Draft CONCEPT NOTE for 'Socially Just Trade, Production and Investment'
Asia Europe Peoples Forum, Ulaanbaatar, Mongolia, July 4-6, 2016
The aim of the sessions is to show the relevance and enhance the knowledge of the current trade and investment framework by a) showing the wider context of the trade and investment regime; b) signaling and explaining the risks and dangers in the trade agenda; c) highlighting the growing unease with the current trade and investment framework and the calls for reform, both from active civil society campaigns and from governments primarily in the global South, and pulling all of this global, abstract critique into the Mongolian context by highlighting concrete cases; and e) providing angles for further action and collaboration among all civil society actors present.
The session should also sketch the history of investment protection agreements as such – with the multitude of bilateral investment agreements signed from the 1950s onwards, the exponential growth in the number of investment claims since the 1990s and the reasons behind this, and the current trend of including investment protection chapters in trade agreements, which, unlike bilateral investment agreements, do not have a window of opportunity to terminate or amend.
Key message should be that countries/governments should be much more aware of what crucial capacities and assets they are giving up in order to gain dubious trade and investment benefits: there is no decisive evidence that investment agreements attract more investment, while the trade generated as a result of free trade agreements tends to lock developing countries into global value chains controlled by powerful TNCs while limiting opportunities for balanced domestic economic development – not in the least because trade agreements compel governments to irreversibly liberalise and commercialise vital public services, jeopardizing universal and affordable access for all. The current model for trade and investment relations benefits economic elites and contributes to growing inequality, both between and within countries.
Session 1 (phase 1): Trade and investment agreements – fundamentals of the framework
The session needs to highlight how modern trade agreements in their focus on trade in services and investment go well beyond traditional agreements that only dealt with cross-border trade in goods. It needs to highlight how, because of this new, much further reaching trade focus, modern trade and investment agreements have severe and far reaching impacts on sustainable development and the scope for self-determination of sovereign countries. These aren’t any longer trade agreements. They are agreements of the elites to change the basics of their societies. It is like changing the constitutions. And everything is suddenly under the control of wall street listed entreprises.
The session needs to make very clear that in signing trade and investment agreements states are relinquishing their right to regulate in the wider public interest, that these agreements primarily serve big and footloose transnational enterprise at the expense of small and medium-sized, locally or regionally oriented industry that is much more firmly rooted in society and provides much more stable development opportunities.
Trade Agreement EU – Vietnam as example
Addressing the problems with the trade and investment agenda can be done on the basis of the EU-Vietnam free trade and investment agreement, which the EU put forward as the new model for trade relations with developing countries (and which is different from TTIP als model for agreements between industrialised countries?). It is showcased as development-friendly and beneficial to a balanced sustainable development. But a closer look reveals that the EU-Vietnam trade agenda continues to enshrine some very problematic elements, like irreversible liberalization, hampering governments to regulate and set performance requirements for incoming investment, Investor-state dispute settlement, with potentially severe impacts for public budgets and the risk of regulatory chill.
Session 2 (phase 1): Investment protection and ISDS/ICS
Zoom in on investment. The workshop should focus on what constitutes sustainable investment and the tension between the need to attract sustainable development and the trade and investment framework.
Zoom in on the dangers of ISDS: system is growing exponentially; crippling damages are borne by public budgets at the expense of social policies; highlight cases related to extractives and land-grabbing – these are relevant to Mongolia. Extractive companies are main users of ISDS
Zoom in on the proposals for reform of the ISDS system that the EU has included in EU-Vietnam FTA. The EU promotes this new Investment Court System, but it does not address the systemic flaws associated with ISDS.
Highlight the risks of including investment chapter + investor-state dispute settlement in a comprehensive trade agreement: bilateral investment agreements have a built in time-frame to revise/terminate which FTAs have not: this constitutes a relinquishing of sovereignty, because revisions can only be made in agreement with the other party.
Highlight the risk of ISDS in the Mongolian context: The Khan resources case. Mongolia has already decided to terminate a tax treaty with the Netherlands, because of adverse development impacts. Investment protection – including the EU’s ICS - should be observed with equal reservation.
Session 3 (phase 2): Resistance against trade and investment agreements from civil society and sovereign states
Exchange of experiences with resistance against the neoliberal trade and investment agenda from civil society and governments, embarking on a revision or termination of their existing investment agreements. Discuss how resistance from both regions may be harnessed to reinforce each other’s efforts. Visions, perspectives and strategies can be extrapolated from the discussions and brought together in a paper to be published after the event.
Very briefly highlight cases: Gabriel Mining, Achmea, Lone Pine, Veolia/Egypt, Philip Morris, etc.
Zoom in on Indonesia, which is developing a new model investment agreement to avoid further restraints on policy space, after having been forced to abandon public interest regulation under threat from claims from the extractives industry.
Indonesian speaker from Indonesia for Global Justice – possibly Rachmi Hertanti?
Zoom in on India, which revised its foreign investment policy after escalating tax disputes with Vodaphone and others.
Also highlight the shortcomings of these revisions from a civil society/sustainability perspective. Indonesia, for example, missed the opportunity to include investor obligations/ a human rights perspective in its new model investment treaty.
Session 4 (phase 3): Strategising
Have an open space meeting to which we invite als speakers and participants from the workshops on trade and investment to sit together, network and discuss what might follow from AEPF11, the trade and investment cluster and all the workshops.
Note: The Thematic Cluster 'Socially Just Trade, Production and Investment' is being coordinated by Sustainable Development Research Institute (Mongolia), Focus on the Global South (Bangkok), Monitoring Sustainabilitiy of Globalizations (MSN,Malaysia), Transnational Institute (TNI, The Netherlands), and Rosa Luxemburg Foundation (RLS, Germany)
By AEPF Working Group, Stiftung Asienhaus, May 2, 2016
In recent years there has been a significant increase in free trade and investment deals that are negotiated and signed globally. Besides the so-called mega regionals such as the Trans-Pacific Partnership Agreement (TPP) or the Trans-Atlantic Trade and Investment Partnership (TTIP) several bilateral and regional free trade and investment treaties are on the agenda of governments and business. Besides the USA, which has recently sealed its deal with the Asia-Pacific region by signing the TPP, the European Union also looks to at Asia. The free trade agreements with Singapore or Vietnam can be understood as blue prints for future trade and investment agreements.
Trade and investment are also used as tools in development politics. The EU's Generalised Scheme of Preferences (GSP), especially the Everything But Arms (EBA) scheme, is supposed to bring benefits to Least Developed Countries (LDC) also from Asia, giving several countries duty free access to the EU market for their exports, except arms and ammunition.
Advocates of free trade usually promote the triggering effects of such deals for cheaper production chains, the increased opportunities for exports etc. Meanwhile, critics analyze the negative impacts that will occur because the free trade and investment agreements are mainly benefiting large corporations from the global north that are looking for cheap production sites in the global south. Further, these agreements assure an easy and low cost access to human and natural ressources in countries where these „goods“ are available, namely in Asian, African or Latin American countries. The strong export orientation implied by free trade deals brings along a natural obstacle to the development of a healthy local or regional economy, which in the long run will have negative impacts on the development paths of poorer countries that followed the temptation of quick export opportunities.
Too, in times where climate change and environmental degradation are hitting the world, the endeavors of governments and business to trigger economic growth by increasing global trade – which will lead to continuously mounting global transport and hence more and more carbon emissions – seem like a mockery towards the voices of the climate and environmentalist movements but also to the climate protection deal that has been signed by governments themselves in Paris. Additionally, the trade and investment deals must be understood as a threat towards citizens' rights and participation, democratic state-building as well as rule of law. Often these deals are negotiated in secrecy - with national parliaments or civil society often not being allowed to get insights into the draft papers while representatives of business and their lobbyists belong to the entourage of negotiators.
The mechanism of investor-state-dipute-settlement (ISDS) that is usually part of free trade and investment agreements is totally favor of corporations' interests. It bypasses national legislation by putting its ruling to off-shore, not democratically legitimized privately run „courts“, punishing states who want to enact for example protective laws for the benefits of their citizens. Cases where national legislators decided for example to enforce laws on health protection against the interests of the tobacco industry or laws on environmental protection against the interests of polluting energy companies have shown that the ISDS will be used to make the governments pay exorbitant fines to the companies that see their future investment potential and benefits being threatened by national legislation.
Hence, in many countries in the EU and in Asia, protests of social movements, farmers, and even business as small and medium sized enterprises have been adressing the negative impacts of this development. As the ASEM summit brings together governments and companies, the AEPF shall be used as a space for the Asian and European civil society to analyze impacts of trade and investment patterns that are on the political agenda of Asian and EU governments. It shall provide opportunity to formulate specific critical analysis by taking into account the voice of citizens, but also bring up alternatives for a more sustainable development path that ensures a fair and just socio-economic agenda. It could discuss questions of how a democratic economy can look like, how a shift towards an Asian-EU fair and participatory trade agenda might look like. Further it could be a space where social movements can exchange their experiences with successful struggles, trigger solidarity among Asian and European activists and build a platform and an ongoing process beyond the AEPF summit, where movements from the EU and Asia create a stronger joint activism for a more just, democratic and sustainable future also in the economic sphere, namely in trade and investment.
AEPF11 is financially supported by the ASEM Dialogue Facility of the European Commission and the German Ministry of Foreign Affairs.
The Update of this Website for AEPF11 has been made possible by Rosa Luxemburg Stiftung, Germany.
The views at the AEPF11 and in its related documents are those of the participating organisations.