REPA Booklet - Stop Epa

16
A Charter for Europe’s Investors
Will the European Union also use the Cotonou negotiations to get binding commitments on
foreign investment?
Promotion, protection and guarantees for foreign investment is given its own chapter, but in Part 4 of the Cotonou
Agreement, which deals with Development Finance Cooperation, rather than Part 3 on Economic and Trade
Cooperation. Annex II provides further detailed provisions on Investment Protection Agreements.
“Through the EPAs
the EU is trying to
sneak in issues
through the back
door, such as
investment and
government
procurement, that
African countries
have been resisting
in the WTO.”
(Steve Ouma, Kenya
Human Rights
Commission, 2005)
What do these investment agreements involve?
They are usually called Bilateral Investment Treaties (BITs) or Investment Promotion and Protection Agreements
(IPPAs). Basically, national governments sign a charter of rights for transnational companies that guarantee the
right to make investments and protect the value (and often profitability) of those investments. These rights are
usually enforceable directly by investors through secret proceedings in international tribunals. The definition of
‘investment’ can include company shares, physical assets like roads or ports, mining licenses, patents and land.
Sometimes it also includes bonds and speculative financial assets, such as derivatives.
How would these investment agreements impact on ACP States?
They would provide guarantees from ACP governments to European investors. Similar agreements have
already exposed the governments of poor countries to massive damages awards when they adopted perfectly
valid policies to address their local social, economic, environmental or cultural needs, but those policies reduced
the profits or value of the foreign investment. The most notorious have involved the cancellation of contracts with
transnational companies to supply water, after local people rebelled over the cost and quality of the water; these
contracts were the result of water privatisations forced on those countries by the World Bank. Many of the
biggest water companies are based in Europe, so there are obvious concerns about links between the
European Union’s Water Facility and its desire to get binding investment agreements.
Why did the European Commission insist on including investment under Cotonou?
The Commission has failed to achieve a multilateral agreement on investment through both the WTO and the rich
countries club of the OECD. Ironically, the ACP Group was largely responsible for defeating the proposal to
negotiate an investment agreement at the WTO ministerial meeting in Cancun in 2003 – yet it had already
agreed to negotiate some such provisions under Cotonou! Article 75 contains general obligations to implement
measures and take actions to promote European investment, including negotiation of agreements to improve the
investment climate. In the provision on protecting the interests of investors (Art 78) they
affirm the need to promote and protect either Party’s investments on their respective territories, and
in this context affirm the importance of concluding, in their mutual interest, investment promotion
and protection agreements which could also provide the basis for insurance and guarantee schemes.
But neither obligation has a specific time line.
How would these investment agreements be negotiated and by whom?
Negotiating bilateral investment treaties is the prerogative of individual European Union Member states. Many
already exist with ACP countries. Cotonou aims to include general principles for such agreements in the
Economic Partnership Agreements:
The Parties also agree to introduce, within the economic partnership agreements, general principles
on protection and promotion of investments, which will endorse the best results agreed in the
competent international fora or bilaterally.
Where might they look for ‘best results’, ‘agreed’ by whom?
In the past, the Commission has viewed the North America Free Trade Agreement (NAFTA) and model
bilateral investment treaties as ‘best practice’. Currently it views the Chile/European Union free trade agreement
as ‘state of the art’, but Commission officials agree that an ACP region like the Pacific doesn’t have the capacity
and investment structure to implement that, so some flexibility will be needed. The OECD and APEC – which are
champions of investors’ interests – will be other important reference points.
Will ACP governments buy into this, given their staunch opposition at the WTO?
They already have. The ACP negotiating guidelines for 2002 talked of attracting foreign investment by concluding
investment protection agreements, without saying when. So there is concern that the move by the Pacific Islands
to put investment on the negotiating table at an early stage will limit their ability to delay indefinitely, or maximise
the benefits and limit the risks of such agreements and undermine the ACP’s collective position in the WTO.
34
A People’s Guide To The Pacific’s Economic Partnership Agreement