Mapp Wayne: International Finance Agreements Amendment Bill — In Committee 
Mapp Wayne: International Finance Agreements Amendment Bill — In Committee 
[Volume:642;Page:11809] 
Dr WAYNE MAPP (National—North Shore) 
: 
 As is well noted the International Finance Agreements Amendment Bill pretty much had the broad consent of the Foreign Affairs Defence and Trade Committee. As members will note new section 1A to be inserted by clause 5 sets out the purpose of this legislation. It really is part of the international framework of financial and monetary institutions to which New Zealand belongs. The bill ties in effectively with the International Monetary Fund and the International Bank for Reconstruction and Development as is noted in the proposed new section 1A(1). 
The purpose of this particular agreement—which one might loosely say is to complete that framework of agreements—is to assist and promote investment in developing countries where there is significant political risk. That is fundamentally set out in new section 1A(3) which states that the purpose of the bill is to enable the Government of New Zealand to fulfil its obligations as a member of the OECD—and I want to stress that—to provide for the Multilateral Investment Guarantee Agency. We do not have to guarantee investments in Britain Australia or the United States. All of these countries and many other countries of course have robust independent legal institutions. Any New Zealander can invest his or her money safely in those countries or make an investment in those countries and that person will face only the normal business risks. 
However New Zealand companies may well wish to invest in places in the world where there is substantially serious political risk. It may interest members to know that I did my doctorate in investments in Iran. There was immense political risk there because of the hostage crisis. A special arbitral procedure had to be set up to effectively protect the United States investments and to compensate for the huge wide-scale expropriations. Members will be interested to know that that particular tribunal drew on a whole body of litigation and arbitral decisions that primarily related to South America and the Middle East and that were built primarily around investments in oil exploration investments in steel and generally speaking resource development contracts. Those are the sorts of contracts that investors are primarily entering into with countries that do not have let us say robust legal systems and that are lacking in any sort of independence and protection. So in order to give an incentive for developed nations to invest in some of these developing nations we have to have this guarantee agency. 
The purpose of the Multilateral Investment Guarantee Agency as is clearly set out in the purpose provision in Part 1 is to make it easier for developed nations or investors in developed nations to invest in developing countries in order to lift the wealth of those developing countries. We know that many of those countries have weak institutions. They are not democratic. They do not have a sense of independent judiciary and the like. Agreements are often made on a person-to-person basis. There are problems around corruption and so forth. Yet such countries still need the investment. And to be truthful developed countries need access to the resources. It is—and I might say this actually to the Maori Party—a relationship that benefits both parties; both the developed countries and the developing countries benefit. The developing countries do not have the financial resources to develop those resources and they need essentially external finance. Without that those resources remain idle and the people remain poor. The countries that have really accepted foreign investment are the ones that have had the fastest levels of development. 
I will just briefly finish on this point. This agreement is to assist developing countries to build their prosperity. I say to the Maori Party that after it has considered the bill it should decide to vote for it because the bill is actually about assisting developing countries in a symbiotic relationship that is beneficial to both parties. That is why National supports this bill. Thank you.