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Public FTAA -
COMMITTEE OF GOVERNMENT REPRESENTATIVES ON THE PARTICIPATION OF
CONTRIBUTION IN RESPONSE TO THE OPEN INVITATION
COMMITTEE OF GOVERNMENT REPRESENTATIVES ON THE PARTICIPATION OF
CONTRIBUTION IN RESPONSE TO THE OPEN INVITATION
Center for International Environmental Law
Submission to the Committee of Government Representatives on the Participation of Civil Society
September 30, 2000
As multilateral trade liberalization treaties push forward the
free-trade agenda, the conflict created between deregulated trade and the
principles of environmental protection has become increasingly apparent.
The growing extent to which multilateral trade treaties are able to
influence and subvert public policy is enlightened by the tension between
these two agendas. With the first draft of the Free Trade Area of the
Americas (FTAA) due this next year, heeded input from civil society may
help to make this agreement one that can reconcile the needs of
multinational corporations with those of the citizens and ecosystems that
fall within the jurisdictions of participating states of the FTAA.
At the San Jose Ministerial, and again in Toronto, the FTAA negotiating
parties reaffirmed their commitment to the principle of transparency in
the negotiating process. This commitment is fundamental not only to the
fulfillment of the democratic principles espoused in the Miami
Declaration, but also to the success of the FTAA itself. The only way to
gain popular support for the FTAA within the hemisphere is to allow the
FTAA to be a transparent institution that involves the input of civil
society. Options for public participation are presented through an
analysis of multilateral environmental treaties, which are on the
forefront of efforts to create participatory international regimes. These
options are summarized below and are discussed in further detail in the
attached document, “Options for Public Participation.” The first steps to
moving towards increased transparency would be to release the negotiating
positions submitted by the governments and any consolidated draft text. An
important second step is to open future ministerial meetings to
participation by NGOs.
Defining the degree and means by which civil society representatives will participate in the FTAA is crucial to its success. There are many options for including public participation in a multilateral agreement, as witnessed in developments in multilateral environmental law. The Rio Declaration on Environment and Development and Agenda 21 at the United Nations Conference on Environment and Development (UNCED) held in Rio de Janeiro in 1992 identified three principles, or “pillars,” of public participation: access to information, access to decision-making, and access to justice. In the post-Rio period, these three principles have been incorporated into the rulemaking, implementation and monitoring phases of several multilateral environmental agreements, such as the U.N. Conventions on Climate Change, Biological Diversity, and Desertification. FTAA negotiators should first provide the framework in the FTAA draft that will establish the right of the public and NGOs to access information and take part in the decision-making process. Details of the participation mechanism can be worked out later.
The first principle of public participation, access to information, can be achieved by ensuring that public authorities make information available to the public in a transparent manner. Allowing for document dissemination facilitates this process. The Framework Convention on Climate Change (FCCC) instructs its secretariat to reproduce and distribute documents at the sessions and to publish and distribute official documents, for example. Hard copies of documents should be available at official meetings and they should be electronically available on the FTAA website. Documents should also be posted on the website in a timely manner. The types of information made available should be subject to limited restrictions. The WTO has failed to fully incorporate this principle. The well-publicized civil protests against the WTO at its ministerial meeting in Seattle, Washington in 1999 were provoked significantly by a belief that the WTO operates secretly and without public accountability. Most WTO documents are made available to the public only six months after they have been “derestricted.”
Access to decision-making is a second principle of public participation
that should be addressed in the FTAA. The public should be able to
participate in the decision-making process both during the negotiating
process and as an eventual agreement is implemented. Agenda 21, the action
plan for the 1992 Rio Declaration, suggests that the U.N. system should
take measures to enhance or establish mechanisms and procedures within
each U.N. organization “to draw on the expertise and views of
non-governmental organizations in policy and program design,
implementation, and evaluation.”
NGOs can contribute to the effectiveness of treaty implementation and
compliance by providing monitoring, data management and outreach services;
alerting parties to potential cases of non-compliance; and submitting
legal briefs for compliance-related proceedings. NGOs are adept at
engaging stakeholders though outreach. This can be useful to treaties
facing potential pubic opposition due to a lack of public understanding.
For example, the contracting parties of Ramsar Convention on Wetlands
agreed that, to be effective, they must engage stakeholders in defining
the issues and possible solutions needed for preserving wetlands. Involved
NGOs develop strategic approaches to communication, education and public
awareness about wetlands issues.
The FTAA should take the first steps to implement the principles of transparency and public participation at the most basic level. Since the first draft of the FTAA is not yet complete, there is good opportunity to involve the civil sector in the creation of the language and provisions that will define the FTAA. This would also prove to be a good way to mitigate public opposition to the treaty.
To date, the FTAA negotiators have made only modest progress in making information publicly available. Consistent with Annex III of the Toronto Declaration, the Trade Negotiations Committee has made available to the public the compilations of hemispheric trade provisions compiled by the various Negotiating Groups. While these compilations may be of utility to persons doing scholarly comparisons of existing trade agreements, they do little to facilitate informed public participation in the FTAA negotiations. Such participation can be facilitated only by timely access to pertinent negotiating documents, such as the "annotated outlines" that have been completed by the Negotiating Groups and the draft chapters currently being prepared. We encourage the negotiating parties to make publicly available the current versions of these documents, negotiating positions that have been tabled by the parties, and the consolidated draft text. To ensure the accessibility of this information in the future, the next ministerial declaration adopted by the negotiating parties should declare that all such materials are public documents.
The FTAA should also open its future ministerial meetings to NGO participation and allow side events, such as seminars and presentations by NGOs and academics, to be hosted by NGOs. At the Climate Convention (FCCC), events and exhibits organized mainly by the NGO community provide fora for the exchange of information between observers, the party delegates, the United Nations and other agencies and intergovernmental organizations. The secretariat arranges for and provides rooms and equipment to NGOs for use at these events.
In the Summit of the Americas Plan of Action, which announced the FTAA, the American nations committed to making "trade liberalization and environmental policies mutually supportive." The negotiating parties renewed this commitment in the San Jose Declaration, declaring this a General Objective of the negotiations. The San Jose Declaration also recognized that the FTAA should not simply mimic the WTO structure, but "improve upon WTO rules and disciplines wherever appropriate." The Dispute Resolution provisions provide a unique opportunity for the parties to fulfill both of these objectives.
It is now widely recognized that the dispute resolution process established under the WTO Agreements is incompatible both with national efforts to protect the environment and with the principles of transparency and public participation to which the FTAA negotiating parties are committed. Due to an unfortunate combination of over-broad commitments and poorly-crafted exemptions, legitimate environment and health policies adopted by every WTO party are subject to attack as trade-distorting measures. Even when a policy might survive a WTO-challenge, the costs of defending the policy before the WTO can be prohibitive. These problems are exacerbated by the non-transparent, non-participatory nature of the WTO dispute resolution process. This secrecy often prevents parties from seeking potentially valuable assistance from members of academia, the NGO community and the general public who may have both resources and expertise to contribute to the process.
If the FTAA is to garner the widespread public support that is critical to its success, the negotiating parties must not replicate the errors of the WTO. The FTAA must include broader and more explicit language exempting legitimate environmental and health policies from unreasonable trade challenges. Just as importantly, the negotiating parties' commitments to transparency and public participation must be explicitly reflected in the FTAA's dispute resolution procedures. At a minimum, the procedures must provide for public notice of disputes, public access to submissions by disputing parties, and the submission--and consideration--of amicus briefs by concerned persons. In addition, the procedures should allow persons with expertise in environmental matters to be empanelled in disputes that raise environmental issues.
The NAFTA investment chapter (Chapter 11) is a likely model for FTAA investment rules, which raises several disturbing matters. The definition of expropriation in NAFTA remains too broad, while case studies, such as the Metalclad Case and the Ethyl Case, have demonstrated that an expropriation provision can significantly restrict the ability of governments to enforce environmental regulation, forcing governments to “pay to regulate” polluters. Similarly, Article 1105 of NAFTA is also problematic in that it requires countries to treat other countries in the trade agreement according to “minimum standards of international law.” Since there is no clear standard to gauge “minimum standards of international law,” broad discretion is left to the NAFTA arbitration panels which were intended to serve as a commercial arbitration mechanisms, and not a body to decide broad public policy conflicts.
These powerful rights granted to foreign investors coupled with the investor-to-state dispute mechanism create a one-sided situation. Although not a complete solution, one option for addressing this imbalance is to include a corresponding right of action for citizens who feel their rights have been relegated to secondary status below the rights of investors under the FTAA. Finally, the best solution to the dilemma caused by the investor-to-state mechanism would be to just eliminate it and substitute it with the more traditional state-to-state mechanism.
NAFTA’s Chapter 11 requires its contracting parties to compensate
investors for acts, even when taken in the public interest, that directly
or indirectly expropriate or nationalize a foreign investment and for
measures tantamount to nationalization or expropriation. This vague
language leaves the precise definition of expropriation to the discretion
of the court, international arbitration panel, or other dispute resolution
body. If such a body were to employ a broad interpretation of
expropriation, a government could be required to “pay to regulate”
polluters if the body found that an environmental regulation had reduced
the value of a foreign investment, either directly or indirectly. The
chilling effect of such a legal framework on government efforts to protect
the environment could be enormous.
Under Article 1105 of the NAFTA, foreign investors are entitled to fair and equitable treatment under the minimum standards of international law. Since there is no clear standard in international law by which to abide, the ambiguity presented by this provision provides the NAFTA arbitrations panel the opportunity to define these standards according to their discretion. Since arbitration mechanisms under NAFTA were primarily designed to be commercial arbitration mechanisms, they are not equipped to deal with broad public policy issues, such as those brought up in the Metalclad and Ethyl cases, which deal with the contours of the powers of countries to regulate public health and the environment. The precarious balance between international commercial interests and domestic public policy enforcement that is supposed to be achieved in such arbitrations panels highlights the essence of the conflict between trade and the environment. The trade world inherently strives for deregulation, since every regulation potentially could be a barrier to trade. The environmental world, on the other hand, requires governmental regulation to achieve its goals.
To the extent that investors are granted directly enforceable rights,
there ought to be a corresponding right of action granted to citizens as
well. NAFTA represents the first time a multilateral trade agreement has
substituted the traditional State-to-State mechanism with an
Investor-to-State mechanism, allowing investors to bring claims for
monetary damages against host countries. As discussed above, the
international arbitral panels established under Chapter 11 do not provide
appropriate fora for resolving disputes in a way that balances the
concerns of investors with the concerns of neighboring property owners and
local communities. Arbitrations take place in secret, without the
participation of all stakeholders in a dispute. Private individuals, and
sub-national levels of government, are not allowed to present their views
during the arbitration or even informed that a claim has been brought
although they may be the parties with the most direct interests in the
outcome of the controversy. Moreover, rather than setting up an
intergovernmental dispute resolution system, Chapter 11 relies on private,
for-profit arbitration institutions. The arbitration system lacks
safeguards to ensure that arbitrators are trained to understand the risks
to human health and the environment posed by inadequate regulation as well
as the needs of business.
There are a number of "positive provisions" that could improve
investment regimes. In particular, investment rules must contain
provisions that: prevent host countries from attracting investment by
lowering or relaxing health and environmental standards; require investors
to conduct environmental impact assessments for any significant projects;
give citizens and local communities access to relevant information
regarding investments; ensure that environmental standards are
progressively improved and consistently enforced; and create mechanisms
for Parties and citizens to raise issues related to the environmental and
social impacts of increased economic activity due to greater investments
flows. Above all, a regime that grants broad rights to investors, as the
NAFTA does, should impose concomitant responsibilities on investors to
ensure that their actions meet minimum corporate accountability standards.
We have sought to provide a brief overview of some of the problematic
issues surrounding the FTAA. Without adherence to public participation
principles, the FTAA will face public opposition in the U.S. There needs
to be a democratic check on the trade process in order to gain popular
support. This paper and the attached document highlights many options for
public participation that have been adopted in multilateral environmental
agreements. They all draw upon the three principles of public
participation-access to information, access to decision-making, and access
to justice. The most immediate way the FTAA can begin to embrace these
principles is to open future FTAA ministerial meetings to NGO
participation and to make public the tabled negotiating positions by the
participating parties as well as consolidated text when it becomes
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