1. Negotiations
2. EU-ASEAN

EU-Myanmar/Burma Investment Protection Agreement (IPA) and impact assessment fail to protect human rights

FIDH / ALTSEAN Burma | 5 December 2016

EU-Myanmar/Burma Investment Protection Agreement (IPA) and impact assessment fail to protect human rights

Dear Ms Malmström,

We are writing to express our serious concern over the final version of the report on the sustainability impact assessment (SIA) for the EU-Myanmar investment agreement that is currently under negotiation. The document that fails to retain recommendations that would establish human rights safeguards should in consequence be rejected.

In mid-2015 and early 2016, the EU adopted new guidelines to enhance the quality of its human rights impact assessments. [1] In October 2015, the EU released its new trade and investment strategy that commits the EU to “enhance the analysis of the impact of trade policy on human rights both in impact assessments and in ex-post evaluations” based on the guidelines. [2] The strategy also aims at implementing the EU’s 2015-2018 human rights action plan, which commits the EU to continue to develop “a robust and methodologically sound approach” to human rights impacts of trade and investment agreements, in ex-ante impact assessments, sustainability impact assessments, and ex-post evaluations. [3]

In October 2015, the EU launched the SIA for the EU-Myanmar investment agreement. Its terms of reference (ToR) state that the EU should examine the potential impacts of the agreement on human rights, in accordance with the European Commission’s “Better Regulation Package” and the “Guidelines on the analysis of human rights impacts in impact assessments for trade-related policy initiatives.” [4]

FIDH regrets the ongoing failure to implement all these new guidelines and commitments, as the SIA actually failed to meet the EU’s standards. In a letter dated December 2015, commenting on the first draft report issued as part of this SIA process, we recalled that the European Commission has the responsibility to ensure that the guidelines are followed. We also insisted on the necessity for the Commission to ensure the study’s independence. [5]

In April 2016, commenting on the second step of the SIA (i.e. the “draft final report” issued on 18 March 2016), FIDH and its member organisation for Myanmar, ALTSEAN-Burma, welcomed the fact that, despite some weaknesses, this first human rights impact assessment ever carried out in the context of the EU trade and investment agreement, led to concrete achievements and proposals. The draft report proposed to introduce concrete human rights safeguards directly into the agreement. It proposed the introduction of human rights references in the clauses of the IPA. It recommended the establishment of effective monitoring and enforcement mechanisms that could be used to address human rights and human rights impacts. The SIA “draft final report” also proposed guidelines for the formulation of some of the clauses negotiated to protect the investors (for example, on expropriation), it recommended dispute settlement mechanisms, and proposed safeguards to better protect the right to regulate. These safeguards would have provided a significant answer to the inexplicable lack of human rights protections in the trade and investment agreements negotiated by the EU and would have participated to prevent negative impacts on human rights, and to strengthen the respect for human rights and the rule of law. [6]

Regrettably, the content of the “final report”, which was published in July 2016, was disappointing. Compared to the “draft” version, the “final report”, was extensively modified. Its conclusions and recommendations on human rights were significantly changed, watered down, or removed altogether. As a result, the “final report”, in its current version, recommends ‘business as usual’ vis-à-vis Myanmar. This approach would result in the application to Myanmar of the EU’s current model of its agreements drafted for Canada, the US (i.e. developed countries that do not face the same human rights challenges as Myanmar), or Vietnam (whose free trade and investment agreement has been negotiated and concluded without carrying out a human rights impact assessment).

FIDH and ALTSEAN-Burma, as well as a number of experts and NGOs, consider that this approach is a serious threat to the respect of human rights and disqualifies the agreement under EU and international law. [7] In addition, the way in which the “draft final report” has been devoid of its substance raises serious concerns.

As highlighted by the UN, the preparation of human rights assessments prior to the conclusion of trade and investment agreements is aimed at securing the respect, by EU Member States and their partner States, of their human rights obligations. [8] Human rights impact assessments fulfil an obligation under Articles 3, 6, and 21 of the Treaty on European Union (TEU) and Article 207 of the Treaty on the Functioning of the European Union (TFEU), which oblige the EU to shape its trade policies in a manner that respects, promotes, consolidates and supports the rule of law and human rights.

Deriving from these legal obligations, the SIA is not a simple formality but needs to:
– Identify and duly assess the human rights risks potentially created by the IPA under negotiation;
– Be convincing in its reasoning, provide adequate recommendations, and present options that effectively strike a balance between the IPA’s twin objectives of: 1) protecting investors; and 2) complying with human rights requirements, expectations and obligations. To this end, the impact assessment should use all relevant information, effectively compare the various options, alternatives, and mechanisms available, and assess the impacts of the wording of the clauses in light of the relevant arbitration cases and the specific context in which the IPA will operate (in the case of Myanmar, the weak legislative framework, practices, and institutions with regard to human rights). All these elements should lead to sensible conclusions and proposals.

In the human rights context, the European Court of Justice (ECJ) requires that the EU institutions prove “that they have carefully considered different policy options and have chosen the most proportionate response to a given problem.” [9] The European Commission equally recognizes that human rights impacts assessments must “support sound policy-making” by analyzing “the advantages and disadvantages of available solutions”, leading to the “insertion of safeguards in the agreement” when needed and being transparent and convincing in their thinking [10]. The EU Ombudsman recalled these principles in its decision, dated 26 February 2016, related to the EU-Vietnam free trade agreement. [11]

• The “final report” does not meet these criteria. Instead, it validates the European Commission’s approach (rejected by the EU Ombudsman in other circumstances), which consists of concluding a trade or investment agreement without conducting a full prior human rights impact assessment, and carrying out a retrospective human rights impact assessment in cases where human rights have been negatively affected. The “final report” fails to provide specific and convincing arguments to explain how the recommendations that it has made fulfil the EU’s human rights obligations. It also fails to explain how these recommendations are better suited than the recommendations made by the human rights experts and stakeholders consulted to strike a balance between protecting investment and strengthening human rights.

We therefore call on the European Commission to:

• Recognize that the “final report” made for the EU-Myanmar IPA does not meet the quality criteria required by the guidelines on human rights impact assessments and the SIA’s ToR, and that the significant changes in the recommendations are not supported by legal arguments and reasoning.

• Introduce in the text negotiated with Myanmar the proposals made by civil society and human rights experts, which aim to ensure the respect, protection, consolidation and promotion of human rights, including proposals regarding alternatives to ISDS/ICS. [12]

• Set up a team of legal human rights experts in order to conduct a human rights impact assessment that respects the guidelines and ensure the introduction in the investment agreement of the clauses that aim at effectively preventing negative human rights impacts;and at providing remedy mechanisms when prevention has failed.

• Ensure better quality of future human rights impact assessments by:
o Requesting in ToRs that the consultant has a proven human rights legal expertise and track record;
o Ensuring that the steering committee can guarantee the effective implementation of the guidelines to their full extent;
o Setting up an independent quality monitoring and advisory body composed of independent human rights experts;
o Providing more time for the realisation of the SIAs in order to ensure better consultations and a real dialogue between the consultant and the human rights defenders;

• Publish the analysis of the legal service of the European Commission on the compatibility of the text negotiated with Myanmar with Articles 3, 6, and 21 of TEU and Article 207 of the TFEU.