Support the civil society letter on EU-Singapore and EU-Vietnam
Call from civil society not to ratify
the EU Singapore and EU Vietnam Free Trade and Investment Agreements
10 October 2018
The undersigned organisations call on the European Parliament and the parliaments of the European Member States not to ratify the free trade and investment agreements (FTAs) with Singapore and Vietnam that were signed on the fringes of the Asia-Europe Meeting, held on 18-19 October in Brussels.
The EU-Singapore and EU-Vietnam free trade and investment agreements talk about sustainable development and high levels of labour and environmental protection as their objective. However, they do not meet the urgent challenges that Europe and Asia face today: the reduction of inequality, the promotion of sustainable development and the mitigation of climate change.
- Both the EU-Vietnam and the EU Singapore agreements lack a ‘supremacy clause’ that ensures international human rights law, environmental and climate agreements take precedence over free trade and investment rules;
- The trade and sustainable development (TSD) chapters for both agreements fail to develop the necessary ambitious joint standards and lay down concrete commitments for the protection and enforcement of international climate, environmental, labour and human rights obligations; such chapters should govern the agreements; instead, of including effective monitoring and enforcement mechanisms, they excluded from the agreements’ dispute settlement mechanism.
- The agreements do not foresee in periodic assessments of the human rights, environmental and climate impacts of the agreement; crucially, they lack a ‘review clause’ to review (parts of) the agreement after it has been ratified and implemented, based on regular impact studies on sustainable development and human rights.
- In terms of protecting human rights, the chapters on the protection of intellectual property pose an immediate threat to the availability of affordable generic medicines. The chapters fail to regulate commercial seed systems from the premise of the overarching right to food and decent livelihoods for small producers and vulnerable farming communities.
- The agreements fail to adequately regulate capital flows to avoid exposure to financial instability.
- The agreements fail to impose direct, binding and enforceable obligations on foreign investors to observe relevant recognised international standards for corporate social responsibility and climate policies.
The investment agreements concluded with EU-Singapore and the EU-Vietnam are considered a mixed competence and will have to go through the relevant national ratification procedures in all Member States.
- The investment chapters of these agreements, which are to be ratified independently by the EU Member States’ parliaments, both contain far-reaching investment protections and very wide definitions of what constitutes a covered investor/investment, including portfolio investments, bonds, goodwill and IPR, enforceable through investor-state dispute settlement mechanisms. Such wide protections are extended despite the fact that the evidence that investment protection helps attract FDI is inconclusive: Numerous studies indicate that investment protection/ISDS is hardly the determining factor for investors when making the decision to invest; other factors such as market size and growth potential, a skilled workforce, availability of natural resources and adequate infrastructure appear to be more important determinants of FDI. Such protection is extended across the board, even though not all FDI necessarily contributes to sustainable development. Research indicates that, apart from positive impacts, FDI can also have negative spill-over effects and crowd out domestic companies, create precarious jobs or reduce employment, increase income inequality, facilitate tax evasion and avoidance, and contribute to environmental degradation and pollution. This shows that it is crucial to provide for the adequate mechanisms and regulations to harness FDI for sustainable development.
- Instead of including a broad denial of benefits clause, the EU-Singapore and EU-Vietnam investment chapters continue to protect all kinds of FDI irrespective of the nature of the investment, the behaviour of the investor or the social, economic or environmental impact of the investment.
Both agreements contain a clause containing a commitment on behalf of the signatory parties to enter into negotiations for a multilateral investment tribunal for the settlement of investment disputes, at a time when the legality of investor–state dispute settlement (ISDS), including in the form of an Investment Court System (ICS), in EU trade agreements under EU law is being questioned. In the absence of a ruling by the European Court of Justice, passing a bill for the ratification of the investment part of the EU-Singapore and EU Vietnam agreements may mean sanctioning agreements that are incompatible with the EU Treaties. More fundamentally, a Multilateral Investment Court will further entrench a system for the settlement of investment disputes that enables transnational corporations to wield undue power over public policy-making. In our hyperglobalised world, an increasingly concentrated group of corporations dominates global markets. UNCTAD, in its Trade and Development Report 2018, notes that the sheer size of today’s transnationally operating mega-corporations reinforces ““the gradual dilution of social and political accountability of large corporations to national constituencies and labour around the world”.1 The institution of a MIC would contribute to strengthening the intertwining of corporate and political power.
The human and labour rights situation in Singapore and Vietnam continues to give cause for concern.
Both Singapore and Vietnam have failed to ratify all ILO core conventions. Singapore has not ratified ILO Convention 87 on the freedom of association and the right to organise, nor Convention 111 on discrimination in relation to employment. Vietnam also does not recognise freedom of association and has not ratified the Convention on the right to organise and collective bargaining (no. 98) and the Convention on the abolition of forced labour (no. 105).
In its resolution of 14 December 2017, the European Parliament itself underlined “the deterioration of civil and political rights in Vietnam”.
Human Rights Watch paints a bleak picture of the situation in both countries:
In Singapore “(c)itizens face severe restrictions on their basic rights to freedom of expression, association, and peaceful assembly through overly broad criminal laws and regulations.”
“Vietnam’s human rights record remains dire in all areas. The Communist Party maintains a monopoly on political power and allows no challenge to its leadership. Basic rights, including freedom of speech, opinion, press, association, and religion, are restricted. Rights activists and bloggers face harassment, intimidation, physical assault, and imprisonment. Farmers continue to lose land to development projects without adequate compensation, and workers are not allowed to form independent unions. The police use torture and beatings to extract confessions. The criminal justice system lacks independence. State-run drug rehabilitation centers exploit detainees as laborers making goods for local markets and export.”
Concluding trade and investment agreements under such circumstances conflicts with the basic principles enshrined in the EU Treaties. European transnational traders, service providers and investors should not be enabled to take advantage of such conditions.
1 Power, Platforms and the Free Trade Delusion – Overview, United Nations Conference on Trade and Development Report 2018, p. 10, at: https://unctad.org/en/PublicationsLibrary/tdr2018overview_en.pdf