Batting from a 10-year-old memory of the notes I wrote on investor protection treaties, these treaties have their origins in mid-20th century Latin America where hopelessly corrupt governments and courts were putting off investors.
To attract more investment, these corrupt governments agreed to submit to third-party arbitration at an international forum.
The Closer Economic Relations agreement between New Zealand and Australia has a provision that New Zealanders be treated in the same way as Australians wherever possible in business and commercial relations.
This led to Australian content in their television regulations to include New Zealand content because they had to treat New Zealanders as Australians unless there was some legal provision saying no. That provision was enforced by the Federal Court of Australia in litigation may be 15 years ago.
Investor protection treaties have no role in the trade relations between liberal democracies. International arbitration is required only when the the host country’s government and courts are corrupt.
These investment protection treaties are included in agreements such as a Trans-Pacific Partnership because various developing countries including China are party to the agreement and their courts are not independent of government and of corruption.
Published in The National Business Review (Auckland), 1 May 2015
Since the free trade agreement with China came into effect in 2008, exports to China have soared. The trading relationship with China has been helping the New Zealand economy navigate through the past years of global uncertainty.
For all the controversy before its introduction, few people would still argue that trade liberalisation had not made New Zealand better off. The benefits of greater exchange are palpable.
Economists are not the least surprised by this development. Since the days of Adam Smith and David Ricardo, the case for free trade has been established in economics.
However, just removing tariff barriers to trade does not ensure trade will actually happen. Other obstacles to cross-border dealings are not dealt with by most free trade agreements. One is the uncertainty for businesses about how to deal with disputes between them and their overseas partners.
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Utopia, you are standing in it! 
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