Joint FIDH-VCHR response to the Commission’s comments regarding the request for information issued by the European Ombudsman ref. 1409/2014/JN

Press release

In its reply to the request for information, the Commission reiterated its initial position that, based on a mandate given to negotiate a regional free trade agreement (FTA) with the ASEAN in 2007, a sustainability impact assessment (SIA) was made in 2009 and that any request to duly assess human rights impact of the future treaty it is negotiating would be a retroactive application of the commitments made in 2011/2012 to assess the impacts that trade agreements may have on human rights.

FIDH and VCHR still oppose this position for the following reasons:
• As developed in more detail in the complaint, an assessment of the impacts that the agreement may have on human rights is required by preexisting obligations and principles applying to the EU. The commitments made in 2011/2012 simply provide more concrete guidelines in that regard.

The Treaty on the European Union (TEU) and the Treaty on the functioning of the European Union (TFEU) oblige the EU not to take any action that would prevent or make more difficult the realization of human rights. They oblige the EU to take measures available to ensure the respect of human rights in its external action and the external aspects of its policies, to define and pursue its external common policies and action in order to consolidate human rights, and take, within its spheres of competence, the measures ensuring respect, protection, and fulfillment of human rights in the EU [1] . An assessment of the impacts the future EU-Vietnam agreement may have on human rights aims to define those measures, including the adaptation of the clauses and structure of the future agreement in order to prevent trade and investment agreements from impeding the enjoyment of human rights in the EU and in partner countries.

The relevant moment to be considered is then not when the mandate of negotiation is given, but the date of the decision to sign the text of the agreement. At that date, the EU must be able to demonstrate that it has taken into account the human rights impacts and has defined its policy options in consequence.

Already in 2006, C-310/04, Spain v Council ECR I-7318, paras 133-5, the European Court of Justice annulled an EU Council Regulation on the grounds that it was not proportionate, in contravention of the general principles of the EU law. The decision was justified by the fact that, the EU Council, not having conducted an impact assessment, it was not able to show that it had taken into account all necessary factors and circumstances in its decision to adopt the measure. Following Spain v Council, and taking into account the human rights obligations set out in the EU founding treaties, when adopting trade agreement, the EU must be able to demonstrate that it has taken into account the impacts of that agreement on human rights, human rights being relevant factors under EU law. The SIA made in 2009 for the ASEAN region is insufficient in that regard since it did not assess the potential impacts of the future EU-Vietnam agreement on human rights, and the reference to poverty reduction cannot replace an assessment based on the normative content of human rights.

• With regard to the 2011/2012 commitments and guidance on the introduction of the human rights considerations in its impact assessments and sustainability impact assessments, the date of the negotiation mandate is also irrelevant, as it is at the date of the agreement that the EU must be able to justify it has duly adopted its policy options considering relevant human rights requirements.

• In choosing to refer to the 2007 mandate, rather than considering the scope of current negotiations, the European Commission also ignores the problem of not having assessed the investments protection part of the agreement being negotiated with Vietnam. Indeed, the European Commission has not provided any response to the argument raised by FIDH and VCHR and reiterated in the complaint that “the current negotiating mandate has expanded in 2013 to encompass an investment component. In addition an Investor-State Dispute Settlement (ISDS) mechanism is under consideration. Consequently, we can no longer consider that the negotiation mandate has remained the same as in 2009, when the SIA was carried out, and the impacts of these new components should be assessed”. The impacts of the investment component of the agreement have not been assessed, either in the 2009 SIA or in a subsequent impact assessment.

Vietnam must take important steps in order to comply with international human rights standards and obligations. The EU and its member states will also be required to adopt new laws, policies, and practices to respect, protect and fulfill human rights. Depending on the specific policy options retained by the commission and that will be reflected in the proposed text of the agreement, the impacts on the regulatory powers of the parties to the future trade/investment treaty may be seriously affected. The option retained to frame the ISDS mechanism, if any, may also have negative impacts in that regard. The ISDS allows foreign investors to so sue a host State for alleged breach of the investment treaty, making their case heard by private arbitrators. The parties are always the same: the foreign investor as claimant, and the host State as respondent. No one other than the foreign investor can seize the arbitrators, and populations affected by investments are not allowed to be considered as a party in the dispute. If it is true that the arbitrators are not precluded to take human rights into account, the lack of dedicated human rights clauses and safeguards in the treaties leads them to consider in majority that the investment treaty is a “lex specialis” and to reject an interpretation that duly take into account human rights law. As previous arbitration cases have shown, the lack of reference to the parties’ human rights obligations and the lack of effective recourse given to populations, whose rights may be affected by the decision of the arbitration tribunal, raise serious doubts about the respect by the parties of their human rights obligation when they set up investment protection and arbitration mechanisms without having paid due attention to the safeguards required by this new regime. The negative impact that the investment protection mechanisms may have on human rights have been denounced in several instances. Among them:

• Commentary to Principle 9 of the UN Guiding Principles on Business and Human Rights, states that “the terms of international investment agreements may constrain States from fully implementing new human rights legislation, or put them at risk of binding international arbitration if they do so. Therefore, States should ensure that they retain adequate policy and regulatory ability to protect human rights under the terms of such agreements, while providing the necessary investor protection.” Risks and impacts may be more important also in situations of financial crisis or when dealing with a developing country given, among other things, the high cost of the procedure and the amount awarded to the investors. When dealing with development countries, respect of the founding treaty of the EU requiring policy coherence for development is also at stake
• A 2010 appeal from dozens of academics called for alternatives to the ISDS, which are seen as “hampering the ability of governments to act for their people in response to the concerns of human development and environmental sustainability.” [2]
• The OECD states in the same vein that the “inclusion of responsible business conduct language in treaties will not produce desired welfare benefits if ISDS procedures are not properly designed.” [3]
• The High Commissioner for Human Rights recommended more broadly to balance investors’ rights with investors’ obligations: protect affected peoples by setting up an individual complaint mechanism in relation to human rights violations; include the promotion and protection and fulfillment of human rights among the objectives of investment agreements given States’ international responsibilities regarding the promotion and protection of human rights; ensure States’ right and duty to regulate; realize effective impact assessments on human rights .

An effective impact assessment on human rights that takes into account the context, legal framework and practices that, in conjunction with the future agreement may affect human rights and the capacity of the parties to fulfill their obligations, is in consequence clearly necessary. As previously highlighted, the European Parliament also called for an human rights impact assessment in its resolution of 17 April 2014 on the state of play of the EU-Vietnam Free Trade Agreement. It reiterated the call it made on 25 November 2010 in its “resolution on human rights and social and environmental standards in international trade agreements”, where additionally asked for concrete improvements of the trade agreements. Notably, the introduction of the necessary human rights clauses and safeguards, the establishment of enforcement mechanisms and recourses and the need to better take into consideration priorities and concerns that emerge from impact assessments.

Brussels, 27 February 2015
International Federation for Human Rights (FIDH),
17 Passage de la Main d’Or, 75011 Paris, France;
15 rue de la Linière, 1060 Brussels, Belgium
Tel.:+32 479.19.59
Fax:+32 2 6094433

Vietnam Committee on Human Rights (VCHR)
48 rue Parmentier, 94450 Limeil Brevannes, France
Tel.: + 33 1 45 98 30 85

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