A New Zealand academic Thursday claimed she had evidence the government was planning to allow multi-national corporations to sue it for unfavorable law or policy changes as part of a controversial Pacific-wide free trade agreement.

The assertion by Auckland University Law Professor Jane Kelsey prompted outrage among opposition politicians and trade unionists that the government was preparing to sign away the country's sovereign rights under the proposed expansion of Trans-Pacific Partnership (TPP).

Kelsey produced what she said was a leaked chapter of the proposed agreement, which included a chapter on "investor- enforcement" covering the right of large companies to sue national governments for compensation in offshore tribunals in the event of regulatory changes.

Critics of the TPP negotiations say investor-enforcement terms will hinder a sovereign government's ability to regulate multi- national corporations in matters such as public health and environmental safety.

Kelsey said the document confirmed the center-right ruling National Party had agreed to let foreign investors like tobacco giant Philip Morris, pharmaceutical group Pfizer, Warners, Exxon Mobil or Microsoft sue New Zealand for damages.

"Philip Morris confirmed on the weekend it will use so-called free trade treaties to challenge our smoke free laws. At present, it would need to find a backdoor way to use an existing agreement. This TPP text would throw open the front door to them and all the other U.S. firms that want to block new laws they don't like," said Kelsey in a statement.

Almost half the investor-state disputes currently before the World Bank's tribunal related to oil, mining or gas projects, she said.

"Last week the government opened tenders for oil and gas exploration in 23 onshore and offshore sites, when we have weak regulation. You can guarantee those oil firms would threaten to sue if new regulations hit their share value or profitability. Whether they have a good legal case is beside the point. They can tie governments up for years in massively expensive legal battles. "

Kelsey said the draft text would also prevent future governments from reversing controversial privatizations of state- owned assets or introducing taxes on capital gains or speculative financial flows.

The opposition Green Party called on the government to follow Australia's lead and refuse to sign investor-enforcement clauses.

"Investor state dispute clauses are anti-democratic because they limit New Zealand's ability to make domestic laws," Green co- Leader Russel Norman said in a statement.

The opposition New Zealand First party said the agreement would throw New Zealand's law-making process into "turmoil" and put the country into the hands of big business from overseas.

"National must withdraw from the next negotiation meeting on July 2 and launch a select committee inquiry so all New Zealanders can see the full proposal and comment on it," said New Zealand First leader Winston Peters in a statement.

The Council of Trade Unions (CTU) said the leaked text showed the government's claims that it would not compromise New Zealand's right to regulate were "disingenuous."

"We are asking the government to clarify why, unlike Australia, they are prepared to open New Zealand up to being sued," CTU economist Bill Rosenberg said in a statement.

The current TPP agreement between Brunei, Chile, Singapore and New Zealand came into force in 2006, but the United States, Australia, Peru, Vietnam and Malaysia have joined negotiations to expand the agreement.

Japan, Canada and Mexico announced their interest in joining the TPP in 2010 when the negotiations began.

Last month, more than 100 eminent jurists from New Zealand, Australia, the United States and Singapore signed an open letter to TPP negotiators to exclude investor-state clauses from any agreement.

Critics have also accused the United States of using TPP negotiations to try to enforce unreasonable intellectual property rules and to exclude China from any region-wide free trade arena.

(Source: Xinhua)