Rec­on­cil­ing in­vest­ment pro­tec­tion and hu­man rights

The Myanmar Times - - Views - DANIEL AGUIRRE news­room@mm­

THIS month the newly elected Myan­mar gov­ern­ment re­leased its eco­nomic pol­icy and an­nounced that it will seek to at­tract even more for­eign in­vest­ment than un­der pre­vi­ous ad­min­is­tra­tions. But the new pol­icy did not out­line how it will en­sure that for­eign in­vest­ment will con­trib­ute to the pro­tec­tion of hu­man rights and sus­tain­able de­vel­op­ment.

Myan­mar’s pre­vi­ous mil­i­tary gov­ern­ment was com­mit­ted to in­vest­ment pro­tec­tion treaties. Will the new gov­ern­ment fol­low suit? These treaties be­tween states en­able for­eign in­vestors to chal­lenge new laws and poli­cies by the host gov­ern­ment – po­ten­tially in­clud­ing those pro­tect­ing hu­man rights and the en­vi­ron­ment – through in­ter­na­tional ar­bi­tra­tion if they be­lieve these may ad­versely af­fect their prof­its.

For­eign gov­ern­ments want their in­vestors to ben­e­fit from the open­ing up of Myan­mar’s econ­omy. Myan­mar has al­ready en­tered into in­vest­ment pro­tec­tion treaties with Japan, South Korea, the Philip­pines, China, Laos, Viet­nam, Thai­land, Is­rael and In­dia and is party to the ASEAN Com­pre­hen­sive In­vest­ment Agree­ment. Myan­mar is ne­go­ti­at­ing a new treaty with the Euro­pean Union and ex­plor­ing op­tions with Sin­ga­pore, among oth­ers.

These in­vest­ment treaties grant in­vestors equal stand­ing with Myan­mar’s gov­ern­ment in dis­putes over na­tional laws and pol­icy in in­ter­na­tional ar­bi­tra­tion. Their broad pro­vi­sions fail to rec­on­cile in­vest­ment pro­tec­tion with the host state’s right and duty to reg­u­late for the ben­e­fit of hu­man rights and sus­tain­able de­vel­op­ment. Myan­mar must en­sure that pro­vi­sions on the treat­ment of for­eign in­vestors limit their rights to chal­lenge le­git­i­mate, non-dis­crim­i­na­tory, pub­lic pur­pose leg­is­la­tion.

Seek­ing to at­tract in­vest­ment by giv­ing for­eign busi­nesses more eco­nomic se­cu­rity should not com­pro­mise gov­ern­ment’s abil­ity to reg­u­late in favour of the rights of its peo­ple. Pro­tec­tion of in­vest­ments must not be given pri­or­ity over pro­tec­tion of hu­man rights and the en­vi­ron­ment. The UN Guid­ing Prin­ci­ples on Busi­ness and Hu­man Rights urge gov­ern­ments to main­tain ad­e­quate do­mes­tic pol­icy space to meet their hu­man rights obli­ga­tions when pur­su­ing in­vest­ment treaties.

Be­fore agree­ing to fur­ther in­vest­ment treaties, Myan­mar should com­mit to adopt­ing and en­forc­ing new laws in line with in­ter­na­tional hu­man rights and en­vi­ron­men­tal stan­dards. It should eval­u­ate whether these in­vest­ment treaties are nec­es­sary to at­tract for­eign in­vest­ment to Myan­mar. It should fol­low the re­gional trend and re­visit old treaties that em­power for­eign in­vestors at the ex­pense of lo­cal rights hold­ers.

The Na­tional League for Democ­racy-led gov­ern­ment came to power promis­ing change, to es­tab­lish the rule of law and to pro­tect hu­man rights. In or­der to do so, the gov­ern­ment will need to cre­ate new laws and poli­cies in line with in­ter­na­tional laws and stan­dards in the pub­lic’s in­ter­est. For ex­am­ple, Myan­mar has re­cently signed the In­ter­na­tional Covenant on Eco­nomic Social and Cul­tural Rights, sig­nalling its will­ing­ness to put in place poli­cies to pro­gres­sively achieve uni­ver­sal health­care, ed­u­ca­tion and social se­cu­rity. These rights are also pro­tected in Myan­mar’s con­sti­tu­tion.

But new poli­cies de­signed to ful­fil these rights may give rise to dis­putes un­der in­vest­ment treaties. For in­stance, it is pos­si­ble that for­eign in­vestors will claim that a new pol­icy on pub­lic health (for in­stance by re­quir­ing plain pack­ag­ing for cig­a­rettes) or mi­nor­ity rights (call­ing for af­fir­ma­tive ac­tion for mi­nori­ties) or strict en­vi­ron­men­tal pro­tec­tion stan­dards (im­proved en­vi­ron­men­tal im­pact as­sess­ment reg­u­la­tions) would harm their ex­pected prof­its or other rights that are broadly de­fined in the in­vest­ment pro­tec­tion agree­ment.

These are not out­landish ex­am­ples. There are a num­ber of cases where new laws and reg­u­la­tions passed by demo­crat­i­cally elected gov­ern­ments have been chal­lenged by for­eign in­vestors be­fore ar­bi­tral tri­bunals. In Canada, a for­eign in­vestor suc­cess­fully chal­lenged an en­vi­ron­men­tal im­pact as­sess­ment board’s de­ci­sion to deny it a per­mit and asked for more than US$100 mil­lion in dam­ages. Af­fir­ma­tive ac­tion poli­cies in South Africa and en­vi­ron­men­tal pro­tec­tion stan­dards in Ger­many have been chal­lenged. Just the threat of ar­bi­tra­tion can lead to a “reg­u­la­tory chill”, forc­ing back pub­lic in­ter­est leg­is­la­tion and pre­vent­ing en­vi­ron­men­tal pro­tec­tion mea­sures.

These are costly dis­putes – some ar­bi­tral awards run into the bil­lions of dol­lars against host gov­ern­ments. Re­cent chal­lenges by to­bacco gi­ant Phillip Mor­ris against Aus­tralian and Uruguay plain pack­ag­ing cig­a­rette laws, de­signed to pro­tect pub­lic health, were un­suc­cess­ful but cost mil­lions in lawyer’s fees. Australia re­port­edly paid $50 mil­lion to de­fend its law. Myan­mar can­not de­fend re­peated chal­lenges by deep-pock­eted in­vestors. In Myan­mar, this money could be bet­ter spent im­prov­ing the dire state of health and ed­u­ca­tion.

Around the world, peo­ple are de­mand­ing that ne­go­ti­a­tion and adop­tion of in­vest­ment treaties be trans­par­ent; in­creas­ingly, peo­ple are op­pos­ing treaties that grossly favour the in­ter­ests of in­vestors over the in­ter­ests of the pub­lic. In­vest­ment treaties are of­ten ne­go­ti­ated be­hind closed doors with lit­tle pub­lic or par­lia­men­tary over­sight. These are im­por­tant de­ci­sions that im­pact on the rights of peo­ple in Myan­mar. Myan­mar’s civil so­ci­ety has not yet had the op­por­tu­nity to par­tic­i­pate in gen­uine and in­formed con­sul­ta­tion.

Many states have turned against in­ter­na­tional dis­pute res­o­lu­tion in in­vest­ment treaties. South Africa, Bo­livia, Ecuador, Venezuela and Indonesia have started to can­cel or phase out ex­ist­ing treaties. Oth­ers, in­clud­ing In­dia, are re­view­ing cur­rent treaties and re­think­ing fu­ture ne­go­ti­a­tions. Brazil, Rus­sia, In­dia and China are con­sid­er­ing an al­ter­na­tive sys­tem that con­sid­ers is­sues rel­e­vant to emerg­ing economies.

The In­dian gov­ern­ment in­tends to re­place ex­ist­ing in­vest­ment treaties with new ones de­signed to bal­ance in­vestor’s in­ter­ests, reg­u­la­tory space and in­vestor re­spon­si­bil­i­ties. It seeks to limit pro­tec­tions for for­eign in­vestors, drop con­tro­ver­sial as­pects of treaties and nar­row the scope of oth­ers to re­duce dis­putes. While it al­lows ac­cess to in­ter­na­tional dis­pute set­tle­ment, for­eign in­vestors will have to pass through the do­mes­tic courts first. The new in­vest­ment treaties will also in­clude an ex­haus­tive list of eco­nomic, en­vi­ron­men­tal and social mea­sures to be ex­empt from chal­lenge by for­eign in­vestors.

Myan­mar would do well to fol­low this ap­proach. Im­prov­ing its hu­man rights sit­u­a­tion and main­tain­ing sus­tain­able de­vel­op­ment re­quire sweep­ing le­gal re­form. The threat of costly le­gal chal­lenges by for­eign in­vestors could dis­suade pol­icy mak­ers from mak­ing nec­es­sary changes, dis­cour­ag­ing them from ful­fill­ing hu­man rights and en­vi­ron­men­tal obli­ga­tions in or­der to pro­mote in­vest­ment.

Daniel Aguirre is the in­ter­na­tional le­gal ad­viser for the In­ter­na­tional Com­mis­sion of Jurists based in Yan­gon.

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