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116 5.2 The case of Chile: Foreign investment regulation in the association treaty EU – Chile and its interaction with BITs and WTO rules A very good example for this is the “Association Agreement” of the EU with Chile, which was signed in November 2002 and entered into force in February 2003, 326 and which in its corporation-friendly orientation is amended by a series of earlier bilateral investment treaties between the European states and Chile: 327 • The mutual market access for foreign corporations which operate in the services sector, the non-services sector and the financial services area is safeguarded by the FTA, which in its notion of services follows the four GATS definitions (Mode 1 “cross-border supply”, Mode 2 “consumption abroad”, Mode 3 “commercial presence” and Mode 4 “presence of natural persons”) and whose scope is defined by a positive-list. • The regulation to “protect” investment against “discrimination and expropriations” for “post-establishment” investment in services and financial services is covered by both FTA and bilateral agreements, the non-services area is regulated exclusively by bilateral investment agreements. • The principle of non-discrimination of NT is safeguarded twofold for all three areas (by FTA and bilateral agreements). • The MFN principle is applied by the bilateral agreements. • Capital and profit transfers are also safeguarded twofold through BITs and FTA for all three areas. • The possibility for investor-to-state disputes (post-establishment) has been assured by investors and corporations through the BITs. • The possibilities for trade-related disputes between states are regulated by the BITs. • The regulation concerning services and public procurement is realized by the FTA. • And additionally, in foreign trade-related issues the rules of “non-discrimination” of the WTO apply. 326 The English version of the agreement can be found, e.g., at: http://www.handel-entwicklung-menschenrechte.org/ fileadmin/christian/Chile-EU-AssociationAgreement.pdf. 327 See: Republic of Chile: Investment and Transparency Provisions in Chile’s FTAs with the E.U. and U.S.A. Presentation before the OECD Committee on International Investment and Multinational Enterprises on April 10, 2003.
Through this kind of crossing and mutually amending treaties of BITs, FTAs and WTO everything is subjected to the free play of the market. An extension of investors rights without obligations or conditions goes hand in hand with a restriction and elimination of national margins of action with respect to regional development programs or conditions for investors, certain performance requirements like a minimum quotas on national employees or conditions to promote regional development like the preferential treatment of local suppliers, all of which is prohibited by the joint-play of BITs, FTA and WTO. It is unclear which democratic margins of actions will be retained by governments apart from leaving everything to the market criteria of price and efficiency, without room for national, regional or local decision-making. Environmental, social and human rights are at least mentioned in the FTAs of the EU, but only in so far that the verbal commitment to human rights and the rule of law appears in the introductory clause, without specifying any concrete measures to condition and supervise the compliance with these principles. Investors’ rights are clearly the focus of these treaties, investors’ obligations are not mentioned. EU trade commissioner Pascal Lamy has characterized the EU-Chile agreement as “a XXI century model of trade relations. The ambitious and innovative provisions are expected to deliver considerable economic and commercial benefits” 328 , especially in the area of services and investment it goes much further than the existing WTO-commitments. 329 It can be agreed with the judgement of Klaus Schilder from the NGO WEED regarding the FTAs of the EU, who states that: “The EU its striving to anchor broad concessions to international investors in the treaty (as, e.g., legal guarantees to protect foreign investors, a MFN clause, protection against expropriation and nationalization, free transfer of profits as well as an international dispute settlement mechanism). The European Parliament has already spoken out in 1999 for the adoption of a legally binding code of conduct for foreign investors in developing countries in the annex of future agreements, which would obligate investors to comply with social, human rights and environmental minimum standards. Some of the new EU trade agreements tend to grant broader protection of investment as previously accorded in other multilateral initiatives. Overall it therefore has to be feared, that beyond the WTO-framework the Multilateral Investment Agreement (MAI), 328 http://europa.eu.int/comm/external_relations/chile/assoc_agr/ip02_1696.htm. 329 Taken from: Küppers, Gaby: Es darf geschröpft werden. Das EU-Chile-Abkommen ist unter Dach und Fach, in: ila No. 260, November 2002, p. 33. 117
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Christian Russau Enforcement of int
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Preface Since the end of 1999 the C
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If the “Interregional Association
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8 Chapter 5: The enforcement of int
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10 1.1 Negotiations of the “Inter
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12 A similar agreement of the so-ca
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14 tute in the eyes of many countri
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16 amaraty, where the FTAA-negotiat
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18 free trade agreement between the
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20 at the UN Millenium Summit to ha
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22 on the possibility of a unilater
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24 tual contradictions between the
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26 fired. The workers union OGB-L,
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28 policy and EU development policy
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Chapter 2: Foreign direct investmen
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50% in 2002 as compared to the prev
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The reasons for propagating this co
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• according to a study conducted
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promotion of domestic demand, in or
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2.2 International Agreements and Tr
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2.3 The World Trade Organization WT
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• trade and investment • compet
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2.3.3 The GATS agreement The Genera
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which works on a profit-basis, sees
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“deadline: by 1 January 2005”.
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“discrimination” or “expropri
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Stockholm Chamber of Commerce (SCC)
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58 3.1 European foreign investment
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60 zations and liberalization in La
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62 the profitability, on the electr
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64 America. Also the issue of human
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