389,900, with plans to apply for permanent residency 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, 4.05 hectares of land. Sawpac Export Ltd will be 80.1 per cent overseas owned.)

November decisions

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 32% shareholding in CHH to a joint venture it owns 50-50 with the U.S, International Paper Company for $454.3 million. The Carter brothers who head C:HH 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. International 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 the U,S. (Press, 23 November, 1991 and

January 1992.)

- 61 -

The virtually all our flour and bread is reflected a

Food Industries Ltd. Defiance is a subsidiary of

Australia which is Goodman Fielder Wattles' in the

Australasia's third largest). The OIC decision to De-

fiance's floating of non-voting preference shares to "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 Tourist Hotel Corporation, is revealed a little. Southern Pacific is owned by a Hong Kong owned, British Virgin Islands domiciled, chain of holding companies ending in Hale Corporation Ltd. We said "a little".

The Japan/Hong Kong owned Millbrook Country Club at Lake Hayes near Queenstown 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 8,8227 hectare farm at 120w142 Winters Road, Christchurch being farmed by the New-China Agriculture and Animal Development Co, Ltd, owned by a number of local residents.

Macraes Mining Company Ltd (3 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 "large building to process prospecting samples (provided the prospects at Reef ton justify it)."

December decisions

One of the higher profile overseas takeovers features this month. Canwest Global Communications Corporation of Canada and West pac 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, pulled 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 overseas interests. Canwest, according to press reports, has bought 20 percent (Press, 21 December, 1991).

Meanwhile, other are being left out in the

information as to what is happening, company Network was set

up to hold the assets of TV3, leaving existing shareholders with valueless 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 information about the insolvency of the company, And to add injury to insult, a court found that five high-profile former TV3 employees who were shareholders (George Andrews, Trevor Spitz, Jon Gadsby, David Mel-hail 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 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 disastrous 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 Fiskerlselskap A/S has approval to enter into a Joint

fl. venture fishing operation with Amaltal Fishing Company Ltd, It is buying out a Talleys Fisheries subsidiary, Vartdal New Zealand Ltd, to carry out the operation. "The joint venture is a commercial fishing operation between Vandal and Amaltal Fishing Company Ltd (New Zealand company) which will use the former company's vessel under a 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 technology which will help improve the quality of New Zealand fish products our overseas markets,"

DFS Holdings New Zealand Ltd (presumably part of Duty Free Shoppers) is changing is parenthood to a company incorporated in Bermuda (though owned in Hong Kong). In December 1989. a subsidiary of Duty Free Shoppers International, Harbinger Investments Ltd, was given approval to take over the remaining 49.9 percent of Miles DFS Ltd that it did not already own, (This decision was one deleted from releases to CAFCA by the OlC, but later released after appeal to the Ornbudsman.)

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 Duty Free shares, "The

· 63 -

[Securities} considered that Worldwide had a relevant interest in these

shares and Worldwide give a substantial securityholder to New

Zealand and Exchange, Worldwide is registered in the Cayman

Islands its business address in Panama City. It holds 47.72 per cent interest in

Zealand [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 orc approved the issue of 5,514,000 $0.50 convertible preference shares in New Zealand Duty Free Ltd (a public company) to Worldwide Duty Free Ltd (Panama, 3,334,000 shares), Pierson Heldring and Person NV (Netherlands, 1,680,000), and Schroders Asia Pacific Growth Fund (500,000). The Ole had apparently approved a much larger issue (30 million shares) in February 1991 but did not reveal that decision to the public.

Sedco Forex International Drilling Inc. the company contracted by Shell Todd Oil Services Ltd to provide an oil rig to be used in the Maul 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 to 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 Inc. 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 Resources NL (Australia) is acqumng 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 Ems 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 transnational 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 Marchburn Land Co. Ltd because "it is difficult to maintain in pasture because of severe weed regrowth."

Two rural land sales are approved A Hong Kong citizen (through

Peak Capital Ltd) whose husband 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 operational base" is buying a 4.0646 hectare rural property at Dalefield Road! Queenstown for $295,000 proposes to spend $150,000 "upgrading 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 1.9477 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 Flnnis Road, Pohangina, Manawatu for $42,500. on which they intend to build a house, A "UKJNZ" couple are buying a 5,800 hectare "lifestyle block" at n 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 Cheernimet Finance Ltd, China

International Engineering and Minerals Corporation, Holdings Ltd, and

(New Zealand) Ltd; Bowater Pic (U.K.) - subsidiaries Norton Opax Holdings Ltd, and Bowater Overseas Holdings Ltd; Amcor Ltd (Australia) - subsidiaries Brown and Dureau International Ltd and Brown and Dureau (NZ) Ltd; and General Accident Pic (U.K.) subsidiaries General Accident Life Assurance Ltd, New Zealand Insurance Life Ltd, CFM Holdings Ltd, New Zealand Guardian Trust Company Ltd, and Marac Corporation Ltd.

January 1992 decisions

Fletcher Challenge, through its subsidiary Tasman Forestry is selling of its

.. t- interest in Crown Forestry in Wairua Forest, Golden Downs Rai

Forest in Nelson and Marlborough and approximately 13,200 hectares of to a

company owned by U.S, pension funds and "non-profit, charitable and educational institutions". RU Zealand Forests I, Inc, 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 companies. The proposal will allow control of the forests to be maintained while introducing risk equity capital to New Zealand to allow development of the forest potential", says the Ole in the "benefit" of the transaction. Translated it means that Fletchers are feeling because things are not going very wen, especially in their Canadian operations, so they are trying to reduce their debt by selling what they can.

The Kerry Packer empire Australia, is preparing a share float of magazine publishing, printing and distribution business. Its Aotearoa magazines include Metro,

interests Aotearoa. The "beneConsolidated Press Zealand without change to can believe them) are that

l-, 1i1shing joint venture erstwhile suppliers

• has been set up to market." export partner company, Jemico percent owned by

Marine

Fisheries Ltd of Korea,

fisheries products to the Korean seen, this appears to involve an

it successful, The joint venture

owned by Dong Won Fisheries and 25

A tourist lodge is 2024 square metres on WhICh Holdings Ltd. Formerly

joint venture by G.K.C.

A block of land of is owned by a company, Kisbee selling 40 percent to a 50-50 which is 50 percent owned

In commercial property, a has approval to operate Developments Ltd land. The "benefit"

In rural land, a of land $228,938, to employ

IS a hectare block her brother-in-law's property, for

its

yielding over end of 1994.

it has established at "'~ ,.,n,.., ""V a profi t of $1 L 18 million and which it intends to

Reef ton eRA (Comal-

until the later 1930' s, it working again by the

llM\V New buy new and

to help them

the owner of the subsidiaries: NZI Bank, International

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Write to

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to

- Murray 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 whi.ch spanned years of turbulent social change in New Zealand. Despite being one of the central pillars of the Canterbury Establishments he was never afraid to stick his neck out on the major issues of the day.

He spoke out against NZ's involvement in the Vietnam War, against apartheid and domestic racism, and against increased powers for the SIS. . A WWI I 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.

I 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 liThe Dean is a fascist pig" (ah, those were the days). Cops with dogs were on hand, and murder in the Cathedral seemed likely. From memoryu 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 reciti.ng Abraham LoIn'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 a "sissy basket on his handlebars. The "bicycling bishop" was such a fixture he featured on the n i.qht Ly 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 c Lai m 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. Thei r respect i ve 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 exceptional man. He was widely respected, and even more important, widely loved. He will be sorely missed.

But tne message of Expanaing Our Ho ri z on s is to press on into t he Brave New World of the Transnational: "In New Zealand, we must be aware of these changes and look for ways of adapting to thew"

(p.5). Callister notes, "As q Loba i firms search to expand then territory, there is potential for a particularly rapid buildup a f investment in New Zea land" (p. 2"). ft.Je stand warned..

To regain control over our own lives, we must realise, as Orwell 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 o or.nt.r y 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.

SOLIDARIDAD

CAFCA has been receiving i s regularly for over a

decade (we exchange Watchdog for it), In my humble ion

is far and away the best source about the Philippines, particularly for outsiders.

It is in English, quarterly, and extremely comprehensive. 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 off ice in Tokyo r in 1984 (in the Ivlarcos years, it operated from abroad). One of the highlights of August 1991 ecumenical Mass for John Curnow, in Manilap was meeting leading figures from Solldaridad, people with whom r'd only previously corresponded,

The magazine comes from an honourable lineage. The 0 1 La Solidaridad, was the journal of the bourgeois nationalists who led the revolution against Spanish imperialism in the e 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 SUS, ferably a US bank.

Address all correspondence to:

Broadway 1112

PLUNDER

We've still got copies left of r Mo IS

definitive study of Rio Tinto Zinc, ultimate owner of our very

own Comalco and much else besides, on every cont on

except Antarctica (give them time) .

Right now we're gett warnings of midwinter r 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 electric Y» Nothing changed, except now that Comalco wants to get s on power supply at Manapouri.

The book costs 0 to to

If you have contacts § ice

There is no charge for post or packaging.