Abstract
The impact on European social standards of the trade agreements CETA (Comprehensive Economic and Trade Agreement) and TTIP (Trans-Atlantic Trade and Investment Partnership) has become the subject of a broad critical debate. States may reduce employee protection rights or deny (necessary) improvements of protection standards to obtain a competitive advantage against other countries. This analysis looks at this very danger in relation to the free trade agreements CETA and TTIP.
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Notes
- 1.
For the conclusion of international agreements by the EU see Nawparwar (2009), pp. 25 et seqq.
- 2.
These are: ERT, TABD, Business Europe, European Services Forum (ESF), Association of German Banks, as well as the German Chamber of Commerce and Industry (Deutsche Industrie- und Handelskammer). Scherrer and Beck even quantify that 80% of the input came from the sphere of industry, compare Scherrer and Beck (2014), pp. 12, 50.
- 3.
Compare: Corporate Europe Observatory (2013).
- 4.
These questions were raised by the NGO Corporate Europe Observatory.
- 5.
The list of participants is available under: http://corporateeurope.org/sites/default/files/hlwg-members.pdf. Accessed 22nd November 2017.
- 6.
Not even MEPs have unfettered access to the documents, compare Bode (2015), pp. 29 et seqq.
- 7.
High Level Working Group on Jobs and Growth (2013).
- 8.
The HLWG was instituted at the EU/US summit in November 2011 and intended to propose measures to increase transatlantic trade and investment. See High Level Working Group on Jobs and Growth (2013).
- 9.
Council of the European Union (2013).
- 10.
See High Level Working Group on Jobs and Growth (2013).
- 11.
Ibid., p. 6.
- 12.
On the development see https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact4_e.htm. Accessed 26 Mar 2017.
- 13.
These were meetings of the representatives of WTO member countries, where further trade facilitation was negotiated. These ‘rounds’ are always named after the negotiating venue.
- 14.
- 15.
As a result of disputes between globalization opponents and the police, for example, the 1999 WTO meeting in Seattle could not be held as planned. Images of the protests went around the world at the time.
- 16.
According to the UNCTAD 2363 of these are still in force, compare http://investmentpolicyhub.unctad.org/IIA. Accessed 04 Nov 2017.
- 17.
Compare http://investmentpolicyhub.unctad.org/IIA/CountryBits/78. Accessed 27 Mar 2016.
- 18.
Krätke (2014), p. 5.
- 19.
Compare Francois et al. (2013).
- 20.
- 21.
Compare Francois et al. (2013).
- 22.
- 23.
Stephan (2014), p. 2.
- 24.
- 25.
- 26.
One such expert opinion was provided by the Austrian Research Foundation for International Development, see ÖFSE (2014).
- 27.
- 28.
The survey uses a calculation method employed by the United Nations which also evaluates trade impact, compare Capaldo (2014), pp. 4 et seqq.
- 29.
Ibid., p. 14.
- 30.
- 31.
These limitations are part of numerous agreements on investment; the principles were basically developed by ISDS decisions.
- 32.
- 33.
Concerning the discussions on the definition of investor and investment, see OECD (2008).
- 34.
Krajewski and Kynast (2014), p. 34.
- 35.
- 36.
Although this does not apply directly.
- 37.
- 38.
See Public consultation on modalities for investment protection and ISDS in TTIP. Consultation document, p. 4. http://trade.ec.europa.eu/doclib/docs/2014/march/tradoc_152280.pdf. Accessed 29 Mar 2016.
- 39.
Krajewski (2014), p. 6. See Art. X.2 (4) of the consultation document: ‘For greater certainty, the ‘treatment’ referred to in Paragraph 1: a. does not include investor-to-state dispute settlement procedures provided for in other international investment treaties and other trade agreements, including compensation granted through such procedures (…)’.
- 40.
Compare on the MFN Mechanism UNCTAD (2010), pp. 107 et seqq.
- 41.
- 42.
Trade Agreement between the Federal Republic of Germany and Ethiopia of 7 Sep 1951, TIAS 2864, 4 UST 2134.
- 43.
Trade Agreement with Muscat and Oman and Dependencies, 20 Dec 1958, TIAS 4530, 11 UST 1835.
- 44.
Trade Agreement with Togo, 8 Feb 1966, TIAS 6193, 18 UST 1.
- 45.
For the debate from the 1970th, see Wengler (1975).
- 46.
75% of ISDS proceedings won by US-Investors rely on FET standard violation, compare Wallach (2012).
- 47.
- 48.
ICSID, Lone Pine vs. Canada, Notice of Arbitration, ICSID Case No. UNCT/15/2, 6 Sep 2013. As well as ICSID, Suez vs. Argentine, Decision on Liability, ICSID Case No. ARB/03/17, 30 July 2010.
- 49.
Porterfield (2013).
- 50.
- 51.
New labour protection standards might for example be permissible, providing they do not appear ‘manifestly excessive’.
- 52.
Broß (2015), p. 16.
- 53.
See e.g. Fritz (2015), pp. 12 et seq.
- 54.
Fritz (2015), p. 5.
- 55.
8 Art. 8.9.1 CETA: ‘[…] the Parties reaffirm their right to regulate within their territories to achieve legitimate policy objectives, such as the protection of public health, safety, the environment or public morals, social or consumer protection or the promotion and protection of cultural diversity’.
- 56.
- 57.
- 58.
- 59.
European Parliament Public Procurement (2014).
- 60.
European Parliament and Council Directive 2014/24/EU on public procurement and repealing Directive 2004/18/EC, O.J. L 94/65 (2014). The directive has to be incorporated into national law by 18 April 2016.
- 61.
For more detail, see Glaser (2015), esp. pp. 32 et seqq., 77.
- 62.
Tariftreueregelungen.
- 63.
Similar Fritz (2015), p. 22.
- 64.
Compare in details ibid.
- 65.
Both free trade agreements and BITs.
- 66.
ICSID (2015), p. 1.
- 67.
As figures from the World Bank show, see ICSID (2015), pp. 4 et seq.
- 68.
‘Private’ in the sense, that the dispute settlement did not take place at national courts. The ‘private’ character of ISDS procedures is debated rather controversially. Due to the basis in international law, it is argued, that ISDS procedure would belong to public law or be a ‘hybrid’ form of law.
- 69.
- 70.
8 Art. 8.27 et seqq. CETA.
- 71.
v. Frankenberg (2014), p. 318.
- 72.
Eberhardt (2014), p. 6. See also ICSID, Lone Pine vs. Canada, ICSID Case No. UNCT/15/2.
- 73.
Krajewski (2015).
- 74.
Vattenfall sues on the one hand against the act on the termination of the use of nuclear power stations at the German Constitutional Court (BVerfG). At the same time, the company started an ISDS-case to obtain compensation. The amount in dispute is about €4.6 billion; ICSID, Vattenfall (and others) vs. Federal Republik of Germany, ICSID-Case No. ARB/09/6.
- 75.
This leads in practice to a disadvantage of national companies, who do only have the possibility to take legal action at national courts.
- 76.
Krajewski (2014), p. 10.
- 77.
Broß (2015), p. 11.
- 78.
Hess (2015), p. 166.
- 79.
The values of the claims ranged from several million to amounts exceeding US $1 billion; thus, in 2012, an arbitration panel obliged Ecuador to pay the so far unparalleled sum of US $2.4 billion in damages (including interest and legal costs), compare Eberhardt (2014), p. 6.
- 80.
Eberhardt and Olivet (2012), p. 57.
- 81.
ICSID, Goetz (u.a) v. Republic of Burundi, ICSID Case No. ARB/95/3.
- 82.
The average costs of an ISDS-case are about €8 million, see Hess (2015), p. 173. Concerning the case ICSID, Noble vs. Rumänien, Award, ICSID Case No ARB/01/11, 12 Oct 2005.
- 83.
ICSID, Paushok vs. Republik of Mongolia, Award, ICSID Case No. ARB/04/10, 28 Apr 2011.
- 84.
ICSID, Foresti vs. South Africa, Award, ICSID Case No. ARB(AF)/07/01, 10 Aug 2010.
- 85.
PCA, Achmea B.V. vs. the Slovak republic, PCA-case no. 2008-13; for further information compare Reidl (2013).
- 86.
PCA, Achmea B.V. vs. the Slovak republic, Award on Jurisdiction and Admissibility, PCA-case no. 2013-12, 20 May 2014.
- 87.
Karadelis (2012).
- 88.
Due to a mining moratorium, the mining company Pacific Rim, e.g., initiated arbitral proceedings in 2009 against El Salvador, based upon investment protection rules in CAFTA. The moratorium was imposed because of massive protests of the local population against the destruction of the environment and water pollution because of mining. Since Pacific Rim therefore could not open the new mine ‘El Dorado’, the company demands U.S. $301 million in damages (which is more than 1% of the gross domestic product). Pacific Rim is situated in Canada and as Canada is not part of CAFTA, arbitration procedures were initiated via a subsidiary company in Nevada (USA), see Kirsch and Moore (2016).
- 89.
The study considers all BITs concluded before the end of 2013; compare Gordon et al. (2014), p. 15.
- 90.
In the middle of 2013, 58 of all 248 Free Trade Agreements registered at the WTO, contained a labour clause, see Ebert (2015), p. 19.
- 91.
Prislan and Zandvliet (2013), p. 23.
- 92.
- 93.
- 94.
Concerning labour rights in the EU-GSP-system, see critically Vogt (2015), pp. 285 et seq. who outlines, that even notorious labour law violators like Pakistan or Guatemala are granted GSP+.
- 95.
Concerning the US-approach, see ILO (2016), pp. 44 et seqq.
- 96.
Central American Free Trade Agreement, CAFTA-DR.
- 97.
Nevertheless, this process was interrupted because Guatemala in the meantime had signed an enforcement plan, whereupon the USA stopped the procedure. When Guatemala failed to implement the plan, the USA continued the proceedings.
- 98.
NAALC is the labour side agreement of NAFTA (North American Free Trade Agreement).
- 99.
The same requirement can be found in other agreements, e.g. in Art. 6 (4) (a) US-Jordan Trade Agreement or in Art. 15.2 (1) (a) US-Bahrain Trade Agreement.
- 100.
A complaint was filed, although Guatemala is not party of NAFTA.
- 101.
Similar (giving a different example) Prislan and Zandvliet (2013), p. 25.
- 102.
Washington Office on Latin America (2009).
- 103.
Similar Scherrer and Beck (2014), p. 52.
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Zimmer, R. (2018). Implications of CETA and TTIP on Social Standards. In: Gött, H. (eds) Labour Standards in International Economic Law. Springer, Cham. https://doi.org/10.1007/978-3-319-69447-4_11
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