Safeguarding democracy, rights and the environment in international trade

Doc. 15739: compendium of written amendments | Doc. 15739 | 26/04/2023 | Final version

Contents

A Draft Resolution

B Draft Recommendation

Compendium index

Amendment 3 Amendment 8 Amendment 6 Amendment 1 Amendment 2 Amendment 5 Amendment 4 Amendment 9 Amendment 7

Caption: AdoptedRejectedWithdrawnNo electronic votes

ADraft Resolution

1Our 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 trump 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 them at the outset so that they are not systematically trumped by the investors’ interests, for the benefit of future generations.

2The 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 geo-political 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. It strongly supports proposals to replace the outdated investor-state dispute settlement system with a new Multilateral Investment Court based on the outcomes of current negotiations under the auspices of the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.

• Amendment 3

26 April 2023

Tabled by Ms Lesia VASYLENKO, Ms Yevheniia KRAVCHUK, Mr Oleksii GONCHARENKO, Mr Serhii KALCHENKO, Mr Serhii SOBOLIEV, Ms Yuliia OVCHYNNYKOVA, Ms Oleksandra USTINOVA, Ms Mariia MEZENTSEVA-FEDORENKO

In the draft resolution, after paragraph 2, insert the following paragraph:

"The Assembly supports the police powers doctrine, according to which a State has a right to issue good faith, non-discriminatory and proportionate regulations in protection of the public interest. In this regard, the Assembly calls for further codification and clarification of this doctrine in international investment and trade agreements."

Explanatory note

The legitimate regulatory power of states has long been recognized under the police powers doctrine. Provisions mandating its application to particular policy areas are very important for protecting the environment, human rights, public health and enforcing the international rule of law.

3The 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 big countries in trade matters. To this end, WTO rules and its Dispute Settlement mechanism play a crucial role. The Assembly is concerned by the fact that this mechanism has been blocked since December 2019 because its 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 mechanism to enhance its effectiveness.

• Amendment 8

26 April 2023

Tabled by Ms Lesia VASYLENKO, Ms Yevheniia KRAVCHUK, Mr Serhii KALCHENKO, Mr Serhii SOBOLIEV, Ms Oleksandra USTINOVA, Ms Mariia MEZENTSEVA-FEDORENKO

In the draft resolution, at the end of paragraph 3, insert the following sentence:

"The Assembly urges WTO member States to offer and to negotiate, in good faith, solutions to permit the Appellate Body to resume its normal operation."

Explanatory note

Since the WTO Appellate Body was blocked in 2019 due to refusal of the United States to appoint new members, a clear roadmap out of crisis has been lacking. This amendment seeks to intensify efforts to negotiate an agreement for the Appellate Body to resume its operation and enforce WTO rules.

4The 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 Sustainable Development Goals.

5The 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 could empower individuals in a field uniquely suited to judicialisation – rights protection – while at the same time making the treaties themselves more effective.

6The 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 and on the Application of Sanitary and Phytosanitary Measures.

• Amendment 6

26 April 2023

Tabled by Ms Olena KHOMENKO, Ms Yevheniia KRAVCHUK, Ms Mariia MEZENTSEVA-FEDORENKO, Mr Serhii KALCHENKO, Mr Pavlo BAKUNETS, Mr Yuriy KAMELCHUK, Ms Lesia VASYLENKO

Votes: 39 in favor 0 against 0 abstention

In the draft resolution, paragraph 6, third sentence, replace the words "on Safeguards" with the following words:

"on Technical Barriers to Trade".

Explanatory note

The TBT Agreement regulates technical requirements and standards for products and contains measures for the protection of social and environmental rights. The Agreement on Safeguards is about the urgent need to protect local industries from a surge of imports and does not relate to the values articulated in the report.

7The 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 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.

• Amendment 1

26 April 2023

Tabled by Mr Oleksii GONCHARENKO, Mr Erkin GADIRLI, Mr Markus WIECHEL, Mr Bob van PAREREN, Ms Yevheniia KRAVCHUK, Mr Oleksandr MEREZHKO, Mr Serhii SOBOLIEV, Mr Serhii KALCHENKO, Mr Normunds DZINTARS, Ms Iryna KONSTANKEVYCH, Ms Olena MOSHENETS, Ms Larysa BILOZIR, Mr Pavlo BAKUNETS, Ms Maria JUFEREVA-SKURATOVSKI, Ms Lesia VASYLENKO, Ms Mariia MEZENTSEVA-FEDORENKO

In the draft resolution, after paragraph 7, insert the following paragraph:

"The Assembly recognises that there is a considerable amount of frozen Russian assets in Europe that could be used for the reconstruction of Ukraine after the war. The Assembly also acknowledges that, despite the sanctions imposed on Russia, there are still Russian oligarchs who possess properties and assets in Europe and are known to blackmail European governments. However, there are no mechanisms in place to confiscate these assets and transfer them to Ukraine. If these assets remain frozen, they are at risk of being returned to the oligarchs. Confiscating these assets would not only help Ukraine to rebuild but would also send a message that those who violate international law will not be able to enjoy the benefits of international trade."

Explanatory note

International trade should be inalienable with the norms of international law. The democratic world should send a clear message that aggressive behaviour will not be tolerated and that trade is a privilege that comes with responsibilities towards our partners and a duty to uphold the rule of law.

8Regarding 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 State 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 UN 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.

9In the light of the above considerations, the Assembly asks member States to:

9.1support multilateral negotiations towards the reform of the WTO’s Dispute Settlement mechanism 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;

9.2ensure 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;

9.3assess 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 Sustainable Development Goals;

9.4use trade and investment agreements as tools to promote democratic norms and human rights, including social rights, on a global scale;

• Amendment 2

26 April 2023

Tabled by Mr Oleksii GONCHARENKO, Mr Erkin GADIRLI, Mr Markus WIECHEL, Mr Bob van PAREREN, Ms Yevheniia KRAVCHUK, Mr Oleksandr MEREZHKO, Mr Normunds DZINTARS, Ms Iryna KONSTANKEVYCH, Ms Olena MOSHENETS, Ms Larysa BILOZIR, Mr Pavlo BAKUNETS, Ms Maria JUFEREVA-SKURATOVSKI

In the draft resolution, after paragraph 9.4, insert the following paragraphs:

"- develop legal mechanisms to confiscate frozen Russian assets and transfer them to Ukraine; - refrain from engaging in trade with States that commit acts of aggression against other States, in order to ensure that international trade is conducted in accordance with international law;"

Explanatory note

International trade should be inalienable with the norms of international law. The democratic world should send a clear message that aggressive behaviour will not be tolerated and that trade is a privilege that comes with responsibilities towards our partners and a duty to uphold the rule of law.

9.5systematically involve parliaments in negotiations towards 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;

9.6where 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 also cover fundamental rights, including labour rights, and public health;

• Amendment 5

26 April 2023

Tabled by Ms Olena KHOMENKO, Ms Yevheniia KRAVCHUK, Mr Serhii KALCHENKO, Mr Pavlo BAKUNETS, Mr Yuriy KAMELCHUK, Ms Mariia MEZENTSEVA-FEDORENKO, Ms Lesia VASYLENKO

In the draft resolution, at the end of paragraph 9.6, insert the following words:

", while taking into account the conditions in developing and war-affected countries"

Explanatory note

The effects of the CBAM and other similar unilateral measures on countries like Ukraine may be too disruptive and may add insult to injury. Therefore, we urge the Assembly to complement this call with a caveat for countries which objectively need addidional resources to comply with such rigorous demands.

9.7promote corporate due diligence obligations through trade with regard to the protection of the environment, fundamental rights, and public health, and mitigating climate change.

• Amendment 4

26 April 2023

Tabled by Ms Lesia VASYLENKO, Ms Yevheniia KRAVCHUK, Mr Oleksii GONCHARENKO, Mr Serhii KALCHENKO, Mr Serhii SOBOLIEV, Ms Oleksandra USTINOVA, Ms Mariia MEZENTSEVA-FEDORENKO

In the draft resolution, replace paragraph 9.7 with the following paragraph:

"promote and incorporate into national and EU legislation corporate due diligence obligations through trade with regard to the protection of the environment, fundamental rights – especially in the context of armed conflicts – and public health, and mitigating climate change."

Explanatory note

The amendment promotes implementation of corporate due diligence obligations into national legislation of states to protect human rights and the environment. The amendment stresses that businesses should demonstrate particular care not to aggravate violations in the context of armed conflicts.

10The 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 Sustainable Development Goals at national level.

BDraft Recommendation

1The Parliamentary Assembly refers to its Resolution ... (2023) “Safeguarding democracy, rights and the environment in international trade”. It underscores the close interdependence between policies pursued by the Council of Europe member States in the area of trade and investment and the implementation of shared values “in the interests of economic and social progress” as stated in the Organisation’s Statute (ETS No. 1). International trade arrangements must evolve with society and reflect its increased attention to human dignity and sustainable development.

2Considering the imperative for the Council of Europe and its member States to contribute to the achievement of the United Nations Sustainable Development Goals aimed at promoting human prosperity worldwide while protecting the planet, the Assembly emphasises the need to rebalance States’ economic, social, and environmental commitments at global and domestic levels, including through trade policies and agreements.

3The Assembly therefore reiterates its proposals for action by member States, as contained in its Resolution ... (2023), and urges the Committee of Ministers to recommend in turn that member States’ governments:

3.1support multilateral negotiations towards the reform of the Dispute Settlement mechanism for interstate trade disputes of the World Trade Organization (WTO) 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;

3.2ensure that all 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;

3.3assess 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 the implementation of global environmental treaties and the Sustainable Development Goals;

3.4use trade and investment agreements as tools to promote democratic norms and human rights, including social rights, on a global scale;

3.5systematically involve parliaments in negotiations towards the conclusion or reform of any trade and investment treaties in order to enhance democratic scrutiny and transparency of the process from the negotiation mandate to the final ratification of such agreements;

3.6where 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 also cover fundamental rights, including labour rights, and public health;

3.7promote corporate due diligence obligations through trade with regard to the protection of the environment, fundamental rights, and public health;

• Amendment 9

26 April 2023

Tabled by Ms Lesia VASYLENKO, Ms Yevheniia KRAVCHUK, Mr Serhii KALCHENKO, Mr Serhii SOBOLIEV, Ms Oleksandra USTINOVA, Ms Mariia MEZENTSEVA-FEDORENKO

In the draft recommendation, replace paragraph 3.7 with the following paragraph:

"promote and actively enforce corporate due diligence obligations through trade with regard to the protection of the environment, fundamental rights and public health, especially in the context of armed conflicts."

Explanatory note

The amendment promotes the implementation of corporate due diligence obligations into national legislation of states to protect human rights and the environment. The amendment stresses that businesses should demonstrate particular care not to aggravate violations in the context of armed conflicts.

3.8work together for a co-ordinated revision of the Energy Charter Treaty, in order to minimise the length of the sunset clause and its negative impact on the environment, climate change, and fundamental rights.

• Amendment 7

26 April 2023

Tabled by Ms Olena KHOMENKO, Ms Yevheniia KRAVCHUK, Mr Serhii KALCHENKO, Mr Pavlo BAKUNETS, Mr Yuriy KAMELCHUK, Ms Mariia MEZENTSEVA-FEDORENKO, Ms Lesia VASYLENKO

In the draft recommendation, after paragraph 3.8, insert a new paragraph 4:

"The Assembly calls on the Committee of Ministers to develop recommendations on best practice for parliamentary scrutiny of international economic agreements."

Explanatory note

With this amendment, we want to urge the Committee of Ministers to develop a universal tool which any Council of Europe parliament could use and rely on, providing parliaments with a very practical instrument.