Safeguarding democracy, rights and the environment in international trade
- Author(s):
- Parliamentary Assembly
- Origin
- Assembly
debate on 27 April 2023 (13th sitting) (see Doc. 15739, report of the Committee on Social Affairs, Health and
Sustainable Development, rapporteur: Mr Geraint Davies). Text adopted by the Assembly on
27 April 2023 (13th sitting).See also Recommendation 2254 (2023).
1. Our shared values – human rights,
democracy and the rule of law – are becoming more and more recognised
as critical in the context of global trade. International trade
and investment agreements take precedence over domestic law and
can have a long-lasting legacy. A wave of new-generation, sometimes bilateral,
trade agreements is increasingly shaping norms and influencing policies
of sovereign States, while the multilateral trading system embodied
by the World Trade Organization (WTO) is being weakened. Because trade
arrangements evolve with society and its increased attention to
sustainability issues and human dignity, individual countries and
trading blocs should make every effort to develop trade in ways
that help support our shared values and progress in society, such
as through targeted co-operation, capacity building, pursuit of sustainable
development and enhanced commitments to preserve and improve our
fundamental rights and our quality of life. Purely economic trade
agreements do not automatically protect or promote these values
and can, in practice, undermine them. Therefore, rights, obligations
and enforcement of these values should be incorporated into trade
agreements at the outset, so that they are not systematically supplanted
by investors’ interests, for the benefit of future generations.
2. The Parliamentary Assembly views trade and investment agreements
as powerful tools for advancing progress and believes that trade
policies should be constantly adapted to societal realities and
priorities. Seeing a sustained increase in both the volume and the
geopolitical significance of trade and investment agreements in
the last decade, the Assembly reiterates its concern over the use
of narrow-focus arbitration courts to resolve disputes between States
and private investors in a way that hampers the ability of States
to defend the public interest, including as regards public health
and human rights, and to honour their international commitments
to sustainable development. The Assembly strongly supports proposals
to replace the outdated investor–State dispute settlement system
with a new multilateral investment court based on the outcomes of current
negotiations under the auspices of the United Nations Commission
on International Trade Law.
3. The Assembly considers the multilateral rules-based system
supported by the WTO as the most inclusive and balanced mechanism
on a global scale, especially when it comes to ensuring a level
playing field among small and large countries in trade matters.
To this end, WTO rules and its dispute settlement system play a
crucial role. The Assembly is concerned by the fact that this system
has been blocked since December 2019 because the WTO’s Appellate
Body can no longer deliver binding decisions on interstate trade
disputes. The Assembly therefore appreciates that, pending a solution
to this situation, the European Union and other WTO members have
put in place a multiparty interim appeal arbitration arrangement
and continue to work together on the reform of the WTO’s dispute
settlement system to enhance its effectiveness. The Assembly urges
WTO member States to offer and to negotiate, in good faith, solutions
to permit the WTO’s Appellate Body to resume its normal operation.
4. The Assembly welcomes recent positive developments, notably
the inclusion of sustainable development provisions in new trade
treaties and the framing of corporate due-diligence requirements
by European countries, so as to support fundamental rights and environmental
objectives through trade policies. It underscores the need to realise
the potential of trade treaties and the related dispute settlement
mechanisms to ensure the more ambitious implementation of global
environmental treaties and the United Nations Sustainable Development
Goals.
5. The Assembly underlines that trade treaties can be a means
to enhance the protection of the environment and fundamental rights.
It notes that investment protection provisions have been highly
effective in shielding the interests of private enterprises rather
than fundamental rights and the public interest, because they provide
a powerful mechanism to enforce the rights guaranteed by the treaties
against States. While trade and investment treaties often contain
provisions on fundamental rights, labour rights, public health and environmental
standards (collectively constituting “democracy-enhancing provisions”),
these provisions do not benefit from the same powerful enforcement
mechanisms as the provisions which benefit investors. States should
thus consider how to enhance the potential for citizens to enforce
compliance with those provisions as well as continuing their efforts
to reform these enforcement mechanisms and render them better adapted
to new realities. This would empower individuals in a field uniquely
suited to judicialisation – rights protection – while at the same
time making the treaties themselves more effective.
6. The Assembly acknowledges that lawful unilateral measures
in international trade (in particular the European Union’s carbon
border adjustment mechanism) may be necessary for States to pursue
their ambition of advancing more rapidly towards sustainable and
inclusive development. These could encourage similar initiatives
worldwide, which would help to ensure policy coherence and compatibility
with the WTO rules. States should continue to take advantage of
all lawful possibilities offered by international trade and investment
law to act unilaterally, including through the adoption of measures
under Article XX of the General Agreement on Tariffs and Trade (GATT)
and the WTO Agreements on Safeguards, on Technical Barriers to Trade
and on the Application of Sanitary and Phytosanitary Measures.
7. The Assembly believes that “old generation” trade agreements
should be interpreted and adapted in the light of new imperatives
to promote sustainable development and fundamental rights. It notes
unexpected legal complications in the process of the modernisation
of certain treaties, notably the Energy Charter Treaty (ECT), whose
sunset clauses or narrow interpretation of which by private arbitration
tribunals in the framework of the investor–State dispute settlement
system expose States to expensive litigation, the lowering of standards aimed
at protecting public health and the environment and reducing climate
change, and even policy reversals under pressure from influential
enterprises.
8. Regarding the specific issues linked to the ECT, the Assembly
urges States to close the gap between the protection of investment
in fossil fuels and the mainstreaming of climate goals by concluding
an inter se agreement on the
modification of the sunset clause of this treaty, as permitted by
international law according to Articles 41 and 64 of the Vienna
Convention on the Law of Treaties (1969). This would send a clear
message to other States Parties, national courts and arbitrators
that such a long-lasting sunset clause is incompatible with those
States’ commitments under the Paris Agreement and the ECT’s preamble
which refers to the United Nations Framework Convention on Climate
Change under the auspices of which the Paris Agreement was signed.
The Assembly strongly supports the ultimate goal of a co-ordinated
revision of the ECT with a view to reducing or suppressing the sunset
clause in relation to investment in fossil fuels and taking into
account the environmental benefits of doing so.
9. In the light of the above considerations, the Assembly asks
member States to:
9.1 support multilateral
negotiations for the reform of the WTO’s dispute settlement system
for interstate trade disputes, on the one hand, and the establishment
of a multilateral investment court under the auspices of the United
Nations for enterprise versus State disputes, on the other hand;
9.2 ensure that all their new trade and investment agreements
contain comprehensive provisions on sustainable development and
protection of fundamental rights, and strengthen enforcement mechanisms
for these provisions, commensurate with those protecting investors;
9.3 assess their existing trade and investment commitments
under the “old generation” treaties and, where necessary, launch
their revision with a view to upgrading them with provisions on
sustainable development and protection of fundamental rights, so
as to ensure that they contribute to and are compliant with the
implementation of global environmental treaties and the United Nations
Sustainable Development Goals;
9.4 use trade and investment agreements as tools to promote
democratic norms and human rights, including social rights, on a
global scale;
9.5 systematically involve parliaments in negotiations for
the conclusion or reform of any trade and investment treaties in
order to enhance democratic scrutiny and transparency of the process
before the final ratification of such agreements;
9.6 where necessary, consider taking lawful unilateral measures
in international trade to enforce domestic environmental standards
at the border, based on the European Union’s carbon border adjustment
mechanism, and consider extending such measures to cover fundamental
rights, including labour rights, and public health;
9.7 promote corporate due-diligence obligations through trade
with regard to the protection of the environment, fundamental rights
and public health, and mitigating climate change.
10. The Assembly calls on national parliaments to hold governments
to account in relation to the negotiation of any new trade treaties,
the reform of existing trade arrangements and investment protection
agreements and the pursuit of more ambitious implementation of global
environmental treaties and the United Nations Sustainable Development
Goals at national level.
