On 5 November, States Parties finally released the actual text of the Transpacific Partnership (the TPP), a “next-generation” trade and investment agreement that will bind together 12 countries. The agreement primarily lowers trade barriers, but it also regulates the relationship between the state and foreign businesses from the other states parties.
By Dr. Tara Van Ho. You can follow Tara on twitter: @TaraVanHo
The TPP represents the largest trade and investment partnership to date, with about 40% of the world’s economy covered. It is also largely considered a precursor to the Transatlantic Trade and Investment Partnership (TTIP), the final details of which are still being negotiated between the US and the EU.
Negotiations for the TPP were largely conducted in secret. Until last week, it was classified in the US, and only members of Congress and certain member of their staff could access the text in a secure room. They couldn’t make copies, or even handwritten notes, let alone share details with the public.
As a result, this is the first opportunity to review the final version of the treaty. A comprehensive assessment is too long for a blog post, but I’d like to highlight some of the human rights concerns raised by the investment chapter of the TPP.
I’ll be discussing related issues at this year’s UN Forum on Business & Human Rights (see our side event flier).
The relevant legal standards for reviewing the TPP are stated in the UN Guiding Principles on business and human rights (the UNGPs).
The UNGPs provide a conservative means of assessing the treaty’s compliance with states’ human rights obligations. I say conservative because, as the commentators who have assessed the UNGPs since their creation agree, the document reflects a basic, accepted approach to international human rights law as the special rapporteur avoided taking positions on many of the harder or more controversial issues, such as extraterritorial obligations.
The UNGPs reiterate that states have an obligation to regulate corporate activity for the protection of human rights, while businesses must respect human rights (meaning refrain from interfering with human rights).
Yet, common investment treaty provisions have been interpreted in a way that constrains sates’ regulatory power over corporations, requiring states to keep a “stable” regulatory regime from the time an investment enters, sometimes even in the midst of significant crises, such as Argentina’s financial collapse. To the extent that investment treaties prohibit or restrain states from responding in an ongoing manner to human rights situations, or from regulating businesses’ human rights impact, the treaties undermine or threaten state compliance with human rights obligations.
In assessing the TPP, it is therefore necessary to determine whether the TPP includes language that ensures states can meet their human rights obligations.
Why Specific Discussion of Human Rights Matters in an Investment Treaty or Chapter
Investment disputes are typically decided by ad hoc arbitration tribunals. Often, the investor appoints, solely or jointly, 1-2 of the arbitrators on a 3-person panel, and nationals of the state at issue are precluded from serving as an arbitrator. These tribunals have very little oversight, and their decisions generally cannot be appealed either to a domestic court or to an international one.
These panels frequently reach decisions that affect human rights or raise competing claims, and yet they have at times dismissed the relevance of international human rights law to their work (see para 262 here).
If states are not explicit in stating that their investment law provision are to be read in accordance with their human rights obligations, it will be left to the tribunals to fill in that gap however they see fit. Investment law tribunals do not operate on the basis of precedence. This system, coupled with ad hoc appointments, has led to conflicting decisions, even on cases with, quite literally, the same facts at play.
So, unless states are intentionally ceding their authority to balance investment & human rights interests to three foreign arbitrators – something they can’t do under international law – they need to be explicit about human rights in their investment law chapters.
So how does the TPP fair in regards to human rights?
In one word: poorly. The term “human rights” does not appear once in the entire investment chapter. Instead, the closest reference is to “corporate social responsibility.” I’ve written before about why “business and human rights” and “corporate social responsibility” are not coterminous, so I won’t repeat that here.
Instead, I want to focus on the language in Article 9.16:
The Parties reaffirm the importance of each Party encouraging enterprises operating within its territory or subject to its jurisdiction to voluntarily incorporate into their internal policies those internationally recognized standards, guidelines and principles of corporate social responsibility that have been endorsed or are supported by that Party.
So what does that provide for human rights? Literally nothing.
This provision only recognizes the right of states to encourage businesses to adopt voluntary standards regarding corporate social responsibility. The state can also ensure those voluntary standards are tied to international standards the state has already agreed to.
This is not a reaffirmation of states’ roles in regulating businesses; instead, it is a subversion of that role. Under this provision, the state is not entitled to enact mandatory regulations about corporations’ human rights impacts. The best it can expect is a right to ask corporations to voluntarily agree to international standards.
It’s a weak provision, made even weaker by comparison to the immediately preceding article, which address the “environment, health and other regulatory objectives:”
“Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining or enforcing any measure otherwise consistent with this Chapter that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental, health or other regulatory objectives.”
This makes it clear that for the purpose of the environment and health, states can adopt mandatory obligations for corporations. Now, some human rights will be protected by environmental and health regulations, but obviously not all human right are.
The difference between the language in the two paragraphs is stark, and because “human rights” appears in neither, but the environmental and health language also recognizes “other regulatory objectives.” This leaves two potential interpretations regarding states’ right to regulate for the purpose of human rights.
The Wording of the TPP Means the “Other Regulatory Objectives” Clause May Not Be Interpreted to Cover Human Rights
Regardless of the intent of the State Parties – something we cannot know because of the secretive nature of the negotiations – arbitration tribunals will be the ones deciding which provision addresses human rights.
On the one hand, they could determine that the plain meaning of “other regulatory objectives” requires a broad reading and necessarily entails human rights concerns.
On the other hand, arbitrators could note that human rights are not included in the enumerated list and have traditionally not been an area where tribunals have recognized flexible regulatory authority. As a result, they could may conclude that the inclusion of the CSR provision was intended to address human rights concerns. This line of reasoning would suggest that by providing only for the voluntary promotion of corporate social responsibility, the treaty is not intended to treat human rights in the same manner it is intended to treat the environment and health.
An arbitration panel reticent to bring human rights into investment proceedings, or which feels uncomfortable with the legal considerations at play, could easily dismiss legitimate human rights regulations by employing this reasoning. Since it will not be subject to oversight or review, the rulings could both stand and create non-binding precedent for future arbitrators.
Which of these strands takes hold may depend on who is on the first tribunal to hear the issue. This does not sit well with effective human rights protections.
Human Rights are not “political” and deserve their own, distinct legal protection in the TPP
The latter interpretation – in which ‘human rights’ are treated as part of CSR and not as an ‘other regulatory concern’ – would drawn upon a significant but common mistake. CSR has never been only about human rights but often includes environment, health, as well as issues like education and community service.
Yet, human rights have often been treated different from the environment and health in areas of economic law. The notion that human rights are “political” but the environment and health are not permeates international economic law, policies, and discourse.
It’s true that human rights are often used as a tool for shaming other states, but simply because their employment has political consequences does not mean that their content is political.
Human right law stems from legally binding instruments that states voluntarily consent to be bound by. They are no more “political” than treaties on the environment, health, or investment protections.
Simple changes could have ensured compliance with States’ human rights obligations
Perhaps the most disappointing point of the TPP’s treatment of human rights is that a few small changes could have ensured the treaty embedded human rights.
All the parties to the TTP may not be parties to the same human rights treaties, but they don’t need to be to formulate appropriate human rights language for an investment chapter.
For starters, explicit inclusion of “human rights” before “other regulatory objectives” would have alleviated any doubt. Alternatively, the parties could have affirmed their obligation to regulate in the interest of human rights.
How the language is employed can vary based on the needs and concerns of the negotiating states, but the obligation to affirm the state’s role in human rights protections as part of an investment treaty is no longer be a voluntary principle. Until the TPP and other investment treaties do this, we have not truly reached the “next generation” of investment treaties.