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Protecting Investors or Protecting the Public

published 13 January 2015 updated 13 January 2015
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A post by David Robinson on this blog "Transatlantic Trade and Investment Partnership (TTIP): Education is not for sale", states, "Trade deals are becoming increasingly important for all of us, including teachers and education workers. Education is increasingly seen by the global education industry and some governments as a commodity that can be "traded" like widgets or wheat, and that should be governed by the commercial rules of trade treaties".

TTIP is only one of many agreements that exist to protect investors. An earlier generation of "trade agreements" also dealt with issues that made them, in fact, trade and investment agreements. Even the North America Free Trade Agreement (NAFTA), while reducing or eliminating tariffs, the traditional purpose of trade agreements, also focused on removing "obstacles" or "barriers" to investment (in both the agreement and its implementation). And, in this generation as well as subsequent agreements, protection of investor rights carries with it no real, enforceable requirements on investors to respect human rights; an unfair and ultimately unsustainable imbalance.

From 1995 to 1998, the Organisation for Economic Co-operation and Development (OECD) sought to negotiate a "Multilateral Agreement on Investment", however, it failed, in part, because of concerns that it might interfere with the right of States to regulate. However, bilateral investment agreements continued to be negotiated. They were not and are not identical, but they include many common elements which, de facto, establish international policy. Among the common elements of many are investor to State dispute mechanisms, special procedures available exclusively to foreign investors.

The European Union has been given authority in the area of international investment and, as is the case with TTIP, is now a "bilateral" negotiating partner with the United States. TTIP is only the latest of several European agreements, but has received the most attention. If that agreement is concluded, a bilateral agreement is expected to be negotiated between the EU and China.

In addition, some major multilateral agreements are being negotiated which raise similar questions about restraints on government decision making and democracy. These include the Trans-Pacific Partnership (TPP), a regional agreement (trade unions in the region have agreed that it should be withdrawn), and the global Trade in Services Agreement (TISA).

Common trade union concerns shared by many civil society organisations are that penetration of private interests into public services will be protected or will become irreversible. If, for example, a government decides to privatize education or health care or elements of them or other vital public services, but a future government decides that such a policy was unwise, does that government have the ability to reverse those policies? Although assurances are provided by governments that public decision-making will be protected, that has not always been true in the past. If governments have to privilege investor interests over the public interest or the public will, serious questions arise about democracy itself.

Education International, its European Region (ETUCE), and many EI affiliates are working to limit the (potential) damage of trade and investment agreements, including TTIP, to education and to preserve the right of governments to regulate public services.

At the multilateral/global level, there was a largely successful effort by trade unions and civil society to protect education and other public services in the World Trade Organisation's (WTO) General Agreement on Trade in Services (GATS), which took effect in January of 1995.

GATS includes some protections of the right to regulate including Article I(3), which excludes "services supplied in the exercise of governmental authority", which includes public services like education. The Word Trade Organisation (WTO) describes these services as those that "are supplied neither on a commercial basis nor in competition with other suppliers. Cases in point are social security schemes and any other public service, such as health or education, that is provided at non-market conditions".

The fight to protect public services in GATS was long and difficult and required a major mobilisation of the international trade union movement. However, times and the political climate have changed and the fight has become more difficult. With all of its faults, the WTO framework provided access for trade unions and other civil society groups and the process was relatively transparent. That is not often the case with negotiations outside of the WTO or other public institutional frameworks.

The Trade in International Services Agreement (TISA) is being negotiated by a large number of governments, but outside of the WTO, largely in secret, and with few opportunities for public involvement. A report by Public Services International (PSI), " TISA versus Public Services", illustrates some of the dangers of that agreement based on available information. These include eroding some of the rights to regulate that were protected by GATS as well as locking in liberalization measures taken by governments.

There has been opposition to TTIP and, to a lesser extent, to the agreement between the EU and Canada, the EU-Canada trade agreement (CETA). An especially controversial provision in both agreements are investor to State dispute mechanisms giving special treatment to foreign investors over domestic investors through access to a special mechanism for resolving disputes outside of national courts and other official channels. Such mechanisms could be considered an exemption for foreign investors from democracy and rule of law. Public service issues and limitations on government action also have implications for human rights. But, there is also a broader question of human rights versus other rights.

Protections of property rights that bind national governments are emerging at the international level, but protection of human rights, including the human rights of workers, remain at the discretion of national governments. This creates a hierarchy of rights that gives priority to property over human beings and to that which is private over the public good. The rights of investors carry with them no corresponding obligation to respect international labour standards or other human rights. This contributes to the global rights imbalance.

The traditional approach of the international trade union movement has been to try to link the respect of property rights and liberalization with the respect of workers' rights. A short-hand reference to this connection is the "social clause" supported by trade unions at the time of the General Agreement on Tariffs and Trade (GATT) and with the emergence of the WTO. Trade and investment agreements would include something that would not allow governments to violate workers' human rights in order to gain an advantage in international trade or as an incentive to attract investment. This concept was never full developed as governments failed to agree to establish a working party to examine the links between workers' rights and trade and investment.

Those arguments, in addition to the defense of public services, also critical for human rights and democracy, remain valid and trade unions have been able to influence governments and the EU to add provisions on education and other public services and fundamental human rights of workers in some agreements. Although positive experience with such clauses has been limited, they are intended to protect government decision-making and improve laws and enforcement.

The UN Human Rights Council unanimously adopted the UN Guiding Principles on Human Rights and Business in 2011. It includes the following language:"The responsibility to respect human rights is a global standard of expected conduct for all business enterprises wherever they operate. It exists independently of States' abilities and/or willingness to fulfil their own human rights obligations, and does not diminish those obligations. And it exists over and above compliance with national laws and regulations protecting human rights."

Effectively protecting human rights and ensuring their respect by investors requires making these "obligations" real. Serious attention to human rights in investment agreements would be a good place to begin redressing the rights imbalance. It would be relatively little to expect from those investors that already get so much consideration and protection from States. And, realizing human rights and preserving democracy also requires that such agreements serve to keep public services out of the clutches of modern "privateers".

The opinions expressed in this blog are those of the author and do not necessarily reflect any official policies or positions of Education International.