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European civil society demands investment policy reform

As the March-April deadline approaches for a new EU investment policy post-Liston Treaty, civil society groups are intensifying their calls for fairness and maximum space for social and environmental policy under internal and international investment treaties. The Seattle To Brussels network, Ecologistas en acción, Transnational Institute and several other EU-based groups released a briefing note this month which claims, “Bilateral investment treaties are a threat to public policy, democratic governance and the public interest and should alert anybody concerned with environmental and social policies.”

The report argues that there is a window of opportunity now (with the transfer of responsibility for investment from member states to the EU level) for human rights, development and environmental groups, as well as trade unions, to “push for a balanced investment policy that is not merely concerned with investor rights, but holds investors accountable and promotes and protects public interests, human rights and environmental sustainability.”

The EU Commission and Council of the EU deliberations on investment are important for Canada because the Canada-EU Comprehensive Economic and Trade Agreement (CETA) may provide a test case for the new EU investment policy. The Canadian government wants to include an investor-to-state dispute process in CETA as exists in NAFTA’s Chapter 11 (and most of Canada’s other bilateral trade deals). European civil society groups have rejected the inclusion of investor-state in CETA while they push for a more balanced overall EU position with respect to investor rights.

The EU is not a stranger to commercial arbitration being used by companies to challenge local environmental, social or public health rules, or internationally by EU firms to extort developing country governments. The investment briefing released this month offers a few examples, including these two (paraphrased):

– Energy firm Vattenfall brought the German government before the International Centre for Settlement of Investment Disputes (ICSID) under the investment protections in the EU Energy Charter. The company was demanding compensation for restrictions on the use and discharge of cooling water for a coal-fired electricity plant on the Elbe river. New EU water quality directives demanded tougher standards across all industries on German rivers and yet the government eventually settled with Vattenfall for an undisclosed amount (the company was seeking €1.4 billion, or almost $2 billion CDN).

– In 2007, a group of Italian and Luxembourg investors took the government of South Africa to the ICSID over a Black Economic Empowerment (BEE) program which they claimed violated existing bilateral investment treaties (BITs). The firms argued that requirements in the 2004 Mineral and Petroleum Resources Development Act, requiring a re-licensing of mining contracts to transfer a greater portion of shares to black investors, ran counter to obligations to guarantee “fair and equitable” treatment for Italian and Luxembourg companies. In a case that proves BITs give foreign investors more rights than domestic companies, the South African government settled with the firms by granting them concessions under the BEE.

The EU civil society groups endorsing the investment briefing are calling on others across the EU to “contact their national members of the European Parliament and in particular of the Trade Committee (INTA) which will vote in March-April on a resolution on the new EU investment policy and on amendments to the draft regulation dealing with the existing member states BITs.” They’re also targetting national governments with the same message of investment fairness.

The groups are demanding that “Any new investment regime for the EU will need to be guided by”:

• the incorporation of investor obligations into investment agreements in particular in areas of human rights and corporate accountability

• more precise and restrictive language regarding investors’ rights

• the abolition of one-sided and secretive investor-to-state dispute settlement mechanisms

• an explicit recognition of the right of governments to regulate and to formulate policies of general interest

• a substantive social and environmental dimension

Furthermore, related to CETA, they are calling for all current bilateral investment treaty negotiations to be put on hold until all existing EU member states’ BITs can be “assessed for their impact on the ability of governments to further sustainable development, gender justice and social equity as well as their obligation to implement international conventions and treaties on human, women’s and labour rights, the environment and climate change.”

Canadian organizations are demanding the same of the federal, provincial and territorial governments. We’d like to see investor-to-state shelved in CETA, removed from NAFTA and other Canadian BITs (Foreign Investment Protection Agreements and Free Trade Agreements), and taken off the negotiating table at the annual meetings of internal trade ministers. You can write Canada’s trade minister, Peter Van Loan, also about the need to reform Canada’s investment policy. His email address is VanLoan.P@parl.gc.ca.