|Free Trade Area of the Americas - FTAA
COMMITTEE OF GOVERNMENT REPRESENTATIVES ON THE PARTICIPATION OF
CONTRIBUTION IN RESPONSE TO THE OPEN AND ONGOING INVITATION
CIVIL SOCIETY FORUM ON THE FTAA NEGOTIATIONS
THE CHAPTER ON INVESTMENT IN THE THIRD FTAA DRAFT AGREEMENT.
The purpose of this speech is to analyze the content of the FTAA Chapter on Investment in two ways: a) by gaining knowledge of the content of the main articles themselves, their interpretation and deficiencies and b) by comparing the articles of the Chapter on Investment with some of the articles contained in other chapters of the third Draft FTAA Agreement in order to similarly examine their interpretation and deficiencies in terms of their correlation with the other chapters of the aforementioned Draft Agreement.
The proposals we feel should form part of this Forum’s contribution are implicitly included in the analysis.
I feel that this article (Definitions) could be made even more concrete by annexing a list of the sectors each Party feels it could include in its reserved sectors.
We realize that the interpretation of the content of the Agreement is becoming increasingly important. This also applies to the Chapter of Investment should there be any incompatibility, SPECIFICALLY in the case of Article3 of the Chapter on Investment, with other chapters.
As far as National Treatment is concerned, there is a bracket in the last part that seems to contradict the general spirit of the articles on National Treatment.
With respect to Fair and Equitable Treatment, this paragraph of Article 9 states: “A determination that there has been a breach of another provision of this Agreement, or of a separate international agreement, does not establish that there has been a breach of this Article.” This raises the question, however, what validity the determination of another international instrument may have as an establishment of a breach of the Article and the principle of fair treatment or the minimum standard of treatment having been adhered to, especially when there is no concordance with the contents of Article 9.
All of the paragraphs of the article on performance requirements are incompatible with the principle of fair treatment of smaller economies inasmuch as, from the outset, they favor the large investor corporations of the larger economies Parties because any obligatory measure or performance requirement they may wish to impose breach the Agreement and this article in particular.
When the article is analyzed paragraph by paragraph, we come across a series of elements that could turn out to be harmful to the economies of the Latin American Parties that are not international investors.
Moreover, how could we accept there not being performance requirements that might apply to Latin American economies, considering that the indiscriminate acceptance of any type and volume of imports and exports could have a negative effect on trade balances? On the other hand, with respect to paragraph 9.4, even in cases when the smaller economies do not violate norms when they apply an unfair and inequitable treatment to other even smaller economies, their actions or the application of performance requirements are deemed to be in violation when said unfair and inequitable treatment is applied to large and larger economies in the Hemisphere. This is in all respects more inequitable than the article itself, because it would mean that one would be acting in violation, because one would be acting unfairly by imposing requirements on stronger economies. From all angles, this is a regulation that favors the interests of the stronger economies and large corporate investors, which generally are from the stronger economies of Latin America and North America.
[10.3 Performance incentives:
It should also be included in Article 10.3 to avoid misinterpretations, because the Parties will inevitably have the right to prohibit certain investments or to make the entry of investments conditional upon the creation of a certain number of jobs, or to direct investment to areas that coincide best with the development plans of the national economy.
[Article 11. [Key Personnel] [Senior
Management and Boards of Directors]
At this point in time, given the competitiveness and levels of education and economic and international specialization, many of the national economies Parties to the Agreement have key personnel, which means the concept could be operated through rules and percentages for certain countries Parties as a condition imposed on investments made by stronger countries Parties. In this way, the professional labor force of the host country would be taken advantage of and jobs would be created.
Moreover and most importantly, this touches upon a significant social issue, because when one speaks of key personnel, one is speaking of human beings and skilled human resources, and failure to award these the fairest treatment and justice could easily lead to discriminatory practices.
Article 12. Transfers.
Could investors themselves be obliged to transfer their income in accordance with the principle of solidarity?
Article 13. Expropriation and Compensation.
This article allows for the existence of monopolies when these are justified upon the grounds of public or social interest.
Article 15. Exceptions to National Treatment and
In this regard, we find that some subregional agreements can in fact exceed the FTAA obligations inasmuch as they can be more generous in terms of investor treatment; and it remains very unclear as to what will happen when this occurs.
Article 17. General Exceptions
As this article on general exceptions shows, several of the critical situations detected in other articles of this Chapter are contemplated, as well as the lack of correlation with other chapters noted below. We therefore feel that it would be more useful for these general exceptions to be inserted in the articles whose content so merits to avoid double discourse and misinterpretations.
II. LACK OF CORRELATION BETWEEN THE FTAA CHAPTER ON INVESTMENT AND THE CONTENT OF OTHER CHAPTERS
There is a general lack of concrete correlation between the content of the Chapter on Investment and the content of the other chapters, which by their nature and subject-matter affect investments, investors, investor parties, etc. in connection with the entry, establishment, expansion, management, conduct,[or] operation [, sale or other disposition of] an investment in its territory of an investor of a Party, [or of a non-Party] in compliance with any of the performance or incentive requirements.
We propose first of all that the contents be correlated, and, secondly, that certain content from other chapters that is relevant to the Chapter on Investment be clarified in the articles or paragraphs of this Chapter, even if this seems repetitive.
CHAPTER V The treatment of differences in levels of development and size of
1.3 The differential treatment for countries with different levels of development and size of their economies is a fundamental principle of this Agreement. Both the Parties and the entities of the FTAA are obliged to abide by the provisions on the issue found in all chapters of the Agreement.
Caution: This flies in the face of the obligatory performance requirements because no clarifications are provided for the cases of smaller economies, performance requirements and incentives. In addition, the Agreement should indicate the criteria to be considered for countries that must receive differential treatment and therefore list such country Parties.
CHAPTER VI Environment Provisions.
Chapter VII Labor Provisions and Non-Implementation Procedures
Chapter VIII Tariffs and Non-Tariff Measures.
Chapter IX Agriculture
Chapter XV Subsidies, Antidumping, and Countervailing Duties.
Chapter XVI Services
[TEXT ON THE TEMPORARY ENTRY OF BUSINESS PERSONS
CHAPTER XXIV Final Provisions
In terms of the entry into force, I feel that considering this is a multilateral agreement among 34 States Parties, a certain percentage of ratifications could be used as a criterion for its entry into effect, and that it should not act exclusively by only entering into effect for those who have ratified it by the end of December 2005.
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