Fran O'Sullivan: Of trade deals, gulags and black boxes

The week has provided plenty to pique an observer's interest
Hillary Clinton: No to any 'trade deal that kills jobs or holds down wages, including the Trans-Pacific Partnership'.
Hillary Clinton: No to any 'trade deal that kills jobs or holds down wages, including the Trans-Pacific Partnership'.

Hillary Clinton has not got much wriggle room with her declaration that she'll oppose the Trans-Pacific Partnership (TPP) from going through if she is elected as President.

Stand back from the politicking. Realistically, the only pathway for the 12-nation agreement to proceed is if it is ratified by the US Congress in the "lame duck" period between the November 8 presidential election and the inauguration of the new US leader on January 20.

That would require President Obama to make the case for TPP, as Vice-President Joe Biden said he would during the latter's visit to Auckland.

But will Obama have the cojones to do so against Clinton's positioning yesterday when she said: "I will stop any trade deal that kills jobs or holds down wages, including the Trans-Pacific Partnership. I oppose it now, I'll oppose it after the election, and I'll oppose it as President."

I reckon Obama could easily make the case that TPP will increase jobs, not kill them.

'John Major' to fix immigration?

Immigration Minister Michael Woodhouse is never happier than when he is out of the media.

So a hat-tip to NBR's Rob Hosking, who reported that Woodhouse told a Wellington breakfast New Zealand will shortly launch a programme to attract younger, highly talented innovative people - "the James Camerons, the Zuckerbergs" - before they make their pile.

Said Woodhouse: "The Americans are nuts, right? They have these massive scholarship programmes to get people into the Ivy League universities and then when they finish, the Green Card process is a raffle."

There will be what he calls "a kind of Dragons' Den process" to select the right people.

The self-styled "John Major" of the Cabinet was ranked No 8 among his peers by CEOs in last year's Mood of the Boardroom survey.

His policy to offer new pathways to residency for talented, entrepreneurially minded people should be applauded.

But it does not solve the fundamental problems NZ (particularly Auckland) faces, from persistently high net migration which in the year to April showed a net gain of 68,000 people.

Woodhouse has the immigration settings under review. His problem is how does he sell a pause - when his colleagues regard any about-face as a sign of weakness?

Andrew Little's right-wing gulag

Is Andrew Little planning to send any more MPs to the gulag for consorting with those he deems to be Labour Party enemies?

It's a joke that a party which once campaigned for freedom of association is now stamping down on MPs who exercise that right.

MP Stuart Nash was forced to pull out of a pub opening event - where he was to share the stage with former Labour Party activist and commentator Phil Quin and Wellington mayoral candidate Nick Leggett - after Little accused the latter of being a right-winger.

Leggett resigned his Labour membership so he could run as an independent against Labour's candidate in the Wellington mayoralty; Quin resigned his in protest against MP Phil Twyford's "Chinese names" housing campaign.

If Labour is to occupy the centre ground - or at the least get its votes at next year's election - it would pay to keep onside MPs like Nash, Kelvin Davis and David Shearer, who have broad appeal to business, not simply the centre-right.

As does Little's deputy Annette King, who after all, was a Rogernome back in the day.

Shearer - who reputedly faced down warlords in his earlier career - was not intimidated and went along to enjoy the debate, which of all things was on the US presidential election - where it should be said that Democrat candidate Hillary Clinton enjoys the support of a very broad church, including hedge fund owners.

Jiang Zhaobai.
Jiang Zhaobai.

Out of the OIO's 'black box'

Large-scale Chinese investor Jiang Zhaobai, who labelled the Overseas Investment Office a "black box" via my column a fortnight ago - saying "once you get in you can't get out" - will be relieved that an obstacle to the financial re-engineering of his interests has finally been removed.

Two Cabinet Ministers (who had earlier blocked the sale of Lochinver Station to Pengxin interests) this week approved Hunan Dakang's application to effectively buy the Crafar farms from Shanghai Pengxin.

According to the OIO in a May notice, Hunan Dakang applied for consent to purchase 100 per cent of the shares of An Yuan Dairy Limited, a wholly-owned subsidiary of Shanghai Pengxin.

An Yuan Dairy in turn owns Pengxin NZ Farm Group Ltd, which owns the Crafar Farms.

It was widely considered that Pengxin paid over the odds when it finalised the acquisition of the farms in April 2012.

But Pengxin representative Terry Lee confirms a profit will be booked on the the sale to Hunan Dakang, in which Shanghai Pengxin has a 55 per cent stake.

Lee also confirms that Hunan Dakang will inject more capital into the venture. This will lead to an increase in the herd size and to more jobs.

Even though this was essentially an asset swap, the new owner was still obliged to tip in more benefits than an New Zealand bidder would have to do.

The deal is expected to be notified once the transaction is completed.

The OIO has also approved Dakang to hold the management rights for Synlait Farms, which is owned 100 per cent by Pengxin subsidiary NZ Standard Farm Ltd.

The Chinese group is also seeking to invest directly in processing in order to create value-added, branded products for China and other Asian markets.

Lee explains that Pengxin tried to find NZ partners to build plant and production lines for new dairy products and has spent a lot on marketing and channel building in China. The group is constrained by conditions in the original OIO consent to buy the Crafar Farms and by the interpretation the OIO has given to a ministerial letter on vertical integration in the dairy industry.

Lee says the new plant will bring new products, new technology, new job opportunities, new export receipts and a new business model to add value to NZ dairy.

Pengxin is seeking to clarify what is the standard for large scale and vertical integration.

- NZ Herald

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Head of Business for NZME

Fran O'Sullivan has written a weekly column for the Business Herald since its inception in April 1997. In her early journalistic career she was a political journalist in Wellington and subsequently an investigative journalist who broke many major business stories including the first articles that led to the Winebox Inquiry in both NBR and the Sydney Morning Herald. She has specific expertise in relation to China where she has been a frequent visitor since the late 1990s. She is a former Editor of the National Business Review; has twice been awarded Qantas Journalist of the Year and is a multiple winner of the Westpac Financial Journalism Supreme Award.

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