International Trade and Investment

Abstracts for the Conference, Oslo 9-10 May 2017

Day 1: SESSION 1

SOCIAL NORMS AND SUSTAINABLE TRADE

CLAIR GAMMAGE, ‘Social Norms and FTAs: Justiciable or not?’

Increasingly, FTAs include trade liberalisation beyond goods extending their scope to trade in services, intellectual property rights, investment, government procurement while including chapters on labour standards, environmental protection, and human rights. With such expansive coverage of economic and non-economic objectives, these so-called ‘new generation’ FTAs draw into question the extent to which non-economic (social) values are justiciable. Drawing insights from the recent Opinion relating to the EU-Singapore FTA (EUSFTA) and the Front Polisario decision, this paper argues that while social norms possess a legal normative character their justiciability has been challenged in a variety of legal fora. This paper will problematise the approaches of the International Court of Justice (ICJ), the WTO’s Dispute Settlement Body (DSB), and the Court of Justice of the EU (CJEU) to highlight the way in which clauses relating to sustainable development, the environment, labour standards, and human rights have been interpreted from a legal perspective.

DANIEL SZABO, ‘Sustainable Trade, Renewable Energy, and the WTO’

This paper discusses the treatment of sustainability-related trade barriers pertaining to the trade of goods in the WTO system. While the status of sustainability-related requirements that affect the final products’ characteristics are largely settled in the WTO, the status of requirements that are related to the way of production of the products are still unclear. At the same time, the sustainability of products over their entire life-cycle is often contingent on their production, rather than on their characteristics. This paper discusses this problem by analyzing recent WTO disputes in the area, and by analyzing the member countries’ responses to the situation in the renewable energy sector through WTO disputes.

The first section of the paper introduces the topic and contains a brief literature review. Here the academic articles are reviewed that are discussing the early WTO disputes relating to sustainability issues. The classic cases, such as the ‘Tuna-Dolphin I’, the ‘Tuna-Dolphin II’, and the ‘Shrimp-Turtle’ cases, concern the sustainable harvesting of marine animals that, however, does not influence the final characteristics of the products in question and thus challenge the perception of like products. It is discussed what the academic consensus is based on in these cases about the position of the WTO regarding process and production methods (PPMs) that do not influence the characteristics of the final product.

The second section expands on the literature review by analyzing the more recent and so far less discussed, WTO disputes concerning PPMs. Such disputes are DS401 concerning the importation of seal products to the EU and DS469 concerning the importation of Atlantic tuna to the EU. Although, in the latter case a solution has been agreed by the parties, these cases may provide an insight into whether the WTO’s treatment of PPMs, and hence its perception of like products, has changed since the aforementioned classic sustainability-related WTO disputes.

The third section analyses the special case of renewable energy trade, in which both the WTO and its member countries were rather active in the past decade. The volume of renewable energy trade and the varying sustainability of renewable energy products on basis of the production methods used, make them a paramount case of PPMs. Several member countries facilitate the import of only sustainably produced renewable energy products. At the same time, contrary to the previously settled disputes, they are not banning the import and marketing of the non-sustainably produced renewable energy products completely. It is thus discussed based on cases in progress in WTO dispute settlement, such as DS443 and DS459, whether the WTO’s current framework is capable of handling these situations and what outcome can be expected from such cases. Since there have been internal judicial proceedings in the United States concerning California’s low-carbon fuel standard, a standard similarly affecting renewable energy trade, legal arguments from the Rocky Mountain Farmers Union v. Corey case are also taken into account in the discussion.

The fourth section concludes.

MARKUS GEHRING, ‘SDG12 in International Economic Law’ (skype paper)

Many of the sustainable development goals form already part of the international and domestic legal structure of trading nations. This paper explores the existing legal obligations that enable or hinder the full implementation of SDG 12. It reviews first the contribution of International law, policy and governance to SDG 12 on sustainable consumption, then explores the legal obstacles facing the implementation of SDG 12 for example the WTO non-discrimination rules as interpreted in recent disputes such as China-Rare Earth, Brazil-Retreaded Tires. It also discusses contours of natural resources law. It then proposes international policy, institutional and governance arrangement to coordinate delivery of SDG 12 and offers some conclusions on the interaction of SDG 12 and international economic law. This research builds on previous studies published in the author’s published volumes with Kluwer Law International - Sustainable Development in World Trade Law and in Sustainable Development in World Investment Law.

DAY 1: SESSION 2

TRADE, SUSTAINABILITY, AND LABOUR STANDARDS

FRANZ CHRISTIAN EBERT, ‘Increasing the Social Sustainability of Trade Agreements Regarding Labour Standards. Insights from the TPP Experience’

The question of how to make trade agreements conducive to sustainable development has gained attention among academics, policy-makers, and civil society actors in recent years. These agreements have been subject to heightened scrutiny by the public as concerns spread that trade negotiators unduly prioritize economic gains for certain groups at the expense of other societal objectives. The need to rethink the design of trade agreements in terms of both environmental and social sustainability is exacerbated by the fact that such agreements increasingly go beyond trade in goods and services and reach into a vast number of economic governance issues. This concern has gained further prominence in the face of increased political opposition to so-called “mega-regional trade agreements”, such as TPP or the TTIP.

A key challenge in terms of rendering trade agreements more socially sustainable lies in ensuring that trade agreements safeguard rather than hamper decent employment conditions. The present paper explores this question by reference to the case of the stalemated TPP. While proponents present the TPP as the new “gold standard” in terms of labour standards protection, opponents have criticized the relevant provisions as insufficient and the agreement on the whole as pernicious for workers’ interests. An in-depth analysis of the TPP may, therefore, foster a better understanding of the potential and limitations of existing approaches to inserting labour issues into trade agreements.

For this purpose, the paper proceeds in three steps. The first section takes stock of the sustainable development discourse and elaborates on the issue of trade and labour standards. The second section then turns to the legal arrangements under the TPP and analyses them against the backdrop of earlier trade agreements. A particular focus is on the provisions on workers’ rights contained in the labour chapter and the related bilateral labour plans. The argument is put forward that while the TPP contains several innovative elements in comparison to earlier trade agreements, its approach to labour standards protection is overall fragmentary and remains embryonic on several fronts. Based on the TPP experience, the third section, therefore, outlines components for a more comprehensive approach to labour standards protection with regard to trade agreements that takes into account insights from the sustainable development discourse.

YULIYA CHERNYKH, ‘Salt Is Salty: Chasing sustainability in the preambles of the BITS and FTAs’

The contemporary international investment law represents a proliferation of international treaties. Despite of the substantive diversity across more than 3000 BITs, the form of the predominant part of them is quite standardized. Many of the BITs, if not all of them, contain preambles. The practice of inserting preambles is not unknown for the FTAs, including more recent hotly discussed drafts, and generally for international treaties.

Apart from articulating general policy and intent of the document, preambles may have quite pragmatic application. They calibrate interpretation and sometimes play decisive role in underpinning the meaning of the treaty provisions.

Until very recently preambles of BITs and FTAs did not contain reference to sustainability as a promoted value for investment. The recent Model BITs (Austria, Azerbaijan, Brazil, Canada, India and others) added sustainable development to the traditional purpose of promotion of economic cooperation and secure business environment. Furthermore, both drafts of the Norwegian Model BIT of 2007 and 2015 supported the idea of “sustainable investment” as an object of promotion in the preamble of both texts.

What is the effect of introduction of sustainability in preambles? Is sustainability a newly emerged requirement or desirability? Is that reflection of the shifting paradigm? What is the exact impact of the introduction of the wording of “sustainable investment”?

The proposed paper will address the implication of the express introduction of the idea of sustainability into the recently concluded BITs, FTAs, model BITs and negotiated drafts. The paper will question whether sustainability is inherent or becoming inherent to the concept of investment after all?

MARIA PANEZI, ‘Is it too soon to bring labour standards back to the WTO table?

The Seattle Ministerial was without any fruitful outcomes, partially due to the Clinton Administration’s desire to introduce labor standards in trade negotiations. Countries that felt their comparative advantage was cheap labor were up in arms. The discussion since then has not progressed. However, since the early WTO years we have witnessed a significant change in the interpretation of the GATT and other Agreements: environmental standards, although classified as PPMs, are slowly becoming less controversial and pass the panel’s and Appellate Body’s scrutiny when their nature is clearly non-protectionist.

Labor and the environment, one could argue have been two of the thorniest non-trade policy aspects in the GATT and the WTO. As we are moving towards an environmentally friendlier WTO, this paper will pose two questions. First, is it time to revisit the discussion on labor rights, and most importantly, child labor, as part of PPMs, and by consequence, regulate products that of cheap labor differently? If so, how is this discussion to be framed?

Second, what lessons can be learned from the treatment of environmental regulations in the WTO? Are there plausible analogies that can be drawn between the increasing volume of environmental cases and the now dormant labor debate? In this context, I will first review the most seminal environmental cases and various policy justifications and then explore their application potential to labor standards. I will argue that as one door in the WTO begins to open, it may be time for lawyers and trade policy experts to start pushing for the next door to open as well.

Day 1: SESSION 3

TRANSPARENCY AND HUMAN RIGHTS

CHAIR/DISCUSSANT: Beate Faracik

ANNE-CLAIRE BERNARD-TOMASI, ‘The interplay between environmental protection and private market actors’ concerns through the lens of disclosure and confidentiality of information: pragmatism over dogmatism’ (skype paper)

The pursuit and protection of non-economic and economic objectives and interests in the context of legal regulation of products and services has been translated into a sharp and constant interplay between varying objectives and interests. Environmental laws and regulations have gotten more complex, massive and demanding towards a higher protection of the environment. Private market actors face many different kinds of legal and regulatory concerns as well as liability issues; the interplay between environmental protection and private market actors’ interests has thus given rise to far-reaching, acute and diverse legal issues and challenges.

The interaction between the environment and the market is a multifaceted one, and it is traditionally examined as a dilemma and consequently addressed as a conflict. The research aims at challenging this identification by going beyond dogmatic approaches which shape this characterisation, and thus advocating and recognising an alignment between the non-economic and economic objectives and interests at stake. The research combines both a theoretical and an empirical approach: it attempts to engage in a reconceptualisation of legal concepts, i.e. corporate social responsibility, disclosure of information, access to information, and confidentiality of information associated with trade secrets, through a thorough analysis of those legal concepts and their underlying goals and purposes. The research attempts to analyse how those legal concepts work on both sides, and on the basis of a cost-benefit analysis the research attempts to address and analyse what private market actors can gain to go beyond dogmatic approaches among other things in the light of checks and balances that would lead those actors to be more willing to contribute to environmental protection. The research aims at questioning to what extent and how can a cost-benefit analysis in terms of information - in the light of the above-mentioned legal concepts - be grounded through a critical and creative legal architecture aiming at reflecting the alignment between environmental protection and private market actors’ interests and then allowing the reduction of the conflicts between them?

The research is illustrated by two case-studies through an empirical research and a comparative analysis between the EU regulation on chemicals (REACH Regulation) and the US legislation on chemicals (LCSA).

ENRIQUE BOONE BARRERA, ‘Human rights obligations in investor-state contracts: Reconciling the investors' legitimate expectations with the public interest’

Sustainable development in international investment often refers to the environmental impact of the project. However, the UN 2030 Sustainable Development Goals incorporate several human rights standards as goals. The implementation of these goals, and upholding them, may run counter to the stabilizing aims of international investment agreements (IIAs). IIAs encourage freezing the domestic legal framework and require compensation if any change affects the economic interests of foreign investors.

Investor-state arbitration has become one of the most important dispute resolution mechanisms for foreign investors to challenge government policies that affect their economic interests. Because the narrow purpose of these tribunals is to settle an investment dispute, there is not much discussion about the potential human rights impact of the award. Arbitral tribunals rely on the notion that states are primarily responsible to respond to human rights violations. While this is still largely true, arbitral tribunals cannot remain wholly indifferent to states’ obligations regarding the protection of human rights.

However, the challenge is that arbitral tribunals are neither knowledgeable nor experienced in dealing with human rights obligations. Newer IIAs contain more precise references to human rights but it is not clear that this will make a difference when arbitral tribunals are unsure how to incorporate them. This paper argues that there is strong case to make a more efficient use of investor-state contracts to help tribunals incorporate human rights in their decisions. Furthermore, the paper highlights the sort of role that investor-state contracts can have in balancing the legitimate expectations of the investor with the responsibility of states to protect human rights.

Building upon John Ruggie’s recommendations on the drafting of investor-state contracts, the paper offers an approach to the incorporation of human rights in investor-state arbitration taking into consideration the powers and limitations of arbitral tribunals.

TONIA NOVITZ, 'Sustainability, supply chains and migrant Labour: A role for human rights?'

This paper considers the role played by migrant labour in supply chains in the 21st century both within the EU and in the context of EU external trade. Having identified some key issues regarding supply chains, trade in services and exploitation of migrant workers, the paper goes on to consider potential regulatory solutions to this policy problem. An examination of EU and global rules of trade indicate a lack of recognition of these concerns. It is suggested that sustainable development goals and the protection of human rights can be combined to establish global norms regarding the obligations of states. Both substantive and procedural norms can arise from recognition of these connections, so that there should be scope for participation by workers and their organisations in regulatory strategies. Indeed, the Ruggie Principles can be regarded as a first step towards this ambition, but may now need to be supplemented by harder international law with a wider ambit.

Day 1: SESSION 4

REGULATION OF SUSTAINABILITY IN SUPPLY CHAINS AND PROCUREMENT

SUSAN AARONSON (with Ethan Wham), Can Transparency in Supply Chains Advance Labor Rights? A Mapping of Existing Efforts (skype paper)

Supply chain initiatives wed government mandates delineating the “right to know” with corporate governance and voluntary corporate social responsibility (CSR) strategies. They are an attempt by government officials (at the behest of their citizens) to mandate companies to be transparent about their supply chain practices in the hopes that firms will then act in a responsible manner.  In the US and the EU, policymakers have put in place four supply chain transparency initiatives: two to ensure that a supply chain does not contain conflict minerals and two to ensure that companies divulge slave labor in their supply chain. The conflict minerals supply chain initiatives only tangentially address labor rights, but the two supply chain anti-slavery initiatives directly tackle forced labor issues.  However, the architects of the two supply chain anti-slavery initiatives were influenced by corporate response to Dodd-Frank conflict minerals. 
These initiatives are relatively new and hence it may be too early to assess their impact. However, the authors reviewed the findings of civil society groups, consulting firms, and researchers in order to provide an initial assessment. In general, these investigators found that these supply chain initiatives:

  • are expensive for firms to implement;
  • have not led the bulk of firms to report, and the ones that do make broad statements and general commitments;
  • require transparency about supply chain practices but say little about how firms should behave when they find slave or trafficked labor;
  • do not yet appear to have changed corporate behavior, although they have led firms to discuss how to address supply chain problems;
  • can help governments and activists monitor those firms that do report but firms are not providing the right kind or sufficient information to facilitate effective monitoring; and
  • can do little to empower workers.

KASEY MCCALL-SMITH and ANDREAS RUHMKORF, ‘Sustainable global supply chains: From transparency to due diligence’

In recent years, global supply chains have repeatedly been in the spotlight for gross violations of human rights at supplier factories. Those factories are often located in countries of the developing world with weak laws and/or weak law enforcement mechanisms. Due to public pressure and on reputational grounds, transnational corporations have, for some decades now, addressed those issues through voluntarily adopted private governance CSR initiatives. However, reports about gross human rights violations are recurrent. Therefore, discussions at both international and national level are now increasingly focussing on the topic of supply chain due diligence as a way to better promote responsible behaviour. Following international soft law approaches to addressing CSR in global supply chains, there are now different legislative approaches towards regulating supply chain due diligence in the home states of transnational corporations. This trend is partly due to the UN Guiding Principles on Businesses and Human Rights. These pieces of legislation have varying levels of stringency and varying effects on corporate behaviour. They range from transparency legislation such as in the UK Modern Slavery Act 2015, the Sarbanes Oxley Act on conflict minerals in the US, the EU Directive on nonfinancial information disclosure to the UK Bribery Act 2010.

This paper will combine public international law perspectives on human rights due diligence in global supply chains with domestic private law and domestic corporate criminal law perspectives. The paper will first approach the meaning and scope of the concept of due diligence in global supply chains. It will then assess due diligence from a public international law perspective before critically engaging with the way how it has been implemented into domestic legislation. The paper will draw on empirical insights gained by analysing and comparing corporate documents such as codes of conduct, policies and reports from a small sample of companies that are subject to the UK Modern Slavery Act, the US conflict mineral legislation and the UK Bribery Act. The paper will use this empirical evidence to compare the way how companies address due diligence in the context of different forms of home state legislation. The analysis will lead to policy suggestions for the way forward for home state regulation of human rights due diligence in global supply chains.

KARIN BUHMANN, '"Smart" regulation between the law and the market: Reflections on the EU's FLEGT scheme, pitfalls and opportunities

Implementing EU policy objectives and values, the EU’s approach to fighting illegal forestry through the Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan adopted in 2003 involves multiple forms of law in the EU and timber-producing tropical countries, combined with privileged market access and law and governance reforms and institutions in timber-exporting countries. Two Regulations regulate at the level of the EU market and its actors, while agreements with partner countries aims to drive change in those.

This form of regulation may be characterized as an example of ‘smart’ or intelligent regulation that draws on a diversity of soft and hard law elements combined with (typically economic or reputational) incentives and policy measures. ‘Smart’ regulation is a work in progress, but recognised to have considerable potential for advancing sustainable business. This has been recognised, i.a., by the UN Guiding Principles on Business and Human Rights, and the EU’s 2011 Communication on CSR. As a work in progress, the deployment of ‘smart’ regulation to reach intended objectives without causing adverse side-effects naturally encounters challenges. These challenges are a timely and relevant issue for the SMART project that may draw on past experiences for its future research and policy proposal developments and improvements of ‘smart’ regulatory theory.

This paper draws on research on the FLEGT scheme and its implementation for that purpose. The FLEGT scheme is an early example of the EU’s efforts to drive sustainability through privileged access to the EU market in combination with EU hard law, trade treaties, and treaty-based commitments of exporting countries to introduce changes of national law and governance for the purpose of advancing a specifically defined sustainability issue (in the case of FLEGT, legally produced and imported timber).

Discussing the FLEGT scheme from the theory perspective of Multi-Level Regulation (MLR), a transnational law strand particularly applied in regards to the EU area and EU law, this paper draws on the cases of Vietnam and Indonesia for empirical insights and expands application of MLR studies beyond the intra-EU focus that has characterized much previous MLR scholarship. Recognising that MLR approaches offer opportunities for regulators to influence law and governance extraterritorially to advance sustainability objectives, the paper identifies examples of impact on host-state law but also risks of institutionalization of adverse practices through new formal law. Market access in combination with legality verification is a powerful driver for reforms. However, legitimacy and accountability issues arise when regulators influence law and governance affecting individuals, firms and public institutions that have no direct democratic influence on the framing conditions. These points need to be carefully assessed by scholars as well as regulators to ensure that efforts to implement certain EU values extraterritorially do not conflict with other values, or risk creating opposition in partner states. Such opposition is likely not be conducive to the success of joint efforts, including the confidence that the market must have in transparency and verification for such measures to complement hard law, monitoring and enforcement.

Based on this case study the paper draws up perspectives for the SMART research and policy agenda.

Day 2: SESSION 1

INVESTMENT AND DIVESTMENT CONFLICTS

BENJAMIN J. RICHARDSON, ‘Fossil Fuels Divestment – Can it Work?’ (skype paper)

Is fossil fuels divestment likely to achieve its aims? This presentation evaluates the rationales of divestment for their capacity to give the campaign influence. In seeking to end fossil fuel industries in order to halt climate change, the campaign deploys a variety of arguments to win support and wield influence, namely: the legality and indeed emerging duty to divest; investors’ moral responsibility to avoid complicity in the fossil fuels economy; their moral responsibility to use their leverage against climate polluters; and the power of financial sanctions to create a business case for abandoning fossil fuels. Each of these asserted rationales has some limitations that may diminish the influence of the divestment movement, although in combination they may be effective. Moreover, the movement does not engage sufficiently with the systemic qualities of finance capitalism that must also be reckoned with in order to address broader patterns of environmental unsustainability. The divestment movement may achieve greater influence by seeking government regulation of the financial economy.

DANIEL BEHN, TARALD LAUDAL BERGE AND MALCOLM LANGFORD, ‘Poor states or poor governance? Explaining outcomes of investment treaty arbitration’

Is investment treaty arbitration (ITA) tarnished by a bias against developing states? The international investment regime relies heavily on arbitration for the enforcement of its substantive rules but critique has risen as the number of foreign investor claims have stacked up in recent years. Current empirical research is ambiguous in its evaluation of ITA outcomes, but an interesting strand finds that the difference in treatment afforded to developed and developing respondent states in ITA seems to be explained by a conflation of democratic governance and economic development status. We present an elaboration of this conflation theory and, using the largest dataset of ITA cases compiled to date, we conduct a more thorough empirical test of its tenets. Our findings importantly determine that, instead of an anti-developing state bias disfavoring less developed respondent states in ITA, there appears to be a strong pro-developed state bias favoring more developed respondent states in ITA. That is, higher economic development at the respondent state level is associated with lower claimant-investor success rates in ITA. However, we also find partial support for the conflation theory. While a state’s overall democratic governance levels per se do not explain the pro-developed respondent state favoritism in ITA, we find that two particular governance aspects – the strength of a state’s ability to protect property rights and the degree to which a state maintains impartial bureaucracies – can possibly explain higher degrees of respondent state success in defending against ITA claims. The strength of these state-level governance institutions also possibly explains why relatively wealthy respondent states fare better in ITA than other respondent states.

AHMAD GHOURI, ‘Treaty Conflicts in Investment Arbitration’

The investor-State arbitration as a system is facing great challenges of balancing investors’ rights under investment treaties against the citizenry rights. The common citizenry rights, such as the right to health, safety, and the environmental protection, are frequently at stake in investor-State disputes. In addition to domestic laws and constitutions, such citizenry rights are the subject matter of many international treaties. The primary questions addressed by this paper are: Where States have acquired binding obligations under their parallel investment and non-investment treaties, are there instances when these different sets of treaty obligations interact with each other? What if the obligations acquired by a state from an investment and a non-investment treaty conflict with each other? Would a conflict in such parallel treaty obligations call for reconciliation or balancing? If yes, what is the underlying assumption of such reconciliation or balancing? In the context of these questions, this paper primarily argues that although citizenry rights may exist in treaties concluded by States, investor-State tribunals have not fully benefitted from the relevance of such rights in the interpretation of investment treaties. The paper showcases legal bases for interaction between obligations arising from different treaties under the VCLT rules on treaty interpretation, and discovers whether investor-State tribunals have or could have benefited from such interaction to address its systemic challenges.

Day 2: SESSION 2

SUSTAINABILITY AND INVESTMENT

YING-JUN LIN, ‘Reconciling the past to the future: the role of treaty interpretation in the implementation of sustainable development in international investment law’

The vast majority of discussions of the sustainable development concentrates efforts on how to picture the future vision that sustainable development ought to be. An unexplored and missing issue is how to implement the concept of sustainable development in the present international disputes? The future vision of the sustainable development in international law can be achieved through the amendment of existed rules and renegotiation of new treaties. However, in the transition period of reconstruction of rules and treaties, the issue could be tackled by treaty interpretation.

This study is aimed to explore the influence of the practice of treaty interpretation on the implementation of sustainable development in international investment law. The reasonable person test in light of the notion of balance is suggested in the conclusion. The suggestion is based on the two arguments. The first argument is about the gap between the past commitments and the present disputes. The notion of balance being applied in the present practice gives the flexibility to incorporate the concept of sustainable development. The need to balance rights and obligation between private sectors and public authorities is also experienced in the concept of sustainable development. In the similar ideological demand, the notion of balance grants the possibility to fulfill the gap between the past commitments and the new regulatory pattern.

The second argument is related to the acknowledgement gap between the Contracting States and the international society. The reasonable person test is suggested to fulfill this gap. In the mutual interaction of municipal and international laws, the reasonable person test has been widely accepted and applied by international authorities to prevent from uneven and imbalanced decision. The reasonable person test not only provides the leeway to incorporate the concept of sustainable development, but also fulfills the requirement of objectivity of investor-State awards.

AMY MAN, ‘A critical assessment of China (an emerging actor) and international investment law in the context of socio-economic rights in Ethiopia’

The rapprochement between China and African States is garnering much academic attention. The objective of this paper is to scrutinise one aspect of this relationship. That is the role of Chinese foreign direct investment (FDI) in African host States and the relevant legal and institutional frameworks, particularly focusing on Ethiopia as a case study country.

The Ethiopian Constitution affirms that economic development is a priority in order to enhance the domestic standard of living. However, as a host State for FDI, Ethiopia needs to ensure compliance not only with international investment law (IIL) norms, but also its obligations under the International Covenant on Economic, Social and Cultural Rights (1966). This paper seeks to critique China's bilateral investment treaty (BIT) with Ethiopia. Additionally, it questions whether, as an emerging actor in international investment, China can generate positive 'spillovers' that benefit socio-economic rights. To do so requires an examination of the trends within existing IIL and its relationship with international human rights law (IHRL) with particular focus on investment arbitration. The paper argues that there may be a positive dimension to Chinese FDI, but stronger legal and institutional frameworks in the host States are needed if it is to encourage the progressive realisation of socio-economic rights.

FATHIMA SHAMILA DAWOOD, ‘The principle of “common but differentiated” responsibilities in investment treaties to combat environmental degradation: A developing country perspective’

The principle of common but differentiated responsibilities (CBDR) address the unequal status of countries towards achieving the goals of concept of sustainable development (CSD). The main idea of this principle is to address how developed states can assist in the implementation of environmental related laws in developing countries, which are in a vulnerable situation to expose their development activities align with the CSD. Foreign investment is a reliable and sustainable avenue for developing countries to lead their economies towards a sustainable path since it involves capital inflows and technology transfer. At the same time, developed states will also be able to fulfill their duties to protect the common interest of mankind while performing their differentiated role. Nevertheless, existing investment treaties mostly focus on achieving economic objectives like protection of investment against non-commercial risks rather than addressing non-economic objectives. It reveals the fact that most of the investment treaties of developing countries are outdated and need to be revised in order to provide a standardized balanced treaty. Thus, understanding the CBDR principle at the initial stage of investment treaty making is paramount to define the duties and responsibilities of the contracting parties, and consequently result in producing a comprehensive legal framework which emphasizes contemporary issues. The CBDR principle has been discussed in relation to climate change and environmental law debates. Yet, existing investment treaties are not sufficiently admitted or recognized this principle in order to accentuate its practical application by acknowledging differentiated responsibilities of contracting parties. Only a few works of literature have addressed this issue, and current research seeks to fill the literature gap by examining CBDR principle to fight against environmental degradation in the context of investment treaty law. Since uncertainty and unsatisfactory procedure persist in the investment treaty to uphold CSD, this research will look at bilateral investment treaties that concluded with developing nations in general, South Asian in particular, to support the disparate challenges faced by these countries with limited choices.

Day 2: SESSION 3

SUSTAINABILITY IN FINANCE AND TAX

CELINE TAN, ‘Creative Cocktails or Toxic Brews? Blended finance and the regulatory framework for sustainable development’

Blended finance is the new catchphrase in international development cooperation. Referring broadly to financial instruments that combine public and philanthropic resources with private capital to support development and global public policy objectives, blended finance is deployed ostensibly to catalyse greater private capital flows to emerging and so-called ‘frontier’ markets through the public provision of financial incentives, such as subsidised loans, risk guarantees and co-financing, to private actors investing in developing countries. Proponents argue that blended finance is crucial to scaling up resources for sustainable development projects, including in agriculture, energy, and climate change mitigation and adaptation by mitigating risks, by lowering transaction costs and thereby increasing the commercial viability of such investments for private actors.

This paper examines the emergence of blended finance as mechanism for financing development and its implications for the international aid architecture and framework for international development cooperation. It argues that the growth of new public-private modalities of development financing, such as blended finance, reflects the progressive financialisation of the international public financial realm and a downgrading of the role of state – both at national and intergovernmental levels – in the financing and delivery of global public goods.

This, in turn, has implications for both the substantive outcomes of international development cooperation, such as food security, poverty reduction and environmental protection, and for the governance and regulatory framework of international development cooperation that is crucial not only to the delivery of such outcomes but to safeguarding the interests of stakeholders of sustainable development investments. The paper argues that without attendant regulatory reforms to the global financial system and the international aid architecture, the move towards blended finance and other so-called ‘innovative’ mechanisms for financing sustainable development integrates states and domestic economies into global financial markets without adequate safeguards for the sustainability and accountability of such financing.

YURI BIONDI, ‘Sovereign Debt Restructuring, Refinancing and the Financial Market: A Comment on Lienau’s “Rethinking Sovereign Debt”’

Lienau’s essay on ‘Rethinking Sovereign Debt’ delves into international finance to shed light on its background rules, overarching ideologies and interacting actors, disentangling the social norm of sovereign debt continuity and its institutional foundations. What a formalistic legal reasoning would interpret as a self-contained bilateral contract is then situated in historical time and social space populated by a variety of actors (debtors and creditors), co-existing legal regimes and evolving principles of reference. Her focus on odious debt highlights situations where debt continuity is challenged by major events in the sovereign borrower status (such as major political regime change, corruption and human rights abuse) which challenge debt legitimacy. This comment expands on her thoughtful analysis by linking debt continuity to the borrowing sovereign entity as a going concern. Sovereign borrowing makes lenders involved with this ongoing entity through time and circumstances. Ongoing sovereign debt management is jointly featured by debt securities market trading and the refinancing mechanism. In turn, refinancing relates to public finances with their public benefit missions, central banking and the monetary base management. Socially responsible lending and borrowing may then be facilitated by acknowledging the bonding relationship between the borrowing sovereign entity and its creditors, including when default occurs.

IRENE LYNCH FANNON, ‘Apple Tax – A Complex Story’

Corporate sustainability has been defined in previous work (Sustainable Companies Project) as when market actors create value in ways which are, amongst other concerns, economically sustainable. In the context of this paper this means that corporate actions ought to satisfy the economic needs necessary for stable and resilient societies. There is a clear imperative that multinational companies do not respond to a notional concept of ‘shareholder primacy’ with an agenda dominated by the avoidance of tax liabilities.
Nevertheless, in September 2016 the EU Commission ruled that 13billion Euros in taxes was owed by a globally respected ‘corporate citizen’-Apple Inc.- and that Ireland, a small member of the European Union, was responsible for collecting this tax. Ireland is appealing this decision.

Avoidance (distinguished from illegal evasion) of tax on the scale we are considering is destructive and antithetical to sustainable actions. 13 billion Euros represents a significant sum of monies required by governments to fund schools, hospitals, infrastructure and even aid programs. This paper places the interplay between Apple Inc., the Irish and US national tax authorities (California and US Federal), the EU Commission and OECD global tax initiatives such as BEPS (Base Erosion Profit Shifting) within the mapping framework set out by the SMART project. It will consider the interplay of national, international and supranational legislative systems, in addition to the concept of ‘regulatory ecology,’ with particular focus on the relationship between legal and social norms (the acceptability of tax avoidance). Our hypothesis is that this particular case study presents a ‘perfect storm’ allowing us to see how these regulatory arenas and types interface rather badly with each other. This is not a simple story of corrupt corporate or bureaucratic actions but rather a presentation of a complex range of problems which cannot be addressed by rushing to ill-considered conclusions.

Day 2: SESSION 4

FINAL CONCLUSIONS

LORRAINE TALBOT, ‘The Global Economy: The Grow or not to Grow Conundrum’

After decades of leading global growth, global trade is now contracting. World gross product is growing at barely registerable rates. Investment is at new historical lows. Since 2014, fixed capital formation has registered negative quarterly growth in 9 economies from developed to developing economies. (UNCTAD 2016) Such investment as there is focused on consolidating previous progress through buying trademarks, copyrights and patents. Investment in productive capital is the weakest part with the OECD stating baldly that investing in production is seen as bad business. Consequently, the post GFC period has witnessed sharp falls in labour productivity growth. Yet, ‘excessive’ growth, particularly in the production of tangibles, has been the target of many of those concerned with the environment, expressed in such global initiatives as the Kyoto Protocol. So is low growth really a problem or does it present an opportunity for sustainability? In this paper I argue that while a planned reduction in growth may have positive social and environmental outcomes, when it is unplanned it has the opposite effect. Capitalist health is measurable by high growth and slow or negative growth means more social inequality (Piketty) and less progressive innovation (Marx, Schumpeter). The paper aims to tease out an alternative approach to the growth and sustainability conundrum.

CLAIR GAMMAGE AND TONIA NOVITZ, ‘Comparisons between EU and global trade regulatory dilemmas’

Internal European Union (EU) trade norms operate in ways that give entitlements to private actors and, also, constrain their activities. In this paper, we consider the ways in which the four freedoms of movement (goods, services, establishment and workers) are defined with reference to the notion of sustainability alongside environmental and social protections. We then consider the extent to which EU norms can serve as a model for treatment of sustainability within the World Trade Organisation (WTO) or for norms negotiated in trade agreements. Sensitive to the issue of State interests, which formally predominate in international law, we seek to offer options for promotion of sustainable development, which are adapted to current concerns around global trade. In particular, we argue that the background redistribution around wealth and infrastructure between EU States needs to be replicated on the international stage for certain normative structures to be viable.

BEATE SJÅFJELL, ‘Concluding statements’