Effects of CETA on Social Standards

Transcription

1 Effects of CETA on Social Standards Presentation at the extraordinary workers` group meeting 12th may in Malta Prof. Dr. Reingard Zimmer Prof. of Labour Law Berlin School of Economics and Law

2 Structure of the presentation I. Threat to social standards by investment protection provisions? II. Labour chapters in trade agreements I. Effectiveness of provisions in labour chapters II. Labour chapter of CETA III. Final conclusions and Recommendations 2

3 I. Threat to social standards by investment protection provisions? (chapter 8 CETA)

4 1. Most favoured treatment (Art CETA) Most favoured treatment ( most-favoured nation, MFN) Opportunity for investors to invoke other investment agreements concluded by the host country in question, should these offer more favourable treatment than the BIT concerned; even if this was not the original intention of the contracting parties; moreover: import of standards from older BITs, even if the content is bizarre, like Art. 5.3 of the BIT between Germany and Ethopia from 1951; These rules could serve as a gateway against parity codetermination of German supervisory boards!!! 4

5 2. Fair and Equitable Treatment (FET) Chapter 8, Art CETA Most ISDS-procedures (private dispute settlement) are based upon violation of the FET-Standard. Breach of contract e.g. in CETA (Art ) through: denial of justice, significant breaches of ordinary court proceedings, obvious arbitrariness, targeted discrimination or improper use ( ). Legitimate expectations, may be derived from specific assurances which may have been raised in the investors (Art CETA). These undefined legal expressions were broadly interpreted in ISDS proceedings in the past. 5

6 ISDS-proceedings based upon violation of FET-standard: Centerra vs. Kyrgystan (2006): ISDS-procedure by Canadian mining company after the Kyrgyz government prescribed extra pay for miners working at high altitude (case still pending or outcome not accessible to public). Veolia vs. Ägypten (2012): arbitration based upon the BIT between France and Egypt. The city Alexandria had refused contract changes (Veolia wanted to introduce to counter higher costs, arising among others from the introduction of a national minimum wage). Due to media reports, Veolia is demanding 82 million in damages (case still ongoing). Noble Vetures vs. Romania: 2001 ISDS-procedure of UScommodities group for 365 Mio US $ of damages. Investment became more expensive due to protests and strikes; although Romania won the case, the country was facing enourmous costs, because the costs of the procedure are shared. 6

7 3. Protection against direct and indirect expropriation Mandatory compensation in cases of direct or indirect CETA defines an indirect expropriation like this: Indirect expropriation occurs where a measure or series of measures of a party has an effect equivalent to direct expropriation, in that it substantially deprives the investor of the fundamental attributes of property in its investment, including the right to use, enjoy and dispose of its investment, without formal transfer of title or outright seizure (CETA, Annex 8-A.1.b). Even regulative measures reducing the value of an investment are affected, which might be relevant in terms of social standards. 7

8 Example for ISDS-procedure based upon indirect expropriation Foresti vs. Südafrika (2007): Claim of investors from Italy and Luxemburg for compensation (350 Mio. US-$), be-cause the new act on mining contained elements of antidiscrimination in favor of black workers (Black Empowerment Act). Dispute settlement in 2010, after the state made concessions in favour of investors. Acknowledged as grounds of justification in CETA are: non-discriminatory measures aimed at legitimate public purposes, such as health, safety and the environment. Social standards are not mentioned. 8

9 II. Enforcement of social standards through labour chapter of trade agreements?

10 1. Social standards in labour (or sustainability) chapters All recent investment protection or trade agreements (EU, US, ) contain a sustainability or social chapter. This is the case for CETA (as well as for TTIP). The ILO counts 75 trade agreements with labour provisions in Reference to ILO core labour standards: Either to the ILO-declaration from 1998, or to the core conventions (with specific reference to C. No. 87, 98, ); preferable, because they are interprted by the supervisory bodies, etc. 10

11 2. Labour chapter in CETA Safeguarding labour standards against the effects of trade liberalization? The parties are required not to waive or otherwise derogate from or fail to enforce their domestic labour standards in order to encourage trade or ( ) investment, Art CETA. Soft wording. (P): Link necessary between the lowering of domestic labour standards and the intention to encourage trade or investm. (high standard of proof). The labour provisions in CETA do not address the relation between the labour provisions and the agreements investment provisions. 11

12 3. Labour standards in sustainability chapters: two different approaches EU Trade Agreements: Sustainability chapters are excluded from normal (ISDS) mechanism of sanctions. Sanction only via a consultation or complaints mechanism ( naming and shaming ); complaints can be filed by the contracting parties (governments), not by representatives of the civil society (like trade unions). US Trade Agreements: regular dispute settlement mechanism is applicable to sustainability chapter. Dispute-settlement mechanism is applied only in rather exceptional cases on the violation of labour standards (1. case ever: Guatemala). 12

13 4. Complaint mechanism EU s trade agreements do not usually provide a formal complaint mechanism for third parties. Cases have to be brought to national contact points which examine the case and might initiate further procedures. 13

14 5. CETA: mechanism of enforcement CETA: Committee on Trade and Sustainable Development (TSD Committee) for interparty dialogue on labour matters (Art. 22.4). Submissions from civil society related to labour issues can be made to the domestic advisory groups, Art (5). Unclear, how these submissions will be handled. No sanctions for violations of labour or sustainability provisions; the regular dispute settlement mechanism (ISDS) is expressly excluded for that chapter (Art CETA). Final report (experts). 14

15 IV. conclusions The analysis of the free trade agreements illustrates the tense relationship between state`s interest in regulation and investment protection rules which aim at protecting investors and their interests. The current design of chapters on investment protection trigger a dynamic of a competitive-based deregulation of standards and can be considered as a threat for social standards. Unless the investment protection chapter stays the same, it is rather doubtful weather an annex or a protocol will change the outcome of ISDS-cases (same with an investor court system). 15

16 Recommendations concerning CETA (1) Clarifications concerning the Investment protection provisions should be added (directly into the investment chapter), for example: Labour law related measures cannot be considered an expropriation or a violation of the FET standard. The MFN-standard is a dangerous and unclear provision and should be deleted. 16

17 Recommendations concerning CETA (2) Addition to Government Procurement chapter: The agreement does not prevent the inclusion of labour standards-related conditions (such as those requiring compliance with local collective agreements) in any public contract. The Joint Interpretative Instrument (Oct 2016): CETA preserves the parties ability to use environmental, social and labour-related criteria, such as the obligation to comply with and adhere to collective agreements, in procurement tenders. But: The parties will be able to do so in a way that is not discriminatory and does not constitute an unnecessary obstacle to international trade 17

18 Recommendations (3) A priority clause should guaranty, that the social chapter prevails if there are inconsistencies between the labour chapter and other chapters. If there is any inconsistency between the labour chapter and another chapter, this chapter prevails to the extent of the inconsistency. The provisions of the labour chapter will be used to interpret undetermined legal terms of any other chapter of this agreement. 18

19 Recommendations (4) The involvement of trade unions and other actors from civil society should be integrated into CETA s institutional setting as a whole and should be mandatory rather than voluntary for the parties. Trade unions (and other actors from civil society) would need direct access to the dispute settlement mechanism. 19

20 Further reading: Zimmer, R., The Impact of CETA and TTIP on Social Standards, in: Hotvedt, Marianne J./ Mulder, Johann/ Nesvik, Marie/ Sundet, Tron Løkken (eds.), Sui generis - Festskrift til Stein Evju, Universitetsforlaget, p , Oslo Zimmer, R., Auswirkungen von CETA und TTIP auf soziale Standards, in: Soziales Recht (SR) 2/2016, p Zimmer, R., Sozialklauseln im Nachhaltigkeitskapitel des Freihandelsabkommen der Europäischen Union mit Kolumbien und Peru, in: Scherrer, C./ Hänlein, A. (Hrsg.), Sozialkapitel in Handelsabkommen. Begründungen und Vorschläge aus juristischer, ökonomischer und politologischer Sicht, Baden-Baden 2012, p Ebert, C., The Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada: Are Existing Arrangements Sufficient to Prevent Adverse Effects on Labour Standards?, forthcoming in ILCLLIR,

21 Thank you very much for your attention!