Brussels, 13/06/2016 (Agence Europe) - On Monday 13 June, the Dutch and American think tanks, Transnational Institute and the Institute for Policy Studies respectively, warn - in a report alongside the first round of negotiations for the modernisation of the EU-Mexico free trade agreement - against the risks of including in this future revised agreement a chapter on investment protection involving a dispute settlement mechanism of the sort proposed by the EU in its negotiations with the US (TTIP) - the Investment Court System (ICS).
The report highlights six reasons why including a chapter on investment protection in the revised EU-Mexico free trade agreement is a major concern.
Firstly, the ICS does not deal with the fundamental shortcomings and injustices of the old investor-state dispute settlement (ISDS), and including it in the revised EU-Mexico free trade agreement will enable foreign investors to challenge the right of states to regulate in the public interest in Mexico and Europe, the report warns.
Secondly, the report states that this strengthened protection for investments will lock in the process of privatisation and reforms in the oil and gas sector in Mexico, which the government opened to foreign companies at the end of 2013 and in which European oil companies Shell, BP and Total have a major interest. “Future Mexican governments will find it hard to reverse these policies without the risk of being sued at international investment tribunals”, the two think tanks warn, stating that court cases in the energy sector account for a large proportion of the international arbitration cases on investment and aim at corporate reforms by governments.
Including a chapter on investment protection will also complicate the possibility for the EU and Mexico to withdraw from the revised agreement. Mexico has bilateral investment treaties with 16 EU member states, most of which expire by 2019.
Including a chapter on investment protection will put Mexico at risk of being the target of a new wave of investment court cases by European investors. (Mexico has already faced 23 investment arbitration cases and has had to pay out $246 million in damages to nine different companies.)
Including an investment protection chapter will also increase the chances of EU governments becoming the target of court cases by Mexican multinationals. (The EU has recently faced 43 investment treaty cases, 29 of which were against Spain, where Mexico is the fifth largest investor.)
In addition, including an investment protection chapter will enable European companies to continue human rights violations in Mexico “with impunity”, the report warns. “European companies have a track record of human rights and environmental violations in Mexico with virtually total impunity. The proposed investment chapter developed by the EU does nothing to address this situation (…) The EU proposal does not include any obligations for investors, only rights”, the report states.
“This modernised free trade agreement is a corporate power grab - one that grants major multinational companies in Mexico and the EU the exclusive right to challenge democratic decisions that protect the public interest. It is time to end trade deals written by and for multinationals and instead negotiate trade deals based on principles of participation, cooperation, solidarity and sustainability”, says Cecilia Olivert, the Transnational Institute's co-author of the report.
“More than 100,000 people have been killed or disappeared in Mexico since 2006, yet this agreement will do nothing to address those violations. In fact it cements into place a system where human rights are treated as empty aspirations, while corporations are given the full backing of international law to sue states for regulations that affect their profits”, adds Manuel Perez Rocha, the Institute for Policy Studies co-author. (Original version in French by Emmanuel Hagry)