AFTINET - 14 July 2025
New Zealand confirms opposition to ISDS in RCEP
New Zealand has confirmed it will oppose the inclusion of Investor-State Dispute Settlement (ISDS) provisions in the Regional Comprehensive Economic Partnership (RCEP).
The RCEP, which includes 15 countries across the Asia-Pacific including Australia, New Zealand, China, Japan, South Korea, and ASEAN nations, came into force for all members by June 2023 without ISDS. However, a clause in the agreement required members to "enter into discussions" on ISDS within two years, meaning discussions could commence imminently.
ISDS gives special rights to foreign investors to bypass national courts and sue governments for millions of dollars if they can claim that a change in law or policy will harm their future profits. ISDS can discourage governments from implementing critical policies, particularly in areas like public health, labour rights, and climate action.
An open letter signed by 68 organisations from RCEP countries was sent last week to governments, urging them to continue to exclude ISDS from the agreement. The letter cited the growing number of ISDS cases globally involving fossil fuel companies challenging environmental regulations. The cost of these cases, often in the billions, can be particularly damaging for developing countries.
The current Australian government has a policy to exclude ISDS from new trade agreements. New Zealand has maintained a similar stance, and its confirmation that it will not support the inclusion of ISDS in RCEP should mean that it stays out of the agreement.
However, while the New Zealand government’s opposition remains firm at the international level, some groups have raised concerns about the rise of domestic policies that may echo ISDS principles. Proposed legislation referencing compensation for "regulatory takings" has prompted debate about whether such laws could recreate investor privileges internally.
The current momentum behind global action on climate change, and the need for governments to retain full policy flexibility, underscores the importance of resisting any reintroduction of ISDS. Major economies, including the European Union and the United Kingdom, have already begun withdrawing from treaties like the Energy Charter Treaty due to the use of ISDS by fossil fuel companies against climate-related policies. The permanent exclusion of ISDS from RCEP would be an important step in moving away from these damaging provisions.
