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Since 2012 I have been the UN Independent Expert on the Promotion of a Democratic and Equitable International Order. Among the many threats to this international order are the way free trade and investment agreements are secretly negotiated and the adverse human rights impacts ensuing from their implementation. Particularly problematic is the investor-State-dispute settlement mechanism. I am submitting a full report to the Human Rights Council on these issues in September.

Special rapporteurs

It is time to inject international law and human rights law into the debate over existing and future agreements. While everyone would agree that reduction of trade barriers in the past has been generally beneficial, tariffs are already very low, and the purpose of these agreements seems to be geopolitical at the expense of domestic regulatory space.

Many economists including Nobel Prize laureate Joseph Stiglitz have challenged market fundamentalism and opposed the adoption of new agreements in their current form. They are in fact, a “lose-lose” proposition.

While free trade is, in principle, a good thing, it must be compatible with the overall goal to advance human dignity and must not add to the staggering inequality among States and within States. Liberalism as an article of faith has failed to deliver.

Among the problems posed by free trade agreements are lack of transparency and accountability, the thoroughly undemocratic way of elaborating and negotiating the agreements whereby key stakeholders including labour unions, consumer unions, environmental protection experts and health professionals have been excluded.

Fast-tracking the adoption of treaties that have been negotiated in secret is a mockery of the democratic process and agreements adopted as a result of massive pressure by corporate lobbies have no democratic legitimacy.

Another serious source of concern are chapters on investor-state-dispute settlement, which provide for protection of investors and not of States or of the public interest. Indeed it is anomalous that while investors can sue States under ISDS, States cannot sue investors. Moreover, I see no justification whatever to allow the creation of a separate system of justice, which is not accountable nor appealable. ISDS should quite simply be eliminated from all future agreements.

But I am not only worried about future agreements. The world is already burdened by some 3200 bilateral investment treaties, and by multilateral agreements such as the Energy Charter Treaty, many of which have ISDS provisions. These must be modified or terminated.

It is inacceptable that investors can challenge a State’s function to legislate in the public interest. Arbitrations are currently pending pursuant to which corporations are challenging States for raising the minimum wage, for phasing out nuclear power plants, for reducing tobacco use. Unconscionable ISDS awards are exercising a worrisome “chilling effect” on governments.

In international law this situation is termed contra bonos mores, or contrary to the public interest, to domestic and international ordre public. As such they are null and void under the Vienna Convention on the Law of Treaties, Article 53.

Moreover, let us not forget that article 103 of the UN Charter stipulates that in case of conflict between the UN Charter and the provisions of any treaty, it is the UN Charter that prevails. Hence, to the extent that the policy space of States is negatively impacted by FTAs and human rights and development are adversely affected, the treaties must be modified or terminated.

Finally, let me mention two fundamental principles or ontologies

First, it is the ontology of States to legislate in the public interest, to advance the welfare of the people living under their jurisdiction

Second, risk-taking is in the very nature of business and investment. ISDS violates both ontologies.

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