Public statement urges reform of international investment regime

Academic experts on investment law, arbitration and regulatory policy, many of them from Canadian universities, issued a statement today that urges states to "review their investment treaties with a view to withdrawing from or renegotiating them... take steps to replace or curtail the use of investment treaty arbitration; and ... strengthen their domestic justice system for the benefit of all citizens and communities, including investors."

Considering the yet-to-be court verified settlement in the AbitibiBowater NAFTA case, the statement should resonate with Canadians. But it was motivated by broader international discussions (and skepticism) about investor-state disputes, and the value of protecting investment above most other social considerations in international trade law.

According to the statement, which was posted to the website bilaterals.org today, the motivating international developments include:

• European Union processes to develop a common investment policy that could consolidate or supercede hundreds of bilateral investment treaties;

• Negotiations toward a Trans-Pacific Partnership Agreement on investment;

• Possible renewed negotiations on investment at the World Trade Organization, especially in relation to trade disciplines under the General Agreement on Trade in Services;

• Regional initiatives to reform investment law and arbitration, especially in Latin America;

• Reviews by states of their domestic policy on investment law and arbitration;

• Revisions of their arbitration rules, as they involve states, by the UN Commission on International Trade Law and by the International Chamber of Commerce;

• Upcoming meetings of the UN Conference on Trade and Development and other organizations that will address investment treaties.

"The aim of this statement is to bring the concerns expressed above to the attention of decision-makers and the public in general," say the academics, which include professors from York University, University of Toronto, University of Ottawa, University of Waterloo, University of Victoria, and 19 other universities across nine countries.

International decision-makers are meeting Xiamen, China next week for the World Investment Forum 2010. The event is organized biennially by the UN Conference on Trade and Development "to strengthen international cooperation in the interest of promoting international investment and its contribution to economic growth and development."

Don Stephenson, assistant deputy minister at DFAIT and former ambassador of the Canadian mission to Geneva, will represent Canada. On Tuesday, September 7, Mr. Stephenson will participate with 35 other international ministerial representatives in a round table on "Revisiting Investment Policies". It is doubtful he'll be taking the message of the 24 academics with him.

For example, their strong statement says:

Investment treaty arbitration as currently constituted is not a fair, independent, and balanced method for the resolution of investment disputes and therefore should not be relied on for this purpose. There is a strong moral as well as policy case for governments to withdraw from investment treaties and to oppose investor-state arbitration, including by refusal to pay arbitration awards against them where an award for compensation has followed from a good faith measure that was introduced for a legitimate purpose.

As Jim Stanford wrote this week, the AbitibiBowater settlement proved again that the Harper government is more interested in standing up for corporate rights (to fire people, remove production from Canada and leave an environmental mess for public money to clean up) than for broader social or moral considerations. Mr. Stephenson will have little room to consider alternative investment regimes when he travels to China next week.

Likewise, Canadian trade negotiators are trying to insert an investor-state dispute process, like exists in NAFTA, most Canadian bilaterals, and all Foreign Investment Protection Agreements, into CETA. European fair trade, environmental and social justice groups under the banner of the Seattle To Brussels network are resisting European Commission efforts to go this route. The groups have called for:

• all Member States' BIT (bilateral investment treaty) negotiations should be put on hold, while the new and improved EU investment policy framework is being defined;

• a sunset clause is set on all existing Member States' BITs, under which they would expire at a certain date unless they were reviewed to achieve a greater balance between the protection of public and private interests and of economic, social, environmental and developmental interests;

• the European Commission undertakes a thorough assessment of the Member States BITs and the functioning of international investor-to-state arbitration regarding their impact on the policy space of governments to further sustainable development, gender justice and social equity and to implement their obligations under international conventions and treaties on human, women's and labour rights, the environment and climate change;

• broad public consultations are held before any decision on an EU investment policy is taken.

Canada's experience with investor-state disputes has been mixed. But increasingly investment disputes have nothing to do with trade. They are excuses for companies to avoid Canadian courts and take their complaints to unelected trade panels with a mandate to rule in favour of a permissive investment environment - one with as few regulatory barriers to profit as possible. Harper's capitulation to AbitibiBowater last week will only encourage multinationals to throw their weight around in international arbitration.

Isn't it time Canada reviewed this regime, too? Of course it is. We should make the AbitibiBowater decision an election issue this fall (or whenever we head to the polls). In the meantime, let's do as the good professors suggest and bring our concerns about the investment regime to our politicians and the public.

 

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