Faced with the evident failure of the multilateral free trade and investment agreements promoted by the European Union (EPAs, TTIP, MERCOSUR), Europe has developed its commercial strategy through bilateral economic agreements with third countries.
The last of these bilateral agreements has been the one of the EU and Singapore added to a long list. In this new agreement, like in all bilateral agreements that the EU currently has in force, Europe imposes its commercial interests on countries that accept any type of conditions, protecting their investment companies and forgetting about the social dimension of trade that promotes solidarity, human development and the promotion of human rights.
These bilateral economic agreements not only provide juridical security to the investment companies but also impose the controversial clause of the multilateral agreements for the resolution of conflicts called the Investor-State Dispute Settlement (ISDS). Through these dispute resolution mechanisms, investment companies can sue the States in whose territories they are installed if the government change the legislation during the course of their investments and if the said legislative changes affect their benefits.
It’s the world upside down. So, a company will make investments only in case its economic success is guaranteed with profits. Imagine that in your own country a person or a company decides to open a restaurant or become entrepreneur but could do so by securing benefits and could report their local authorities in case the financial investment of the company does not report profits. Does not it sound strange to you?
But the scandal of these dispute resolution systems between companies and States (ISDS) goes beyond who are the legal entities (companies) entitled to sue a sovereign State. These agreements establish that the entities that must resolve the disputes between governments and companies are not the ordinary courts of each country attached to the national legislation of the country in which the investment is carried out. These private courts are also not submitted to the legislation of the country of origin of the investment companies. Moreover, they are not subject to international laws or treaties.
These pseudo-courts of private-juridical nature obey purely the economic criteria and the estimations of the profits of large companies. Therefore, it is not only an attack to the democratic legal systems or the Rule of Law, but it is a threat to the national sovereignty of the countries in which the investments are developed that see how their courts are annulled in the face of a legitimacy granted by a simple
These measures of dispute resolution established in bilateral free trade agreements at the behest of large companies restrict the capacity to legislate of developing countries. Africa Europe Faith and Justice Network (AEFJN) as a civil society denounces these abusive clauses and the injustice that it implies for developing countries especially in Africa where at least 20 % of all dispute cases between Investors and States involve African countries. With these clauses, companies find the way free to act at their will, reinforcing their impunity and with the guarantee that no legislation can harm them even if such legislation serves to improve the lives of citizens and countries.
These clauses make it difficult to develop legislations on environmental issues or protect social and labour rights such us establishing minimum wages for all their workers, changing tax legislation, improving social security, pensions, and so on, as they would mean a change in the production costs of investments companies and provoking potential negative consequences for their profits.
In recent years, the European Union has made an effort in favour of the transparency of European companies that help to improve their social and economic dimension at the service of the society. However, the EU’s effort to maintain clauses such as the ISDS provokes confusion by destroying the values of democracy and the rule of law. One wonders who is behind these types of clauses, why they are included in the bilateral free trade agreements? Are they political or governmental decisions? Do they obey to trade policy of the EU? Is it a self-attributed competence of the European commission? Is it an initiative of the trade commissioner? Do the officials of DG Trade only obey to political decisions? To whom do the European institutions serve, the people or the economy or the economic interests?
What role do the EU’s inspiring values of solidarity and justice play in the concrete practice of an economic agreement? Where is the control of the European Parliament and the Member States in the face of such abuses? What is the position of the International Trade Committee of the European Parliament at this regard? Why do they all look the other way when it comes to approving these treaties? Or are there certain interests of the EU that are hidden from society (civil)?
The social responsibility of companies is not something that can be left without legislative control to the free will of companies. There is a co-responsibility on the part of EU institutions and national governments that must ensure democratic and solidarity values. Otherwise the economic enlargement of the EU will only lead to the impoverishment of other economic regions.
José Luis Gutiérrez Aranda,
Trade Policy Officer,
Africa Europe Faith and Justice Network (AEFJN)