Recall the concern about companies buying up land in developing countries for agricultural purposes (see here and here). Apparently, it's not just developing countries who are worried. This is from some discussion in the New Zealand government:
Overseas Investment Rules—New Zealand - China Free Trade Agreement
2. Dr RUSSEL NORMAN (Co-Leader—Green) to the Minister of Finance: What constraints, if any, does the New Zealand - China free trade agreement place on the ability of the New Zealand Government to tighten the rules governing the sale of New Zealand land to overseas buyers?
Hon BILL ENGLISH (Minister of Finance): In a number of free-trade agreements, as well as in respect of the World Trade Organization, New Zealand has committed to not changing the classes of investments that are subject to screening under the Overseas Investment Act. This means we will be able to continue to screen investments in those existing classes set out in the legislation—significant business assets, and sensitive land, including farmland. Chinese investors are subject to the same rules as everyone else. In all our free-trade agreements, New Zealand has preserved the ability to alter some of the criteria and factors against which proposed investments are assessed, if that is deemed desirable by the Government.
Dr Russel Norman: Is it the case that rules governing the sale of land to overseas buyers from China in force at the time of the signing of the New Zealand - China free-trade agreement cannot be tightened without breaching the terms of the agreement?
Hon BILL ENGLISH: No, I do not think I would agree with the member. He has raised a quite legitimate issue—that is, that if the Government were to alter the Overseas Investment Act, it would need to take account of the undertakings it had made in free-trade agreements. But I do not believe that those undertakings prevent a tightening of the rules.
Dr Russel Norman: In terms of the current review of overseas investment that the Minister referred to previously, and dealing with overseas investment in land in particular, has he considered the issues in relationship to free-trade agreements and whether those free-trade agreements place constraints on how we can change the Overseas Investment Regulations?
Hon BILL ENGLISH: If the Government were to make any change to the Overseas Investment Act, then, yes, it would certainly be checking that change against the free-trade agreements. My impression is that those agreements do not prevent the Government from altering, to some extent, the way that it screens incoming investment.
Dr Russel Norman: If the Government were to decide that all sensitive land—defined within the Overseas Investment Regulations as farmland of greater than 5 hectares, for example—must remain within New Zealand ownership and could not be sold into overseas ownership, would that stay within the terms of the New Zealand - China free-trade agreement?
Hon BILL ENGLISH: Certainly, from the Government’s point of view that is a hypothetical question, because we would not be considering the option of banning any overseas ownership of sensitive land. Sensitive land is a very broad category of land. It includes farmland, but it also includes quite small areas of land next to waterways, for instance, such as sections with commercial buildings on them.
Dr Russel Norman: How will his Government constrain the ability of overseas investors from China to buy land in New Zealand without tightening the overseas investment rules, hence potentially breaching the New Zealand - China free-trade agreement?
Hon BILL ENGLISH: It is unlikely—in fact, it is out of the question—that the Government would tighten criteria related to investors from one particular country. I do not think our free-trade agreements or our commitment to the World Trade Organization would allow that; in fact, it would not be sensible economically, either. We need to keep in mind that any investor coming in to buy, say, farmland in New Zealand has to pass the existing tests in the Overseas Investment Act. Those tests were laid down by the previous Government when it rewrote the Act. Any application that is in the pipeline now will be dealt with by the tests laid out in 2005 I think it was. If there was to be any change to those tests, the Government would signal that ahead of time.
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In Australia, there is a different concern. China is buying the land and taking it home with them (sort of):
Every third Wednesday, Michael Box gets up at 3:30 in the morning to catch a flight out of Perth. Isolated in the south-west of Australia, Perth (pop. 1.6 million) is 1,700 miles from the next large city, Adelaide, which isn't even that big. Box and about a dozen co-workers fly two hours north to a yet more remote section of Australia, the Pilbara, a 193,000-square-mile hump of territory arcing into the Indian Ocean. They will land on this patch of iron-rich red earth and spend the next two weeks sending as much of it as they can, about a million tons a day, to China.
