* Administration says new model will help level playing
field
* U.S. party to 40 investment pacts, out of 3,000 worldwide
* Critic says new model no improvement over old
By Doug Palmer
WASHINGTON, April 20 (Reuters) – The U.S. government on
Friday said it has resolved a three-year internal debate on how
strongly to press countries like China to protect workers’
rights and the environment in negotiations on treaties to
protect U.S. foreign investment.
The U.S. State Department and the U.S. Trade
Representative’s office issued a joint statement outlining a
so-called “model BIT” (Bilateral Investment Treaty) that will be
used as a template in future negotiations.
The new terms of the treaty include demands foreign
governments not relax environmental or labor laws to draw
investment by U.S. companies. The debate over the terms
followed the changeover in government from the administration of
former President George W. Bush.
U.S. business groups applauded the long-awaited decision but
worried the stronger demands could make investment pacts too
hard to negotiate. Labor groups acknowledged a step forward, but
said the provisions were little more than “paper commitments”
because they could not be enforced.
The government’s statement said new language will “U.S.
companies benefit from a level playing field in foreign markets,
providing effective mechanisms for enforcing the international
obligations of our economic partners, and creating stronger
labor and environmental protections.”
The United States and other countries negotiate bilateral
investment treaties to protect their companies against
potentially unfair foreign government actions.
There are some 3,000 BITS in force around the world, of
which the United States is party to 40.
“We need to do everything we can to break down barriers to
America’s world-class goods and help U.S. companies compete in
markets around the world. The new model BIT will help us do
that,” Senate Finance Committee Chairman Max Baucus, a Montana
Democrat, said.
The Emergency Committee for American Trade, a U.S. business
group, welcomed the administration’s announcement and called for
quick resumption of investment talks with China, India, Vietnam
and Mauritius that have been on hold.
But the group, whose members range from heavy equipment
manufacturer Caterpillar to publisher McGraw-Hill
, said stronger U.S. labor and environment demands in the
model BIT “could be counterproductive” because they go further
than what other developed countries demand.
A spokeswoman for Senator Orrin Hatch, the top Republican on
the Senate Finance Committee, echoed that concern.
The new labor and environment obligations “are unjustified
on trade policy grounds and could inhibit countries like China,
Brazil and India from actually concluding bilateral investment
treaties with the United States,” Hatch aide Julia Lawless said.
Critics say the treaties, which must be approved by the
Senate, encourage U.S. companies to move production overseas and
allow them too easily to challenge government regulations that
could hurt the value of their investments.
One of the most outspoken critics, Lori Wallach, director of
Public Citizen’s Global Trade Watch, said the new model BIT was
basically the same as “the deeply flawed ‘old’ model.”
“At a time when multinationals like Chevron are using
BITs to evade justice and get out of environmental remediation
obligations, it is unthinkable that an Obama administration –
post-BP oil spill, post-Wall Street crash – would privilege the
rich at the expense of the 99 percent,” Wallach said.
Thea Lee, deputy chief of staff for the 12-million-member
AFL-CIO labor federation, said her group appreciated the
stronger labor and environmental provisions but was “deeply
disappointed” they could not be enforced through dispute
settlement mechanisms of the BITs.
“On balance, the new model BIT remains lopsided in terms of
granting overly broad rights and protections to multinational
corporations – threatening democratic decision-making processes
and outcomes – without requiring even the most basic minimum
standards of responsible behavior with respect to labor and the
environment,” Lee said.
The Bush administration launched BIT negotiations with China
and Vietnam in its waning months. Responding to concerns raised
by Democrats and labor groups, the incoming Obama administration
put talks on hold and instituted a review of the U.S. model BIT
in February 2009.
The U.S. Trade Representative’s office, in a Fact Sheet,
said the 2012 model BIT expands labor and environmental
obligations in “four important ways.”
It requires governments not to “waive or derogate” from
their own labor and environmental laws to attract investment or
to fail to effectively enforce those laws to attract investment.
U.S. BIT partners also must reaffirm their commitment to
core International Labor Organization principles, such as the
rights of workers to organize and bargain collectively, and
recognize the importance of international environmental
agreements, such as those protecting endangered species.
The new BIT model also contains “more detailed and extensive
consultation procedures (on labor and environment) than those
applicable under the 2004 model BIT,” USTR said.
The Obama administration also responded to growing concerns
about the role of foreign “state-owned enterprises” in
international trade by including provisions in the model BIT to
help level the playing field for U.S. companies.
