The Government should push ahead with plain packaging for cigarettes after the Trans-Pacific Partnership forbade tobacco companies from directly suing the New Zealand Government, the Labour Party says.

The TPP allows foreign investors to seek compensation from governments party to the agreement when investment obligations have been breached.

However, Trade Minister Tim Groser said the "hurdle for this is high", and compensation would only be sought if all other attempts at resolution had failed.

Read more:
New Zealand and 11 other countries strike Pacific trade pact
TPP Q and A: what does it all mean?
Charles Finny: TPP quite different, isn't it?


Labour deputy leader Annette King said one of the positives of the deal was tobacco companies being excluded from the Investors State Disputes Settlement (ISDS) provision.

She said the tobacco "carve-out" meant Government should urgently pass legislation which would introduce plain packaging for tobacco.

The Government has previously said it would wait on the outcome of court cases in Australia, where the Government is being sued by Philip Morris over its plain packaging regime.

"It should be no problem now," Ms King said. "We can't be sued so instead of waiting for Australia, we should be able to pass that bill before Christmas."

ExportNZ executive director Catherine Beard said similar provisions have existed in international agreements New Zealand has been part of before, and no cases have been brought.

Ms Beard said it was a good step to "put everybody's minds at rest" and clearly state tobacco companies would not be able to seek compensation.

"I think what we can be sure of is that the negotiators and our politicians heard the protest and they heard the concerns," she said.

There are positive sides to investors being able to seek compensation, Ms Beard said.


"It means that you can invest in these countries as a business with more confidence ... they're not going to have a flip-flop with the rules.

"You do a lot better as an exporter if you can invest in that country ... open an office, have your own people in the market."

She said the provision was unlikely to affect New Zealand.

"There's quite a high threshold for you to seek compensation ... we're not the sort of Government that would be sued. Contracts mean what they say they mean in New Zealand.

"Very few of [these cases] succeed and the ones that do are done in countries that have a reputation for pretty poor public policy."

Chapman Tripp trade expert Daniel Kalderimis said his analysis of the brief delivered by the Government was that the ISDS provisions were similar to what the Government had previously signed up to.

One difference was that the exceptions for measures taken to protect health and the environment in the TPP did not extend to investment.

"We've lost the safety net that we've negotiated in previous agreements and we will be defending our ability to regulate [in the public interest] on the basis of how well the chapter itself is drafted," he said.

The clear exemption for tobacco companies was significant, he said.

"It shows that the political pressure on the Government does work and I'm sure that to some extent the government did welcome the fact that it was able to point in the negotiations to a constituency of stakeholders that it needed to bring something home to."


• If foreign investors feel New Zealand's Government has breached its investment obligations, they can take legal action, but only if other attempts at resolution have failed.

• There is a specific exemption for tobacco, meaning tobacco firms will not be able to take legal action against New Zealand's Government if they feel their investment obligations have been breached.

• New Zealand's interpretation of the Treaty of Waitangi is not subject to ISDS provisions.