Ongoing negotiations over the proposed Transatlantic Trade and Investor Partnership (TTIP) and the Transpacific Partnership (TPP) have brought to light the democratic impacts of international investment law. Detractors note a lack of awareness at the national level concerning the rights these agreements confer on multinational corporations and the potential restrictions they place on national social, environmental and human rights policy. Proponents stress that prospective economic gains outweigh any concerns and that these agreements must be expedited in order to encourage economic growth.
This debate is relevant to Myanmar as it reforms its investment law and engages with international investment regime. Investment law seeks to insulate investment from unreliable national legal systems and provide recourse to international arbitration for corporations concerning disputes with governments that nationalize their assets. Corporations have reservations about Myanmar’s legal system. They cite the lack of a rule of law as one of the main obstacles to investment. Myanmar will come under tremendous pressure to engage with international investment law. Already, the government has signaled its compliance by signing the New York Convention and by courting bilateral investment treaties.
The problem with international investment law highlighted by social, environmental and human rights advocates is that it has evolved beyond protection against nationalization to encompass regulatory expropriation; it affords corporations standing at investor-state dispute resolution mechanisms (ISDM) to challenge national policies that impact their profits. Commentators such as George Monbiot, Joseph Stiglitz and analysts at the unremitting Private Eye (no.1353) decry the regulatory chill that investment law casts over governments. They also note that those negotiating these agreements often have links to the corporations that stand to gain. It is argued that corporations are securing legal powers through an opaque and obscure international process that limits democratic participation and prevents states from regulating and even taxing corporations.
States that sign onto investment treaties sacrifice sovereignty and can be sued independently by corporations. ISDMs have been used to challenge a range of national policies related to human rights and environmental concerns. For example, Veolia is currently attempting to sue the Egyptian government over recent increases in the minimum wage. Vattenfall has filed a case against the German government for restricting the use of nuclear power. Canada’s patent laws that restricted some US pharmaceutical operations have been challenged by drug company Eli Lilly. The Australian government’s restrictions of cigarette advertising, validated by the Australian Supreme Court, have been challenged by Philip Morris for the loss of its intellectual property. Argentina’s freeze on people’s energy and water bills was successfully challenged by international utility companies. El Salvador’s refusal to grant permission for a gold mine on environmental grounds has been challenged by a Canadian company for the loss of its anticipated future profits. Affirmative action programs in South Africa under the Black Economic Empowerment Act have been challenged. There is a growing list of similar arbitration cases that in the past would have required diplomatic intervention at the highest levels. Corporations are no longer held back by international relations or legal notions of sovereign immunity.
There is also controversy over whether international investment law treaties actually encourage enough investment to make this sacrifice of sovereignty worthwhile. South Africa has reevaluated its position and will no longer automatically renew its post apartheid agreements. Brazil has never signed any. Many Latin American states are reneging on or attempting to renegotiate their investment treaties. India and some European states are beginning to demand regulatory protection in the ISDM process. Does this signal a change in the neoliberal economic consensus that underpins the network of international investment treaties?
Myanmar has shown some foresight in its investment law by laying out regulatory conditions protecting its policy making ability. The law sets out the permitted activities for foreign investors and introduces regulations on applying for an investment license, the use of land, transfer of shares, remittance of foreign exchange and the taking of security on land and buildings. Myanmar has plentiful natural resources that attract investment and should be able to promote sustainable development and human rights without dissuading foreign corporations. It remains to be seen whether these restrictions will be utilized to protect national social, environmental and human rights policy making space. Even if the government does assert its regulatory powers will its international investment commitments allow foreign investors to challenge and overrule future policy designed to protect these fundamental concerns?