Tag Archive | "Trade agreements"

3 Ways the TPP Advances Human Rights Protections

by Jeremy S Goldstein*

[Denver, CO] Last week, signatory nations released the long-awaited full text of the Trans Pacific Partnership (TPP) agreement, which is poised to reshape the way that countries comprising 40% of the world’s economy conduct business. While the white-hot media spotlight has been searing hairs off trade provisions relating to the automotive, agricultural, pharmaceutical, and technology sectors, little attention has been placed on other chapters of the agreement. Few commentators have noticed that the TPP includes provisions which are quite unique in trade agreements, in many places heeding recommendations of the United Nations and other global civil society organizations in a manner which advances human rights. This is important because while many of the 12 nations currently signed to the agreement have substantial domestic human rights protections that will prevent violations resulting from business operations, such as the United States, Australia, New Zealand, Japan, Canada, Peru, Chile, Singapore and to an extent Mexico, others, specifically Vietnam, Malaysia, and Brunei, do not.

During negotiations, the White House released a document, Advancing Human Rights through the Trans-Pacific Partnership, where the administration acknowledged that the TPP “has provided the Administration with significant opportunities to make progress on human rights issues” and they would therefore be developing the agreement in a manner which ensures “that people everywhere are treated with dignity and respect.” The document discusses country and issue specific actions taken by US negotiators to make clear that “protecting human rights … is a core American value.” Even so, of the available publications discussing the administration’s implementation of these goals, most carry an opinion similar to that of a DIPLOMAT article titled Sure, TPP Is ‘Win-Win’… Unless You Care About Human Rights. These authors seemingly miss the point, because trade agreements are not, and have never been, fundamentally concerned with human rights protections. While the goal of many organizations may be to change that reality, relative to most other international trade and investment agreements the TPP stands up as a progressive document, which in many ways heeds recommendations of civil society and of the United Nations Guiding Principles on Business and Human Rights (UNGP). Specifically, there are three chapters in the treaty in which provisions fulfilling the administration’s promise to highlight the importance of human rights are located: Chapter 19 – Labour, Chapter 23 – Development, and Chapter 9 – Investment.

Labour – Chapter 19

Article 19.3 requires that all nations adopt and maintain laws, and take action to implement those laws, which are consistent with the ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up. The agreement also includes a duplicate list of rights, such as freedom of association and collective bargaining, elimination of forced labor, abolition of child labour, and elimination of discrimination. The express protections listed in 19.3 do differ slightly from the ILO’s recommended protections, in that they do not include minimum wage or work hours, but are nonetheless sufficient, and specifically address a major issue for signatory nations, prohibiting the worst forms of child labour.

Article 19.7, Corporate Social Responsibility, goes a step further in responding to the demands of civil society in requiring that signatory parties “endeavor to encourage enterprises to voluntarily adopt corporate social responsibility initiatives on labour issues that have been endorsed or are supported by that Party.” This article is followed by others which further layout the required means of implementation and the preferred methods of reporting for corporations and state parties in implementing labour and CSR standards.

Finally, in annex to the text of the agreement, the US has initiated Labour Consistency Plans with Brunei and Malaysia mandating specific changes to the domestic national laws of each country, which will place them closer to compliance with the ILO requirements. The US and Vietnam have agreed to a similar document in annex to Chapter 19, which is specific enough to require Vietnam to “develop and implement a strategy for targeting inspection and other enforcement activities to sectors where forced labour or child labour has been identified through the National Child Labour Survey or otherwise, including at informal work sites and sub-contractors in the garment industry.” These provisions in the TPP are in line with recommendations from international human rights organizations, and will force improvements in labour standards in the manufacturing powerhouses of Malaysia and Vietnam, greatly reducing the worst labour rights violations in those countries, which are known to be prevalent.

Development – Chapter 23

In an unprecedented move in US trade agreement history, Chapter 23 goes beyond merely arguing that trade enhances development, stating that signatory parties “affirm their commitment to promote and strengthen an open trade and investment environment that seeks to improve welfare, reduce poverty, raise living standards and create new employment opportunities in support of development.” Not only do they affirm this commitment, but they “acknowledge the importance of development in promoting inclusive economic growth, as well as the instrumental role that trade and investment can play in contributing to economic development and prosperity.” This models the UNGP language closely, asserting that trade and development are vital to prosperity and poverty reduction, a key first step in advancing development policy in line with UNGP recommendations.

Most importantly, while the chapter only uses the term sustainable development twice, and one of those instances merely in indirect reference to the UN sustainable development goals, it does make express reference to the importance of women to development. Article 23.4 may not include mandatory requirements on signatory parties, however it does recognize the importance of women in development and suggests steps which may be taken to “enhance the ability of women, including workers and business owners, to fully access and benefit from the opportunities created by [the TPP].” While many may take this for what it is on its face, a hollow but hopeful statement, the chapter does include public recognition from all signatories, including Malaysia and Brunei, that “enhancing opportunities in their territories for women, including workers and business owners, to participate in the domestic and global economy contributes to economic development.”

Investment – Chapter 9

For decades, scholars have lamented the ways in which ambiguous terms of art in international investment agreements like “fair and equitable treatment” and “tantamount to expropriation”, have been used in investor-state arbitration proceedings to restrain states domestic policy space. Many other erudite scholars will argue that the investor-state investment dispute settlement provisions in Section B of Chapter 9 of the TPP have a potential to encourage frivolous claims against states for violations of the agreement, which have, in the past, led to enormous damage awards. However, due to the adoption of recommendations from the UN Guiding Principles on Business and Human Rights (UNGP) and civil society organizations such as the International Institute for Sustainable Development (IISD) in Section A of chapter 9 of the TPP, the danger of frivolous claims by investors is reduced significantly from investment agreements of the past.

UNGP article 9 recommends that states draft investment agreements in a manner which prohibits them from having a reductive effect on the state’s domestic policy space to regulate human rights. The IISD Model Investment Agreement suggests that in order to implement the UNGP recommendations, states should, among other things, define and limit the minimum standard of treatment and create general exceptions provisions which retain policy space for the government to regulate in response environmental and human rights concerns.

An example of the traditional minimum standard of treatment provision in investment agreements follows as such; “Each Party shall accord to covered investments treatment in accordance with international law, including fair and equitable treatment and full protection and security.” Issues resulting from the vagueness of these terms include investors seeking remedy for regulatory efforts by states which do not conform to the investors’ ‘legitimate expectations’. In order to prevent these frivolous claims, and protect state’s domestic policy space, TPP article 9.6 clarifies that the minimum standard is to only include “treatment in accordance with applicable customary international law principles”, and that “the concepts of ‘fair and equitable treatment’ and ‘full protection and security’ do not require treatment in addition to or beyond that which is required by that standard, and do not create additional substantive rights.”

In addition, 9.6 states that ‘fair and equitable treatment’ includes only “the obligation not to deny justice in criminal, civil or administrative adjudicatory proceedings in accordance with the principle of due process embodied in the principal legal systems of the world”; and that ‘full protection and security’ only “requires each Party to provide the level of police protection required under customary international law.” Article 9.6(4) goes even further, stating that “the mere fact that a Party takes or fails to take an action that may be inconsistent with an investor’s expectations does not constitute a breach of this Article, even if there is loss or damage to the covered investment as a result,” expressly precluding claims based on an investor’s expectations. This significantly reduces restrictions on government policy space to regulate human rights abuses by reducing the frivolous claims which may be presented by harmed investors covered by the agreement.

Article 9.15 prohibits claims by investors relating to regulatory measures that a state party “considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental, health or other regulatory objectives.” This is an express dictation of the UNGP article 9 requirement, reducing state’s fears that TPP provisions can be used to investors to restrict their policy space through threat of suit. Finally, as is common throughout other chapters of the TPP, Article 9.16 includes an affirmation of the “importance of each Party encouraging enterprises operating within its territory or subject to its jurisdiction to voluntarily incorporate into their internal policies those internationally recognized standards, guidelines and principles of corporate social responsibility that have been endorsed or are supported by that Party.”

Conclusion

The TPP will not eradicate all human rights violations by businesses in signatory nations, it was not intended to do so, and presumably no agreement could have this effect. The TPP does, however, heed recommendations of the UNGP and other civil society organizations, advancing progressive provisions to prevent human rights violations. The document should be challenged where it is faulty and applauded where it succeeds, not derided entirely for failing to meet unrealistic expectations. After all, the TPP increases trade, trade is essential to continued economic development, and economic development is core to achieving advancements in human rights in developing nations such as Vietnam and Malaysia, specifically those rights listed under the ICESCR. The three chapters examined above, which include more protective human rights provisions than any other multilateral trade agreement the US has entered into in its history, are a step in the right direction. The progressive language in this agreement shows the dedication of the international community to ending the cycle of human rights violations by businesses in the developing world. For this reason, I believe that these 12 courageous nations should be applauded; and for the same reason they should be simultaneously reminded that with great power, comes a great responsibility to ensure the TPP is used to advance human rights through sustainable development across the Pacific, and across the world.

*Jeremy S Goldstein is a 3L J.D. student at the University of Denver – Sturm College of Law and the Online Editor-in-chief of the Denver Journal of International Law and Policy.

TPP

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The Trans-Pacific Partnership: Exploring concerns over an Investor-State Dispute Settlement mechanism

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find more at https://curiousmatic.com/trans-pacific-partnership

After years of negotiations, this week saw the conclusion of the Trans-Pacific Partnership agreement (“TPP”). The TPP unites eleven pacific-rim nations and the United States–a collection of 40% of global gross domestic product and one-third of world trade–making it the largest regional trade agreement in history.

Although the terms of the agreement have not been released yet, it has been a divisive topic throughout negotiations. The Obama administration and TPP’s proponents point toward the elimination of more than 18,000 tariffs in place on American exports by the other participating countries as one of the key benefits of the deal. One of the sticking points for opponents to the deal is the inclusion of an investor-state dispute settlement (ISDS) mechanism. Critics of this ISDS provision claim it undermines state sovereignty by creating a supra-national tribunal where global corporation’s may sue member-states and receive taxpayer compensation.  On the surface, the critics concern is a real one–state sovereignty will be undermined–but states cede sovereignty each time they enter into an international agreement. The real issue at play is whether the obligations the TPP allows global corporations to enforce against the United States are so egregious as to make the cession of the United State’s sovereignty unacceptable.

An accurate answer to this issue cannot be had until the final terms to the TPP are released to the public. Although WikiLeaks published an alleged text of the Investment Chapter of the TPP in March of this year, which is said to create the ISDS. This post will wait to evaluate the obligations of the TPP until it is released. However, two of the rumored grounds for suit, “expected future profits” and indirect expropriation, are provisions found in many of the 3,000-plus trade agreements in place around the world. A look at corporations’ use of these provisions in other trade agreements provides positive arguments for both sides of the TPP ISDS debate.

Under NAFTA, Methanex, a Canadian corporation sued California for loss of $970 million in expected future profits after California banned the chemical MTBE from gasoline sold in the state. The NAFTA ISDS tribunal dismissed the claims against California. TPP supporters say the ruling prove that domestic regulations for the public good will win out under any ISDS regime. Opponents, on the other hand say that those companies from larger countries that are set to gain access to similar rights against the United States will not lose such cases. The ongoing dispute between the United States tobacco company Phillip Morris and Australia for mandating plain packaging of tobacco products on public health grounds is cited as an example of a suit TPP will allow against the United States to the potential detriment of taxpayers.

Opponents also fear “indirect expropriation” will be interpreted broadly by a TPP ISDS tribunal to oppose regulations that may diminish a foreign corporation’s investment expectations in the United States. An example of a corporation successfully suing a state for indirect expropriation is the 2012 Occidental Petroleum’s award of $2.3 billion from Ecuador for its expropriation of oil drilling. The Office of the United States Trade Representative has dedicated an entire website to dispelling critic concerns over a TPP ISDS tribunal issuing similar judgments against the United States. It cites investor burden of proof and a state’s ability to seek expedited review of frivolous claims brought against it as key mitigating factors.

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TPP protests

In the near future the final terms of the TPP will be released to the public. The agreement has the potential to change the United States’ strategic position in Asia and increase its exports in certain struggling industries. It also has the potential of opening the vault to the United States’ taxpayer money. I believe that in order for the TPP to pass congressional approval, ISDS provision must contain the mitigation mechanisms necessary to prevent foreign corporations from impeding the United State’s sovereign right to regulate trade within its borders. Whatever the outcome, the TPP ISDS tribunal will likely influence a similar ISDS provision in the Transatlantic Trade and Investment Partnership currently being negotiated between the United States and the European Union.

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Don’t sit here!: A growing trend in international relations

Multilateralism has been the prevalent method to solve international issues since the end of the Second World War. The idea is that the inclusion of more than two parties to solve international issues ensures more legitimacy and long –term efficiency. Institutions such as the United Nations, the World Trade Organization (WTO) or the International Monetary Fund (IMF) are the renowned multilateral platforms of our time.

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In the past years, we have witnessed the resurgence and strengthening of bilateral and regional relations (see table below). In other words, the trend is to use a platform with a few selected participants rather than a multitude. The creation and the use of regional institutions, regional agreements and bilateral agreements are only the product of their geopolitical environment: the resurgence of bilateralism and regionalism stems from the incapacity of large multilateral institutions to create adequate solutions for the parties concerned. Multilateralism aimed at providing a platform for states with less political and economic influence to express their views; however, when facing stronger economies, it is easier to negotiate terms of an agreement as a group with a converging agenda such as the United Nations Regional Groups of Member States.

Logic would have that this phenomenon is due to the fact that dealing with regional issues is just easier on a regional level. Indeed, bilateralism and regionalism can be fairer and better platforms to solve issues. The purpose of multilateral institutions is to integrate more parties, it appears that smaller states can feel left out amongst bigger players and larger states slowed down by the myriad of negotiations.

The question is: Does the renaissance of a regional and bilateral relationships signal the beginning of the end of a multilateral world?

The most recent sign of a rusted multilateral system is the failure of the WTO Doha Round in December 2013. India´s refusal to adopt the legal text put a halt to the negotiations started in 2001 (the WTO decision-making system requires the consent of all members; consensus exists only when no member formally objects to the decision).

For a decade, the WTO has tried unsuccessfully to reach a consensus between its members on major agricultural and other trade-related issues. These issues are pivotal to the economic relations between developing and developed countries (agricultural subsidies­; trade facilitation procedures and non-tariff barriers). The impasse of the Doha Round can righteously transform into a catalyst for negotiations on a regional or bilateral level for members desperately in need of an alternative.

Somehow, that alternative could be the Transatlantic Trade and Investment Partnership (TTIP) for the EU and the US. The EU and the US are currently the largest trade agreement so far considering the economic weight of its participants. The TTIP agreement seems very promising for the regulatory coherence between the EU and the US. In terms of international trade, the EU and the US account for 60% of global trade, 33% of world trade in goods and 42% of world trade in services. It is also worth noting that the US and the EU are the most recurrent parties of the WTO dispute resolution system and that they also carry significant weight in influencing the regulation of trade between the members of the WTO. The regulatory negotiations and the coherence to be achieved by the EU and the US will undoubtedly have a large impact on the way trade is made with the EU and with the rest of  the world.

Thus, the question arises as to whether the WTO will remain relevant as the platform for international trade negotiation and the development of trade regulations in the future.

The international financial sector has also witnessed the obsolescence of multilateralism. The multilateral system has also been unable to provide an international solution on the very political and legal controversy that is the manipulation of currency values in order to gain unfair competitive advantages over a foreign competitor. The IMF, which has a mandate on currency surveillance, can identify undervalued currencies threatening the stability of the financial system but does not have an efficient enforcement mechanism. In 2009, Brazilian President Dilma Rousseff denounced the activities of certain central banks in Europe and in the US which were affecting the value of the Brazilian Real in a statement before the United Nations General Assembly. However, actions are being taken on a smaller scale despite the presence of platforms such as the WTO or the IMF. Following the BRICS Summit in 2012, a communiqué was released by the BRICS denunciating currency manipulations by some developed states. The US and China have also recently engaged in a “Strategic Economic Dialogue” to tackle the issue of currency manipulation which can ultimately has an impact on the international financial and trade system. Only time will tell us whether this will result in a multilateral or bilateral/regional solutions.

The lesson is that, the increased use of regionalism and bilateralism in international affairs reflects a multilateral system that is struggling to face a growing number of key states with diverging domestic interests. Nevertheless, extensive and protracted regionalism and bilateralism can draw the world further apart and jeopardize the achieved security and predictability of the international system.The current trend is the result of a divided world, regionalism clearly has the power to breathe new life into the pursuit of international solutions. The latest multilateral conference on climate change in Lima, Peru is a positive sign in this direction. The United Nations members reached a first agreement based on “common but differentiated responsibilities and respective capabilities, in light if different national circumstances”.

Regionalism and bilateralism should augment the multilateral system because they reflect the needs of the world as they are today. The ultimate aim should be a multilateral world. A sagely African proverb says it all: “If you want to go fast, go alone, if you want to go far, go together.”

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University of Denver Sturm College of Law

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