Inter Press Service » Trade & Investment http://www.ipsnews.net News and Views from the Global South Thu, 11 Feb 2016 17:21:29 +0000 en-US hourly 1 http://wordpress.org/?v=4.1.10 Eight Cooperation Accords Strengthen Ties between Colombia and UAEhttp://www.ipsnews.net/2016/02/eight-cooperation-accords-strengthen-ties-between-colombia-and-uae/?utm_source=rss&utm_medium=rss&utm_campaign=eight-cooperation-accords-strengthen-ties-between-colombia-and-uae http://www.ipsnews.net/2016/02/eight-cooperation-accords-strengthen-ties-between-colombia-and-uae/#comments Wed, 10 Feb 2016 18:53:12 +0000 Constanza Vieira http://www.ipsnews.net/?p=143849 The foreign ministers of Colombia, María Ángela Holguín, and the United Arab Emirates, Abdullah bin Zayed al Nahyan, signed eight cooperation accords late Tuesday Feb. 9 during the Emirati minister’s visit to the South American nation, during a ceremony in the San Carlos Palace, the foreign ministry in Bogotá. Credit: Gloria Ortega/IPS

The foreign ministers of the United Arab Emirates, Abdullah bin Zayed al Nahyanolombia, and Colombia, María Ángela Holguín, signed eight cooperation accords late Tuesday Feb. 9 during the Emirati minister’s visit to the South American nation, during a ceremony in the San Carlos Palace, the foreign ministry in Bogotá. Credit: Gloria Ortega/IPS

By Constanza Vieira
BOGOTÁ, Feb 10 2016 (IPS)

“I am honoured to be in Colombia at a time when important steps towards peace are being taken,” the foreign minister of the United Arab Emirates, Sheikh Abdullah bin Zayed Al Nahyan, said after meeting with Colombian President Juan Manuel Santos.

In Havana, the Santos administration is holding peace talks with the Revolutionary Armed Forces of Colombia (FARC) guerrillas, which have been fighting since 1964. Agreement has been reached on four of the six points on the agenda, including bringing in the United Nations Security Council to oversee any eventual ceasefire agreement.

“You have been caught up in a brutal civil war for a very long time,” said Al Nahyan. “Our region is also in the middle of a very difficult fight against terrorism.

“We would like to learn from your experience in dealing with terrorism and terrorists,” he added.

Late on Tuesday, Feb. 9, the first day of his two-day visit to Colombia, Al Nahyan and Colombia’s foreign minister María Ángela Holguín signed agreements in the areas of cooperation in infrastructure, tourism, trade and investment, renewable energies and culture.

“I’m convinced that through the United Arab Emirates we will be able to reach the Gulf countries, and get to know that region of the world better,” Holguin said during the ceremony held to announce the accords.

“We have all the tools needed to strengthen a very important relationship and continue along the road to generating more development for Colombia and greater opportunities for the UAE,” added Holguín, who described Al Nahyan’s visit as “very beneficial” for bilateral relations.

In the San Carlos Palace, Colombia’s foreign ministry, the two ministers signed four agreements, including a Foreign Investment Promotion and Protection Agreement (FIPA), which offers investors legal security “and will give Emirati companies peace of mind,” said Holguín.

 Colombian President Juan Manuel Santos greets the foreign minister of the United Arab Emirates, Abdullah bin Zayed al Nahyan, in the Casa de Nariño, the seat of the presidency, at the start of their Feb. 9 meeting in Bogotá during the Emirati minister’s visit to this South American country. Credit: Presidency of Colombia


Colombian President Juan Manuel Santos greets the foreign minister of the United Arab Emirates, Abdullah bin Zayed al Nahyan, in the Casa de Nariño, the seat of the presidency, at the start of their Feb. 9 meeting in Bogotá during the Emirati minister’s visit to this South American country. Credit: Presidency of Colombia

They also signed a Tax Information Exchange Agreement (TIEA), which was negotiated in February 2014 during a visit to Colombia by a UAE Finance Ministry delegation, and was pending the ministers’ signatures. The first round of negotiations on the FIPA was also held at that time.

In addition, the foreign ministers signed a Framework Agreement in Cultural, Educational and Sports Cooperation and a Memorandum of Understanding on Cooperation in Environmental Protection, Climate Change and Energy Efficiency, an area in which the two countries have acted in a coordinated manner in global diplomatic forums.

Finally, they signed an agreement from a meeting held Monday Feb. 8 in Bogotá by the Colombia-UAE Joint Cooperation Committee, which is pushing for a strengthening of the growing trade relations between the two countries.

After a meeting in which 60 members of the business communities from both countries took part, the UAE Federation of Chambers of Commerce signed memorandums of understanding with Colombia’s National Industrial Association and Confederation of Chambers of Commerce.

Documents on bilateral cooperation in tourism and innovation in small and medium companies were also signed.

Holguín said the agreements would expedite progress on “more documents” in the near future.

Colombia and the UAE established diplomatic ties 40 years ago. But it was the opening of embassies, in Abu Dhabi in 2011 and in Bogotá in 2013, that basically launched bilateral relations.

Colombia, according to the Emirati minister, was among the first countries to support the UAE’s candidacy to host the World Expo 2020 in Dubai, the first that will be held in the Middle East.

Colombia was the second stop in Al Nahyan’s official Latin America tour, which took him first to Argentina. After visiting the colonial city of Cartagena on Wednesday Feb. 10, to see the port infrastructure, he will continue on to Panama and Costa Rica, before heading home.

An enthusiastic Holguín said her Emirati guest “wants to see the ports, and we hope he will get excited and bring hotel owners to Cartagena, which would also be very important for development in our country.”

“The news is that, first, closer bilateral ties were forged with this tour, which will of course translate into numbers,” Cecilia Porras, the president of the Colombian-Arab Chamber of Commerce (CCCA), told IPS.

“The Arab press is giving a great deal of coverage to this tour because relations with each one of the countries of Latin America are giving a major boost to two-way investment, technology transfer and trade,” she added.

According to the CCCA , Colombia’s exports to the UAE reached 97.6 million dollars in 2014 – the last year for which solid figures are available – nearly double the 50.6 million of the year before, and a far cry from the 11.6 million in exports in 2012.

The difference between 2012 and the following two years is explained by Colombia’s oil exports to the UAE. Although it might sound strange for one of the world’s leaders in oil production to be importing oil from Colombia, the viscosity of this country’s petroleum is useful for the UAE’s blends and for use in the petrochemical industry.

Besides oil, Colombia has exported a variety of goods to the UAE, amounting to between 12 and 14 million dollars, said Porras.

These exports include cut flowers, plants, coffee – although through intermediaries in other countries, such as the United States – gold, emeralds, leather goods such as saddles, designer clothing, knitted fabrics, furniture, sugar and confectionary products, while the UAE exports to Colombia construction materials, doors, windows, ceramics and tubing, as well as petroleum by-products.

Visits to the UAE by Colombian tourists grew 23 percent between December 2014 and December 2015, based on the number of visas arranged by the CCCA, which organises business trips.

In 2014, during a visit by Holguín to the UAE, the two countries signed a memorandum of understanding for political consultation, aimed at facilitating dialogue on bilateral, regional or global issues.

The UAE and Colombia cooperated closely in the negotiations on the 2030 Sustainable Development Goals (SDGs) agenda. Colombia has also played an active role in the International Renewable Energy Agency (IRENA), based in Abu Dhabi.

In January, the Gabriel Plazas public school in the Colombian town of Villavieja, in the Tatacoa desert in the central department or province of Huila, was one of the eight 2016 winners of the Zayed Future Energy Prize, created in 2008 by the UAE government to celebrate innovation and leadership in renewable energy and sustainability.

The 100,000 dollar prize will enable the school to build a “bioclimatic” lunchroom using sustainable construction techniques from the past that keep the school cool in a natural manner, in a desert climate where temperatures remain between 22 and 38 degrees Celsius year-round.

The school will be equipped with solar energy and water extracted from deep wells by means of wind power.

According to data provided by local journalist Luisa Fernanda Dávila, from the Huila newspaper Opanoticias, the cafeteria will be used to serve a healthy lunch to the 539 students, who are the sons and daughters of poor farmers and families displaced by the armed conflict.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

]]>
http://www.ipsnews.net/2016/02/eight-cooperation-accords-strengthen-ties-between-colombia-and-uae/feed/ 0
Rural youth can be tomorrow’s entrepreneurshttp://www.ipsnews.net/2016/02/rural-youth-can-be-tomorrows-entrepreneurs/?utm_source=rss&utm_medium=rss&utm_campaign=rural-youth-can-be-tomorrows-entrepreneurs http://www.ipsnews.net/2016/02/rural-youth-can-be-tomorrows-entrepreneurs/#comments Tue, 09 Feb 2016 10:36:27 +0000 Nteranya Sanginga http://www.ipsnews.net/?p=143835 Nteranya Sanginga is the Director General of the International Institute of Tropical Agriculture ]]>

Nteranya Sanginga is the Director General of the International Institute of Tropical Agriculture

By Nteranya Sanginga
Ibadan, Nigeria, Feb 9 2016 (IPS)

Bolstering widespread prosperity in Africa is a key necessity if the world is to achieve its commitments to eradicate poverty and hunger by 2030.

Nteranya Sanginga, Director General of the International Institute of Tropical Agriculture (IITA). Courtesy of IITA

Nteranya Sanginga, Director General of the International Institute of Tropical Agriculture (IITA). Courtesy of IITA

The sheer numbers indicate the scale of the challenge, and also strong hints as to the path to pursue.

The continent’s population has doubled in three decades, and while urbanization has moved at a blistering pace, it has not offset the number of people living in rural areas. Agricultural productivity has in fact increased faster than the global average, but not fast enough to resolve the paradox of the continent with a majority of the world’s unfarmed arable land remaining a net importer of food.

Those are the facts. And they highlight some basic principles: Africa has huge potential, but progress must include the rural and agricultural sectors. Smallholders contribute around 80 percent of sub-Saharan Africa’s food supply, according to the Food and Agriculture Organization of the United Nations, and these are the critical enterprises that must be tapped to produce incomes, jobs and opportunities.

Much work is being done by governments and international organizations to shore up food security, through social protection and targeted agricultural development programs.

What we at the International Institute of Tropical Agriculture think is essential is that people themselves have to be enabled to truly leverage their own and their continent’s potential.

While there is absolutely a role for public policies and large private-sector initiatives to make this happen, individual empowerment is also essential.

On the surface, that is obvious. While our core mandate is to be the lead research partner facilitating agricultural solutions for hunger and poverty in the tropics, our core vision is based on the idea that the connecting links for the broad array of initiatives around the land, not always perfectly coordinated, are entrepreneurs.

Family farmers are far and away the world’s largest investors in agriculture. Likewise, bottom-up business activity is the most efficient way to maximize efficiency.

That is why IITA is investing heavily in spreading our Business Incubation Platform, a model closely linked to our Youth Agripreneurs programs and aimed at accelerating the rollout of a series of useful services to be offered along the value chain. Our approach is particularly geared to fostering productive and profitable opportunities for youth, especially rural youth.

Not all youth, after all, can permanently migrate to cities; and if they were to do so, the countryside would suffer from an ageing work force.

Let me emphasize that the goal here is to make money, not just spend it! I jest, but only to hammer home the point that real sustainability requires viable networks that can carry research ideas to positive fruition.

Consider NoduMax, one of our Business Incubation Platform’s star developments. This is a legume inoculant for soybeans that allows them to access more nitrogen from the air – which ultimately also improves soil fertility – and thus lead to up to 450 kilograms of additional yield per hectare. It’s easy to use and affordable.

The technology was developed in our Business Incubation Platform in Ibadan. Now the time is ripe to produce it in larger quantities and for sales networks to spread the word. All of this is a form of sustainably intensifying agricultural production and creating greater food security, and its driving force does not involve touching a till or needing to own new land.

We’re also developing aflasafe strains to combat the aflatoxins that are such a scourge to major staple crops across Africa. Aflasafe is a natural biological control product developed by IITA and partners to fight aflatoxin contamination. Again, we incubate its development, but it can easily be transferred to the private sector and scaled up in multiple sites, meaning more jobs in construction, manufacturing and as laboratory analysts.

Both products also of course increase the food supply – through yields or reduction of losses – and thus catalyze further commercial opportunities.

Projects in the works include an innovative fish-pond system and food-processing activities for our mandate crops: cassava, soybean, cowpea, yam, plantain and banana.

Operating our business incubation platform also means individuals naturally network, meeting partners, potential funders and others useful to an array of enterprises, which may range from innovative risk-sharing or credit-supply services to the discovery and establishment of new markets for both inputs and specialty crops. These “externalities” are intrinsic to the whole idea that agriculture is not an ancestral destiny for the poor but an exciting frontier that can be conquered by Africa’s burgeoning demographic group: Youth.

While policy makers have a lot of work to do to create enabling environments for smallholder farmer families to prosper, those environments must also be populated, and that is what we are trying to do.

(End)

]]>
http://www.ipsnews.net/2016/02/rural-youth-can-be-tomorrows-entrepreneurs/feed/ 0
Argentina and United Arab Emirates Open New Stage in Bilateral Relationshttp://www.ipsnews.net/2016/02/argentina-and-united-arab-emirates-open-new-stage-in-bilateral-relations/?utm_source=rss&utm_medium=rss&utm_campaign=argentina-and-united-arab-emirates-open-new-stage-in-bilateral-relations http://www.ipsnews.net/2016/02/argentina-and-united-arab-emirates-open-new-stage-in-bilateral-relations/#comments Fri, 05 Feb 2016 23:42:58 +0000 Fabiana Frayssinet http://www.ipsnews.net/?p=143816 The foreign minister of the United Arab Emirates, Sheikh Abdullah bin Zayed Al Nahyan, and his host, Argentina’s foreign minister Susana Malcorra, outside the San Martín Palace in Buenos Aires at the start of their meeting on Friday, Feb. 5. Credit: Government of Argentina

The foreign minister of the United Arab Emirates, Sheikh Abdullah bin Zayed Al Nahyan, and his host, Argentina’s foreign minister Susana Malcorra, outside the San Martín Palace in Buenos Aires at the start of their meeting on Friday, Feb. 5. Credit: Government of Argentina

By Fabiana Frayssinet
BUENOS AIRES , Feb 5 2016 (IPS)

With United Arab Emirates’ foreign minister Sheikh Abdullah bin Zayed Al Nahyan’s visit to Argentina, the two countries launched a new stage in bilateral relations, kicked off by high-level meetings and a package of accords.

On Friday, Feb. 5 Al Nahyan and his host, Argentina’s foreign minister Susana Malcorra, signed five agreements on taxation, trade and cooperation in the energy industry, after a meeting with other officials, including this country’s finance minister, Alfonso Prat-Gay.

The meeting in the San Martín Palace, the foreign ministry building, addressed “important” aspects of ties with the Gulf nation made up of seven emirates, an Argentine communiqué stated.

Al Nahyan’s visit took the UAE’s contacts to the highest diplomatic level with the new Argentine government of Mauricio Macri, who received the minister Friday in Olivos, his official residence, less than two months after being sworn in as president on Dec. 10.

After the meeting in the foreign ministry, the Emirati minister also met with Argentine Vice President Gabriela Michetti, and visited the Senate.

The day before, Al Nahyan was named guest of honour in Buenos Aires by the city’s mayor, Horacio Rodríguez Larreta, with whom he met after the ceremony.

In the meeting between Al Nahyan and Malcorra, a tax information exchange agreement was signed, along with an accord between the Argentine Industrial Union and the UAE Federation of Chambers of Commerce aimed at “establishing a joint business council.”

The foreign ministers of Argentina, Susana Malcorra, and the United Arab Emirates, Sheikh Abdullah bin Zayed Al Nahyan, exchange tax agreements signed during their meeting in Buenos Aires on Friday Feb. 5. Credit: Government of Argentina

The foreign ministers of Argentina, Susana Malcorra, and the United Arab Emirates, Sheikh Abdullah bin Zayed Al Nahyan, exchange tax agreements signed during their meeting in Buenos Aires on Friday Feb. 5. Credit: Government of Argentina

The governor of the southern Argentine province of Neuquén, Omar Gutiérrez, was also present at the meeting, where an agreement was reached to grant a loan to that region to finance the Nahueve hydroelectric project through the Abu Dhabi Fund for Development (ADFD), in the town of Villa del Nahueve.

A four-MW hydroelectric plant will be built in that town of 25,000 people in southern Argentina with an investment of 18 million dollars, through a soft loan, the secretary-general of the Argentine-Arab Chamber of Commerce, Walid al Kaddour, told IPS.

According to the Chamber, trade between the two countries stood at 228 million dollars in 2014, with Argentina exporting nearly 198 million dollars in mainly foodstuffs and steel pipe and tube products.

As Al Kaddour underlined, “there is a great deal of room to grow (in bilateral ties), especially taking into account that the United Arab Emirates is located at a strategic point linking the West with the East.”

He explained that products can be re-exported to all of Asia from the Emirati city of Dubai, because “it is a very important distribution hub.”

The population of the UAE is just barely over nine million, “but it can reach a market of 1.6 billion inhabitants, and it has major logistics infrastructure enabling it to re-export products,” he said.

Al Kaddour said the UAE’s chief interest is importing food, “which is what Argentina mainly produces,” although he said the Gulf nation could also buy raw materials as well as manufactured goods.

The UAE at one point imported up to 1,000 vehicles a year from Argentina, he pointed out.

According to Al Kaddour, another aim of the Emirati minister’s visit was “to meet Argentina’s new administration.”

Macri, of the centre-right “Cambiemos” alliance, succeeded Cristina Fernández of the centre-left Front for Victory, who had strengthened ties with the UAE during an official visit to Abu Dhabi in 2013, where an agreement on cooperation in nuclear energy for peaceful purposes was signed.

“The UAE has pinned strong hopes on the new administration in Argentina,” said Al Kaddour. “The last few years have also been positive in terms of building a friendlier relationship.

“The idea now is to move towards concrete things, such as investment projects in different areas, like renewable energy and agriculture,” he added.

In an article sent to the Argentine daily Clarín, Al Nhayan stressed that “the ties of friendship between Argentina and the United Arab Emirates are strong” and the two countries “are united by shared economic interests.”

He added that “we hope to be able to work with the president, and we believe that together we can bring many benefits to our two countries and our people.”

He also emphasised that his country is seen as “the future gateway for access to Argentine products to the Middle East.”

Emirati sources told IPS that the UAE minister and the Buenos Aires mayor discussed questions such as sustainable urban development and solar energy – an area in which the Gulf nation is interested in cooperating with Argentina.

Although it is a leading oil producer, the UAE is considered a pioneer in the development of unconventional renewable energies, which it is fomenting as the foundation of clean development that will curb climate change.

In Argentina, Al Nahyan kicked off his Latin America tour that will take him to Colombia, Panama and Costa Rica through Feb. 12.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

]]>
http://www.ipsnews.net/2016/02/argentina-and-united-arab-emirates-open-new-stage-in-bilateral-relations/feed/ 0
TPP: Lessons from New Zealandhttp://www.ipsnews.net/2016/02/tpp-lessons-from-new-zealand/?utm_source=rss&utm_medium=rss&utm_campaign=tpp-lessons-from-new-zealand http://www.ipsnews.net/2016/02/tpp-lessons-from-new-zealand/#comments Tue, 02 Feb 2016 12:42:44 +0000 Jomo Kwame Sundaram http://www.ipsnews.net/?p=143753

Jomo Kwame Sundaram was an Assistant Secretary-General responsible for analysis of economic development in the United Nations system during 2005-2015, and received the 2007 Wassily Leontief Prize for Advancing the Frontiers of Economic Thought.

By Jomo Kwame Sundaram
KUALA LUMPUR, Malaysia, Feb 2 2016 (IPS)

A new paper* on the implications of the Trans-Pacific Partnership (TPP) Agreement for New Zealand examines key economic issues likely to be impacted by this trade agreement. It is remarkable how little TPP brings to the table. NZ’s gross domestic product will grow by 47 per cent by 2030 without the TPP, or by 47.9 per cent with the TPP. Even that small benefit is an exaggeration, as the modelling makes dubious assumptions, and the real benefits will be even smaller. If the full costs are included, net economic benefits to the NZ economy are doubtful. The gains from tariff reductions are less than a quarter of the projected benefits according to official NZ government modelling. Although most of the projected benefits result from reducing non-tariff barriers (NTBs), the projections rely on inadequate and dubious information that does not even identify the NTBs that would be reduced by the TPP!

Jomo Kwame Sundaram. Credit: FAO

Jomo Kwame Sundaram. Credit: FAO

Agriculture
The main beneficiaries in NZ will be agricultural exporters, but modest tariff reductions of 1.3 per cent on average by 2030 are small compared to ongoing commodity price and exchange rate volatility. Extensive trade barriers to agricultural exports in the Japanese, Canadian and US food markets remain, and will be locked in under TPP. TPP has also failed to tackle agricultural subsidies that are a major trade distortion. Significant tariff barriers remain in some sectors in Japan, Canada and the US likely to be ‘locked in’ under the TPP that are almost impossible to remove in the future. TPP’s Sanitary and Phytosanitary Measures limits on labelling may also restrict opportunities for food exporters to build high quality, differentiated niche market positions.TPP has also been used to undermine negotiations in the World Trade Organization, the only forum for removing such trade distorting subsidies.

ISDS
TPP’s investor-state dispute settlement (ISDS) provisions and restrictions on state-owned enterprises will deter future NZ governments from regulations and policies in the public interest, for fear of litigation by corporate interests. The threat, if not actual repercussions, are good enough to ‘discipline’ governments by causing ‘regulatory chill’. TPP is very much a charter for incumbent businesses, especially US transnational corporations. Thus, it inadvertently holds back the economic transformation the world needs. The agreement’s TPP’s benefits are likely to be asymmetric as it is more favourable to big US business practices and will deepen the disadvantages of small size and remoteness. Potential ISDS compensation payments or settlements could far outweigh the limited economic benefits of TPP. Even when cases are successfully defended, the legal costs will be very high.

Value-addition
TPP can both help and hinder ambitions to add value to raw materials and commodities, and to progress up value chains. However, it is likely to reinforce NZ’s position as a commodity producer and thus hinder progress up the value chain where greater economic prosperity lies. More analysis based on the actual agreement is required to ascertain the conditions for and likelihood of such progress. TPP will limit government’s ability to innovate and address national challenges and is likely to worsen rapidly escalating problems such as environmental degradation and climate change.

Furthermore, TPP is projected to reduce employment and increase income inequality in NZ. In its analysis, the government has not considered the likely costs, which are probably going to be very significant, and may well outweigh economic benefits.

TPP thus falls well short of being “a trade agreement for the 21st century”, as its cheerleaders claim. A more comprehensive, balanced and objective cost-benefit analysis on the basis of the October 2015 deal should be completed before ratifying the TPP.

*The report is available at: https://tpplegal.files.wordpress.com/2015/12/ep5-economics.pdf

]]>
http://www.ipsnews.net/2016/02/tpp-lessons-from-new-zealand/feed/ 0
United Arab Emirates Strengthens Ties with Argentina’s New Governmenthttp://www.ipsnews.net/2016/02/united-arab-emirates-strengthens-ties-with-argentinas-new-government/?utm_source=rss&utm_medium=rss&utm_campaign=united-arab-emirates-strengthens-ties-with-argentinas-new-government http://www.ipsnews.net/2016/02/united-arab-emirates-strengthens-ties-with-argentinas-new-government/#comments Mon, 01 Feb 2016 17:20:02 +0000 Fabiana Frayssinet http://www.ipsnews.net/?p=143740 The Four Seasons hotel in the upscale Buenos Aires neighbourhood of Recoleta was remodeled this decade with a multi-million dollar investment by the Dubai-based Albwardy Investment Group. This is just one example of investment in Argentina by the United Arab Emirates, which is expected to increase in different sectors as a result of the visit here by the UAE’s foreign minister, Sheikh Abdullah bin Zayed Al Nahyan. Credit: Fabiana Frayssinet/IPS

The Four Seasons hotel in the upscale Buenos Aires neighbourhood of Recoleta was remodeled this decade with a multi-million dollar investment by the Dubai-based Albwardy Investment Group. This is just one example of investment in Argentina by the United Arab Emirates, which is expected to increase in different sectors as a result of the visit here by the UAE’s foreign minister, Sheikh Abdullah bin Zayed Al Nahyan. Credit: Fabiana Frayssinet/IPS

By Fabiana Frayssinet
BUENOS AIRES , Feb 1 2016 (IPS)

The new government of Argentina and the United Arab Emirates (UAE) are strengthening the relationship established by the previous administration, at a time when this South American country is seeking to bring in foreign exchange, build up its international reserves and draw investment, in what the authorities describe as a new era of openness to the world.

Bilateral ties will be boosted during a visit to the Argentine capital by the UAE’s foreign minister, Sheikh Abdullah bin Zayed Al Nahyan, on Feb. 4, the start of his Latin America tour which will also take him to Ecuador, Colombia, Panama and Costa Rica before he flies out of the region on Feb. 12.

After several high-level meetings on Feb. 5, the minister’s visit will end with the signing of five agreements on taxation, sports, cooperation between the state news agencies Telam (Argentina) and WAM (UAE), and an Emirati loan to the southern province of Neuquén.

Mauricio Macri, who was sworn in as president of Argentina on Dec. 10, already indicated his interest in stronger ties when he met on Jan. 20, during the World Economic Forum in Davos, Switzerland, withHamad Shahwan al Dhaheri, executive director of the private equities department of the Abu Dhabi Investment Authority (ADIA).

ADIA, considered the second-largest sovereign wealth fund in the world, manages the excess oil revenues of the UAE, a federation of seven emirates: Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah and Umm al-Quwain.

The centre-right Macri, of the Cambiemos coalition, and Al Dhaheri“discussed the prospects opening up for Argentina and were enthusiastic about this new era for the country,” Telam reported from Davos.

The news agency was referring to the end of 12 years of government by the late Néstor Kirchner (2003-2007) and his widow and successor, Cristina Fernández (2007-2015), of the Front for Victory, the Justicialista (Peronist) Party’s centre-left faction, which defines itself as anti-neoliberal.

“Argentina has to position itself as a serious, predictable interlocutor,” this country’s foreign minister, Susana Malcorra, said in Davos.

“The question of economic opening, the search for investment and business opportunities is essential in our agenda,” she stressed.

According to a report from its embassy in Buenos Aires, the UAE has a significant presence in international capital markets through different investment institutions, such as ADIA, Dubai Ports World, Dubai Holding and Abu Dhabi’s International Petroleum Investment Co.

The then president of Argentina, Cristina Fernández, with her host, United Arab Emirates President Khalifa bin Zayed Al Nahyan, at a January 2013 meeting in Abu Dhabi during her official visit to the Gulf nation when bilateral relations were given a major boost. Credit: Government of Argentina

The then president of Argentina, Cristina Fernández, with her host, United Arab Emirates President Khalifa bin Zayed Al Nahyan, at a January 2013 meeting in Abu Dhabi during her official visit to the Gulf nation when bilateral relations were given a major boost. Credit: Government of Argentina

The UAE is a timely interlocutor for Argentina, Luis Mendiola, an expert on the Middle East, the Arab world and Africa with the Argentine Council for Foreign Relations (CARI), underlined in an interview with IPS.

“Their biggest problem is the extraordinary abundance of capital…the question is where to put it to get the best returns on the extraordinary surplus capital they produced during nearly a decade and a half of high oil prices,” added Mendiola, who served as ambassador to Saudi Arabia from 1996 to 2005.

New opportunities

As part of its strategy of strengthening ties with Latin America, the foreign ministry of the United Arab Emirates held a workshop in Abu Dhabi in December with diplomats from Argentina, Colombia, Ecuador and Panama, with the participation of some 70 UAE governmental, semi-governmental and private organisations.

At the workshop, the director of the foreign ministry’s department of economic affairs and international cooperation, Fahad al Tafaq, stressed the UAE’s interest in taking ties with Latin America “to a higher level” in order to serve common interests, WAM, the Emirates news agency, reported from Abu Dhabi.

The participants in the workshop discussed opportunities for investment and strategic alliances in sectors like energy, environment, technology, tourism, agriculture, mining, peaceful uses of nuclear energy, infrastructure and natural resources.

These funds, he said, could go into major infrastructure projects in areas like housing, energy, transport and communications.

In January 2015, the authorities in the southern Argentine province of Neuquén reported that they had secured an 18 million dollar loan from the Abu Dhabi Fund for Development, to finance the Nahueve Hydroelectric Project for the promotion of irrigation in new productive areas, among other aims.

The two countries established diplomatic ties in 1975 and opened embassies in 2008. But relations moved to a new plane when President Fernández visited Abu Dhabi in January 2013, where she met with UAE President Khalifa bin Zayed al Nahyan.

During that visit, cooperation agreements were signed in the area of food, with the opening of the Emirati market to non-traditional Argentine products, and this country opened its first business office in the UAE.

In 2014, as the Argentine-Arab Chamber of Commerce informed IPS, trade between Argentina and the UAE amounted to 228 million dollars, with this South American country enjoying a surplus, exporting 198.9 million dollars in mainly foodstuffs and steel pipe and tube products.

But Mendiola believes there is greater potential to tap because besides boasting one of the highest per capita incomes in the Gulf, the UAE is a business hub which re-exports products to third countries and large markets, such as Saudi Arabia, India, Iran and Pakistan.

Bilateral ties were reinforced in April 2014, with a visit to Argentina by Mohammed bin Rashid Al Maktoum, vice president and prime minister of the UAE and emir of Dubai.

A memorandum of understanding for cooperation in the peaceful use of nuclear energy was signed during that visit.

On that occasion, Fernández emphasised the Argentina forms part of the “exclusive club” of nations “that can produce nuclear energy, but that do so on a non-proliferation basis.”

The then president also referred to the UAE’s “enormous interest” in investing in Argentina and financing projects aimed at bolstering food security.

In November 2015, with support from the local government, five family farming cooperatives from Argentina took part in an international specialty food festival in Dubai.

During the meeting in Buenos Aires, agreements were also reached to promote tourism initiatives and projects in renewable energy – an area in which the UAE, despite its status as one of the world’s largest oil producers, is considered a pioneer among the Gulf countries and even at the international level, Mendiola noted.

“The Emiratis are very good at forging ahead and moving into new areas, and in that sense they are a model, at least in the Gulf region,” he added.

During his visit to Argentina, Al Maktoum remarked that his country did not invest “according to preferences or political motives, but based on economic questions.”

For that reason Mendiola said he was not “surprised” by the UAE’s interest in Latin America “because the Gulf countries in general have always had extremely pragmatic foreign policies which are at the same time modest, in terms of maintaining a low profile.”

“I think the difference now is they are taking advantage of the fact that there is a new government in Argentina, which presents itself to the world as very different from the last one, and that is raising a lot of interest because they have an extraordinary level of reserves as well as investment abroad,” he said.

Mendiola pointed out that the UAE did not have a “clear” presence in Latin America until recently, unlike in Africa and Asia.

“Up to now, South America was a caboose for the Gulf countries, from the point of view of their economic interests. And the change in government without a doubt awakened curiosity and interest in seeing how to best take advantage of these opportunities,” he added.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

]]>
http://www.ipsnews.net/2016/02/united-arab-emirates-strengthens-ties-with-argentinas-new-government/feed/ 0
The Lesson from Davos: No Connection to Realityhttp://www.ipsnews.net/2016/01/the-lesson-from-davos-no-connection-to-reality/?utm_source=rss&utm_medium=rss&utm_campaign=the-lesson-from-davos-no-connection-to-reality http://www.ipsnews.net/2016/01/the-lesson-from-davos-no-connection-to-reality/#comments Wed, 27 Jan 2016 18:04:26 +0000 Roberto Savio http://www.ipsnews.net/?p=143712

Roberto Savio, founder and president emeritus of the Inter Press Service (IPS) news agency and publisher of Other News

By Roberto Savio
ROME, Jan 27 2016 (IPS)

The rich and the powerful, who meet every year at the World Economic Forum (WEF), were in a gloomy mood this time. Not only because the day they met close to eight trillion dollars has been wiped off global equity markets by a “correction”. But because no leader could be in a buoyant mood.

Roberto Savio

Roberto Savio

German Chancellor Angela Merkel is losing ground because of the way she handled the refugee crisis. French President Francois Hollande is facing decline in the polls that are favoring Marine Le Pen. Spanish president Mariano Rajoy practically lost the elections. Italian President Matteo Renzi is facing a very serious crisis in the Italian banking system, which could shatter the third economy of Europe. And the leaders from China, Brazil, India, Nigeria and other economies from the emerging countries (as they are called in economic jargon), are all going through a serious economic slowdown, which is affecting also the economies of the North. The absence of the presidents of Brazil and China was a telling sign.

However the last Davos (20-23 January) will remain in the history of the WEF, as the best example of the growing disconnection between the elites and the citizens. The theme of the Forum was “how to master the fourth revolution,” a thesis that Klaus Schwab the founder and CEO of Davos exposed in a book published few weeks before. The theory is that we are now facing a fusion of all technologies, that will completely change the system of production and work.

The First Industrial Revolution was to replace, at beginning of the 19th century, human power with machines. Then at the end of that century came the Second Industrial Revolution, which was to combine science with industry, with a total change of the system of production. Then came the era of computers, at the middle of last century, making the Third Industrial Revolution, the digital one. And now, according Schwab, we are entering the fourth revolution, where workers will be substituted by robots and mechanization.

The Swiss Bank UBS released in the conference a study in which it reports that the Fourth Revolution will “benefit those holding more.” In other words, the rich will become richer…it is important for the uninitiated to know that the money that goes to the superrich, is not printed for them. In other words, it is money that is sucked from the pockets of people.

Davos created two notable reactions: the first came with the creation of the World Social Forum (WSF), in 1991, where 40,000 social activists convened to denounce as illegitimate the gathering of the rich and powerful in Davos. They said it gave the elite a platform for decision making, without anything being mandated by citizens, and directed mainly to interests of the rich.

The WSF declared that “another world is possible,” in opposition to the Washington Consensus, formulated by the International Monetary Fund (IMF), the World Bank, and the Treasury of the United States. The consensus declared that since capitalism triumphed over Communism, the path to follow was to dismantle the state as much as possible, privatize, slash social costs which are by definition unproductive, and eliminate any barrier to the free markets. The problem was that, to avoid political contagion, the WSF established rules which reduced the Forums to internal debating and sharing among the participants, without the ability to act on the political institutions. In 2001, Davos did consider Porto Alegre a dangerous alternative; soon it went out of its radar.

At the last Davos, the WSF was not any point of reference. But it was the other actor, the international aid organization Oxfam, which has been presenting at every WEF a report on Global Wealth.

Those reports have been documenting how fast the concentration of wealth at an obscene level is creating a world of inequality not known since the First Industrial Revolution. In 2010, 388 individuals owned the same wealth as 3.6 billion people, half of humankind. In 2014, just 80 people owned as much as 3.8 billion people. And in 2015, the number came down to 62 individuals. And the concentration of wealth is accelerating. In its report of 2015, Oxfam predicted that the wealth of the top 1 per cent would overtake the rest of the population by 2016: in fact, that was reached within ten months. Twenty years ago, the superrich 1 per cent had the equivalent of 62 per cent of the world population.

It would have been logical to expect that those who run the world, looking at the unprecedented phenomena of a fast growing inequality, would have connected Oxfam report with that of UBS, and consider the new and immense challenge that the present economic and political system is facing. Also because the Fourth Revolution foresees the phasing out of workers from whatever function can be taken by machines. According to Schwab, the use of robots in production will go from the present 12 per cent to 55 per cent in 2050. This will cause obviously a dramatic unemployment, in a society where the social safety net is already in a steep decline.

Instead, the WEF largely ignored the issue of inequality, echoing the present level of lack of interest in the political institutions. We are well ahead in the American presidential campaign, and if it were not for one candidate, Bernie Sanders, the issue would have been ignored or sidestepped by the other 14 candidates. There is no reference to inequality in the European political debate either, apart from ritual declarations: refugees are now a much more pressing issue. It is a sign of the times that the financial institutions, like IMF and the World Bank, are way ahead of political institutions, releasing a number of studies on how inequality is a drag on economic development, and how its social impact has a very negative impact on the central issue of democracy and participation. The United Nations has done of inequality a central issue. Alicia Barcena, the Executive secretary of CEPAL, the Regional Center for Latin America, has also published in time for Davos a very worrying report on the stagnation in which the region is entering, and indicating the issue of inequality as an urgent problem.

But beside inequality, also the very central issue of climate change was largely ignored. All this despite the participants in the Paris Conference on Climate, recognized that the engagements taken by all countries will bring down the temperature of no more than 3.7 degrees, when a safe target would be 1.5 degrees. In spite of this very dangerous failure, the leaders in Paris gave lot of hopeful declarations, stating that the solution will come from the technological development, driven by the markets. It would have been logical to think, that in a large gathering of technological titans, with political leaders, the issue of climate change would have been a clear priority.

So, let us agree on the lesson from Davos. The rich and powerful had all the necessary data for focusing on existential issues for the planet and its inhabitants. Yet they failed to do so. This is a powerful example of the disconnection between the concern of citizens and their elite. The political and financial system is more and more self reverent: but is also fast losing legitimacy in the eyes of many people. Alternative candidates like Donald Trump or Matteo Salvini in Italy, or governments like those of Hungary and Poland, would have never been possible without a massive discontent. What is increasingly at stage is democracy itself? Are we entering in a Weimar stage of the world?

(End)

]]>
http://www.ipsnews.net/2016/01/the-lesson-from-davos-no-connection-to-reality/feed/ 1
The Trans-Pacific Partnership Fraudhttp://www.ipsnews.net/2016/01/the-trans-pacific-partnership-fraud/?utm_source=rss&utm_medium=rss&utm_campaign=the-trans-pacific-partnership-fraud http://www.ipsnews.net/2016/01/the-trans-pacific-partnership-fraud/#comments Tue, 26 Jan 2016 14:51:53 +0000 Jomo Kwame Sundaram http://www.ipsnews.net/?p=143700 Jomo Sundaram was an Assistant Secretary-General responsible for analysis of economic development in the United Nations system during 2005-2015, and received the 2007 Wassily Leontief Prize for Advancing the Frontiers of Economic Thought.]]>

Jomo Sundaram was an Assistant Secretary-General responsible for analysis of economic development in the United Nations system during 2005-2015, and received the 2007 Wassily Leontief Prize for Advancing the Frontiers of Economic Thought.

By Jomo Kwame Sundaram
KUALA LUMPUR, Malaysia, Jan 26 2016 (IPS)

The Trans Pacific Partnership Agreement (TPPA), negotiated in Atlanta in October 2015 and to be signed in Auckland in February 2016, privileges foreign investors while imposing substantial costs on partner countries. Touted as a ‘gold standard’ 21st century trade deal, it is critical to ascertain what gains can really be expected and whether these exceed costs.

Jomo Kwame Sundaram. Credit: FAO

Jomo Kwame Sundaram. Credit: FAO

Modest trade gains
Mainly using methodologically-moot computable general equilibrium (CGE) models, all studies so far project modest direct economic growth gains from TPP trade liberalization. Actual net gains may be even more modest, if not negative, as many assumptions in projection exercises are not in the final trade deal.

To make the case for the TPP, some studies looked for benefits elsewhere, mainly from supposedly projected investment boosts, while ignoring costs or presenting them as benefits. The most widely cited study was issued in 2014 by the well known US globalization cheerleader, the Peterson Institute of International Economics.

Wide-ranging expected TPP provisions were fed into the economic models as simple cost reductions, with no consideration given to downside risks and costs, e.g. due to reductions in national regulatory autonomy resulting from the TPP. As such, costs are not included, they do not provide a real cost-benefit assessment.

By excluding crucial costs, TPP advocates exaggerate projected trade benefits by claiming dubious gains. For example, they view provisions to extend intellectual property rights (IPRs) as cost reductions that will increase the trade in services.

Provisions allowing foreign investors to sue governments in private tribunals or undermining national bank regulation, are seen as trade-promoting cost reductions, ignoring the costs and risks of side-lining national regulation.

The study claimed huge benefits by assuming that the TPP will catalyse large exports by lowering the fixed costs of entering foreign markets. Although the huge gains claimed have no analytical bases, it assumed that half the impact of the TPP would be from cutting fixed trading costs.

If the modelling used conventional methods for estimating gains from trade, the results would have been much more modest, as per the only US government study of TPP impacts.

Fantastic foreign investment effects
The remaining benefits projected by the Peterson Institute study are mainly from a foreign direct investment (FDI) boom. It arbitrarily assumed that every dollar of FDI within the TPP bloc would generate additional annual income of 33 cents, divided equally between source and host countries without any economic theory, modelling procedure or empirical evidence for this supposition.

Paltry gains
Thus, the study greatly overstates the benefits to be derived from the TPP. While most of its claims lack justification, the only quantified benefits consistent with mainstream economic theory and evidence, are tariff-related benefits that make up an unknown but very small share of the projected gains.

The gains are much smaller than claimed by the TTP governments citing them. Less than a quarter of overall gains claimed can be considered seriously. Even these need to be compared against costs conveniently ignored by the study as well as actual details of the final deal. Needless to say, ostensible country gains calculated similarly need to be discounted for the same reason.

Even unadjusted, the gains are small relative to the GDPs of TPP partner economies. Also, while projected trade benefits will take a decade to realize, the major risks and costs will be more immediate. They represent one-time gains, and have no recurring annual benefit, i.e. they do not raise the economies’ growth rates.

The distribution of benefits has not been sufficiently analysed in these exercises; if they mainly go to a few big businesses, with losses borne by others, the TPP would exacerbate inequality.

Net gain or loss?
The TPP goes much further into how governments operate than needed to facilitate trade. Such ‘disciplines’ significantly constrain the policy space needed for countries to accelerate economic development and to protect the public interest.

The modest benefits projected make it crucial to consider the nature and scale of costs currently ignored by all available modelling exercises. The TPP will impose direct costs, e.g. by extending IPRs and by blocking or delaying generic production and imports.

The TPPA’s investor state dispute settlement (ISDS) provisions will enable foreign investors to sue a government in an offshore tribunal if they claim that new regulations reduce their expected future profits, even when such regulations are in the public interest. As private insurance is already available for this purpose, ISDS provisions are completely unnecessary.

Jagdish Bhagwati, a leading advocate of free trade and trade liberalization, along with others, have sharply criticized the inclusion of such non-trade provisions in ostensible free trade agreements. Instead of being the regional free trade agreement it is often portrayed as, the TPP seems to be “a managed trade regime that puts corporate interests first”.

The TPP, offering modest quantifiable benefits from trade liberalization, is really the thin edge of a wedge package which will fundamentally undermine the public interest. Net gains for TPP partners seem doubtful at this stage.

Only a complete and proper accounting based on the full text can settle this key question. The TPP has, in fact already been used to try to kill the Doha ‘Development’ Round of multilateral trade talks, but may well also undermine multilateralism more broadly in the near future.

– The Peterson Institute report is available at http://www.sustainabilitynz.org/wp-content/uploads/2014/02/EconomicGainsandCostsfromtheTPP_2014.pdf

]]>
http://www.ipsnews.net/2016/01/the-trans-pacific-partnership-fraud/feed/ 1
After a Historic Success, Urgent Challenges Face the WTOhttp://www.ipsnews.net/2016/01/after-a-historic-success-urgent-challenges-face-the-wto/?utm_source=rss&utm_medium=rss&utm_campaign=after-a-historic-success-urgent-challenges-face-the-wto http://www.ipsnews.net/2016/01/after-a-historic-success-urgent-challenges-face-the-wto/#comments Fri, 22 Jan 2016 07:05:26 +0000 Roberto Azevedo http://www.ipsnews.net/?p=143665

Roberto Azevêdo is the Director General of the World Trade Organization (WTO)

By Roberto Azevêdo
GENEVA, Jan 22 2016 (IPS)

In 2015 the international community took some huge strides forward on a number of vital issues.

There was the agreement on the United Nations new Sustainable Development Goals.

There was the remarkable breakthrough in Paris in the fight against climate change.

Roberto Azevêdo

Roberto Azevêdo

And, late in December, at the World Trade Organization (WTO) ministerial conference in Nairobi, members agreed a set of very significant results. In fact, they delivered some of the biggest reforms in global trade policy for 20 years.

We must seek to capitalise on this progress in 2016.

Let me explain in a bit more detail what was delivered in Nairobi.

The Nairobi Package contained a number of important decisions ­ including a decision on export competition. This is truly historic. It is the most important reform in international trade rules on agriculture since the creation of the WTO.

The elimination of agricultural export subsidies is particularly significant in improving the global trading environment.

WTO members ­ especially developing countries ­ have consistently demanded action on this issue due to the enormous trade-distorting potential of these subsidies. In fact, this task has been outstanding since export subsidies were banned for industrial goods more than 50 years ago. So this decision corrected an historic imbalance.

Countries have often resorted to export subsidies during economic crises ­ and recent history shows that once one country did so, others quickly followed suit. Because of the Nairobi Package, no-one will be tempted to resort to such action in the future.

This decision will help to level the playing field in agriculture markets, to the benefit of farmers and exporters in developing and least-developed countries.

This decision will also help to limit similar distorting effects associated with export credits and state trading enterprises.

And it will provide a better framework for international food aid ­ maintaining this essential lifeline, while ensuring that it doesn’t displace domestic producers.

Members also took action on other developing-country issues, committing to find a permanent solution on public stockholding for food security purposes, and to develop a Special Safeguard Mechanism.

And members agreed a package of specific decisions for least developed countries, to support their integration into the global economy. This contained measures to enhance preferential rules of origin for these countries and preferential treatment for their services providers.

And it contained a number of steps on cotton ­ helping low-income cotton producers to access new markets.

Finally, a large group of members agreed on the expansion of the Information Technology Agreement. Again, this was an historic breakthrough. It will eliminate tariffs on 10 per cent of global trade ­ that’s 1.3 trillion dollars worth of trade, making it the WTO’s first major tariff cutting deal since 1996.

Altogether, these decisions will provide a real boost to growth and development around the world.

This success is all the more significant because it comes so soon after our successful conference in Bali that delivered a number of important outcomes, including the Trade Facilitation Agreement. (TFA)

The TFA will bring a higher level of predictability and transparency to customs processes around the world, making it easier for businesses ­ especially smaller enterprises ­ to join global value chains.

It could reduce trade costs by an average of 14.5 per cent – with the greatest savings being felt in developing countries.

The Agreement has the potential to increase global merchandise exports by up to 1 trillion dollars per annum, and to create 20 million jobs around the world.

That’s potentially a bigger impact than the elimination of all remaining tariffs.

So the challenge before us is very significant.

For instance, during or the last two years, we have been trying to reinvigorate the Doha agenda on development, exploring various ways of overcoming the existing difficulties. We tested different alternatives over several months of good engagement, but the conversations revealed significant differences, which are unlikely to be solved in the short term.

But the challenge is not limited only to the question of what happens to the Doha issues, it is about the negotiating function of the WTO. It is about what members want for the future of the WTO as a standard and rule-setting body. And the challenge is urgent.

The world won’t wait for the WTO. Other trade deals will keep advancing.

The wider the gap between regional and multilateral disciplines, the worse the trade environment becomes for everyone, particularly businesses, small countries and all those not involved in major regional negotiations.

But the outlook is not bleak. I said at the outset that 2016 was full of promise. I truly believe that ­ because, while we face real challenges, there are also real opportunities before us.

(End)

]]>
http://www.ipsnews.net/2016/01/after-a-historic-success-urgent-challenges-face-the-wto/feed/ 0
One Fish Two Fish, No Fish: Rebuilding of Fish Stocks Urgently Neededhttp://www.ipsnews.net/2016/01/one-fish-two-fish-and-then-no-fish-in-the-caribbean-reconstruction-urgently-needed/?utm_source=rss&utm_medium=rss&utm_campaign=one-fish-two-fish-and-then-no-fish-in-the-caribbean-reconstruction-urgently-needed http://www.ipsnews.net/2016/01/one-fish-two-fish-and-then-no-fish-in-the-caribbean-reconstruction-urgently-needed/#comments Thu, 21 Jan 2016 15:22:27 +0000 Christopher Pala http://www.ipsnews.net/?p=143658 http://www.ipsnews.net/2016/01/one-fish-two-fish-and-then-no-fish-in-the-caribbean-reconstruction-urgently-needed/feed/ 0 TAIWAN: Polls Harken End of Nuclear Powerhttp://www.ipsnews.net/2016/01/taiwan-polls-harken-end-of-nuclear-power/?utm_source=rss&utm_medium=rss&utm_campaign=taiwan-polls-harken-end-of-nuclear-power http://www.ipsnews.net/2016/01/taiwan-polls-harken-end-of-nuclear-power/#comments Wed, 13 Jan 2016 13:51:11 +0000 Dennis Engbarth http://www.ipsnews.net/?p=143575 http://www.ipsnews.net/2016/01/taiwan-polls-harken-end-of-nuclear-power/feed/ 0 Soy Boom Revives Amazon Highwayhttp://www.ipsnews.net/2016/01/soy-boom-revives-amazon-highway/?utm_source=rss&utm_medium=rss&utm_campaign=soy-boom-revives-amazon-highway http://www.ipsnews.net/2016/01/soy-boom-revives-amazon-highway/#comments Fri, 08 Jan 2016 00:09:44 +0000 Fabiana Frayssinet http://www.ipsnews.net/?p=143536 A local small farmer, Rosineide Maciel, watches the road improvement works on highway BR-163, which runs past her house in Itaituba municipality in the northern Brazilian state of Pará. Credit: Fabiana Frayssinet/IPS

A local small farmer, Rosineide Maciel, watches the road improvement works on highway BR-163, which runs past her house in Itaituba municipality in the northern Brazilian state of Pará. Credit: Fabiana Frayssinet/IPS

By Fabiana Frayssinet
MIRITITUBA, Brazil , Jan 8 2016 (IPS)

The BR-163 highway, an old dream of the Brazilian military to colonise the Amazon jungle, was revived by agroexporters as part of a plan aimed at cutting costs by shipping soy out of river ports. But the improvement of the road has accentuated problems such as deforestation and land tenure, and is fuelling new social conflicts.

The 350-km stretch of road between the cities of Miritituba and Santarem in the northern Brazilian state of Pará look nothing like the popular image of a lush Amazon rainforest, home to some of the greatest biodiversity in the world.

Between the two port terminals – in Santarém, where the Tapajós and Amazon Rivers converge, and in Miritituba on the banks of the Tapajós River – are small scattered groves of trees surrounded by endless fields of soy and pasture.

Cattle grazing peacefully or resting under the few remaining trees, taking shelter from the high temperatures exacerbated by the deforestation, are the only species of mammal in sight.“A common phrase heard in the area along the BR-163 is ‘whoever deforests, owns the land’ – in other words, deforestation has become an illegal instrument for seizing public land.” – Mauricio Torres

“When we came here 30 years ago this was all jungle,” local small farmer Rosineide Maciel told IPS as she and her family stood watching a bulldozer flatten a stretch of the BR-163 highway in front of their modest dwelling.

Maciel doesn’t miss the days when, along with thousands of other Brazilian migrants, she was drawn here by the then-military government’s (1964-1985) offer of land, part of a strategy to colonise the Amazon rainforest.

Thanks to the paving of the highway that began in 2009, it takes less time to transport her cassava and rice to the town of Rurópolis, 200 km from her farm.

“It’s been easier since they improved the road,” she said. “In the past, there were so many potholes on the way to Rurópolis, and in the wet season it took us three days because of the mud.”

BR-163, built in the 1970s, had become practically impassable. The road links Cuiabá, the capital of the neighbouring state of Mato Grosso – the country’s main soy and corn producer and exporter – with the river port city of Santarém.

Of the highway’s 1,400 kilometres, where traffic of trucks carrying tons of soy and maize is intense, some 200 km have yet to be paved, and a similar number of kilometres of the road are full of potholes.

Accidents occur on a daily basis, caused in the dry season by the red dust thrown up on the stretches that are still dirt, and in the wet season by the mud.

But compared to how things were in the past, it is a paradise for the truckers who drive the route at least five times a month during harvest time.

Truck driver Pedro Gomes from the north of the state of Mato Grosso told IPS: “When soy began to come to Santarém, three years ago, sometimes the drive took me 10 to 15 days. Today we do it in three days, if there’s no rain.”

The BR-163 highway runs up to the entrance of the port terminal built in Santarém by U.S. commodities giant Cargill, where the company loads soy and other grains to ship down the Amazon River to the Atlantic Ocean, and from there to big markets like China and Europe.

This and other ports built or planned by different companies in Santarém, Miritituba and Barcarena – in Belem, the capital of Pará, at the mouth of the Amazon River – are part of a logistics infrastructure which, along with the paving of the highway, seeks to reduce the costs of land and maritime transport in northern Brazil.

The river ports and the road improvement have nearly cut in half the transport distance for truck traffic from Mato Grosso, which is around 2,000 km from the congested ports in the southeast, such as Santos in the state of São Paulo or Paranaguá in Paraná.

The Mato Grosso Soy Producers Association estimates the transport savings at 40 dollars a ton.

“Shipping out of ports in the north like Santarém has boosted competitiveness,” José de Lima, director of planning for the city of Santarém, told IPS. “BR-163 is a key export corridor that was very much needed by the country and the region.”

But the country’s agroexport model has many critics.

Road works on highway BR-163 in Itaituba municipality in the northern Brazilian state of Pará. Credit: Fabiana Frayssinet/IPS

Road works on highway BR-163 in Itaituba municipality in the northern Brazilian state of Pará. Credit: Fabiana Frayssinet/IPS

With the soy production boom in Pará, illegal occupations of land have expanded and property prices have soared.

“The paving of BR-163 has heated up the land market,” Mauricio Torres, at the Federal University of Western Pará (UFOPA), told IPS. “As this is happening in a region where illegal possession of land is so widespread and where there is no land-use zoning, it generates a series of social and environmental conflicts.”

This, in turn, has driven deforestation.

“Forests are cut down not only for agriculture but to make fraudulent land claims. A common phrase heard in the area along the BR-163 is ‘whoever deforests, owns the land’ – in other words, deforestation has become an illegal instrument for seizing public land,” he said.

In 2006, the government launched a sustainable development plan for BR-163, aimed at reducing the socioenvironmental impacts caused by the paving of the road, by means of self-sustaining projects for local communities.

“But this pretty much just petered out,” UFOPA chancellor Raimunda Nogueira explained to IPS.

“If the communities along BR-163 are not strengthened, they will undergo a radical transformation,” she said. “For example, land prices are skyrocketing and small farmers are selling out, which accentuates the phenomenon of the latifundio (large landed estates).”

Deforestation in the Brazilian Amazon became more widespread in the 1960s, driven by the expansion of cattle ranching and the timber industry.

However, that did not leave the land completely free of vegetation, according to Nogueira, because subsistence farming “maintained different levels of regeneration of the forest.”

“When the big agricultural producers came in, they cleared all of those areas in the stage of regeneration that maintained a certain equilibrium,” said the chancellor, who estimates that around 120,000 hectares of land have been deforested to make way for soy.

Torres, meanwhile, referred to the emergence of other social problems like prostitution, involving minors as well as adults.

“There are towns in Pará that could turn into huge brothels for truck drivers,” he said.

The residents of Campo Verde, a town of around 6,000 people located 30 km from Miritituba, who depend on the production of palm hearts and on sawmills for a living, have started to feel the effects.

The town is located near the intersection of BR-163 and the 4,000-km Trans-Amazonian highway that cuts across northern Brazil.

“Only soy is going to come through here,” Celeste Ghizone, a community organiser in the town, told IPS. “An average of 1,500 trucks are expected to pass through every day. Just think of how many accidents we’re going to have with all of these truck drivers who drive through like mad men without even slowing down,” he said, adding that he is worried about rising crime and drug abuse rates.

When the improvement of BR-163 – including widening it to a four-lane highway along one major stretch – is completed, an estimated 20 million tons of grains (Mato Grosso currently produces 42 million tons) will be shipped northward to Amazon River ports rather than on the longer routes to ports in the southeast, by 2020.

The dream of agribusiness corporations is to continue expanding the soy corridor, by building a railway to Miritituba.

But Torres complained that “It’s important to stress that a paved BR-163 is not local infrastructure but is for the big soy producers of Mato Grosso. The state of Pará will become merely a transport corridor for soy exports.”

Edited by Verónica Firme/Translated by Stephanie Wildes

]]>
http://www.ipsnews.net/2016/01/soy-boom-revives-amazon-highway/feed/ 0
Back on Track, Uganda’s Railways Signal Better Days Aheadhttp://www.ipsnews.net/2016/01/back-on-track-ugandas-railways-signal-better-days-ahead/?utm_source=rss&utm_medium=rss&utm_campaign=back-on-track-ugandas-railways-signal-better-days-ahead http://www.ipsnews.net/2016/01/back-on-track-ugandas-railways-signal-better-days-ahead/#comments Wed, 06 Jan 2016 08:53:54 +0000 Amy Fallon http://www.ipsnews.net/?p=143526 http://www.ipsnews.net/2016/01/back-on-track-ugandas-railways-signal-better-days-ahead/feed/ 0 Oil Giants Punish Venezuela through Dutch treatyhttp://www.ipsnews.net/2016/01/oil-giants-punish-venezuela-through-dutch-treaty/?utm_source=rss&utm_medium=rss&utm_campaign=oil-giants-punish-venezuela-through-dutch-treaty http://www.ipsnews.net/2016/01/oil-giants-punish-venezuela-through-dutch-treaty/#comments Mon, 04 Jan 2016 06:48:05 +0000 Frank Mulder http://www.ipsnews.net/?p=143503 isds_3

By Frank Mulder
UTRECHT, Netherlands, Jan 4 2016 (IPS)

Venezuela doesn’t want investment treaties anymore if they give investors the right to drag the country before a commercial court. “The system has been set up to break down the nation-state.”

All is not going well for Venezuela. While the country is torn apart by poor governance, poverty and polarisation, it is attacked from the outside by oil firms claiming tens of billions of dollars.

The method these firms use is called ISDS, or Investor-State Dispute Settlement. This is a mechanism by which investors can sue a state by means of arbitration, which is a kind of privatized court. Many lawyers stress the advantage that plaintiffs don’t have to go before a local judge whom they feel they cannot trust. You can choose a judge for yourself, the opponent does the same, and the two of those choose a chairman. They are called arbitrators. The case is heard at a renowned institute, like the World Bank. How could it be more fair?

Biased

But Bernard Mommer, former vice-minister for oil in the time of Hugo Chavez, now the main witness in different claims against Venezuela, has to laugh a bit. “I won’t say that Caracas is a neutral venue. But don’t be so foolish to say that Washington is neutral. The whole arbitration system is biased in favour of investors.”

After Argentina, no country has been sued as much as Venezuela: until 2014 at least 37 cases have been filed against this Latin American state. However, the fine they can expect now exceeds all of the others. ConocoPhillips, a Texas-based oil company, claims 31 billion dollars and seems to be on the winning side. According to critics, that case represents everything that’s wrong with the ISDS system.

Oil dispute

The dispute about oil began in 2006. Under the activist leadership of Chavez, Venezuela decided to nationalise the oil sector. Also, higher taxes were announced. Mommer was responsible for the negotiations with international oil firms about compensation. Most of the 41 companies in the country agreed with the buyout. Two didn’t. Those were the Texas-based companies ConocoPhillips and Mobil (now ExxonMobil).

“When we started with the expropriation, they went for arbitration,” says Mommer. “I didn’t even know that this was possible. For arbitration two parties need to consent, don’t they? How could they sue a state?” But Mommer discovered that Venezuela signed Bilateral Investment Treaties (BITs) in 1991, among others with the Netherlands. Those treaties give all investors from the given country an offer to arbitration if they feel treated unfairly by the host state.

Dutch sandwich

ConocoPhillips and Mobil quickly moved their Venezuelan holdings to the Netherlands in 2006. That gave them the opportunity to claim, as Dutch investors, that the unexpected policy change violated their BIT rights. Together, they demanded 42 billion dollars.

“This is called the Dutch sandwich”, says George Kahale III, a top lawyer from New York, who defends Venezuela in different cases. “You put a Dutch holding in the middle of your company chain and you can call yourself Dutch.”

Companies are not allowed to do this if the dispute already started. ExxonMobil and Conoco said that their move was made independently of the dispute. However, a remarkable message has been found among the Wikileaks cables. In these a representative of Conoco told someone from the American embassy that they “already” moved to the Netherlands to “safeguard their arbitration rights.”

Unlawful

The cases are still dragging on. ExxonMobil has had no luck. The three arbitrators have judged that the expropriation was lawful. ExxonMobil gets compensation, but not much more than what they were offered earlier, around one billion dollars.

But the Conoco case evolved differently. Two of the three arbitrators found the expropriation unlawful. This means that Venezuela has to compensate the firm, not on the basis of the low oil price in 2006, but on the basis of the much higher price at the time of the claim. This will amount to tens of billions of dollars.

This is insane, says Kahale. “The fact is that four out of six arbitrators found that the expropriation was perfectly lawful. And yet Venezuela can expect a mega award.”

Unfair

Talking about fairness: among the Wikileaks cables another juicy anecdote has been found. In a cable from 2008, the Conoco representative tells the American ambassador that the negotiations are going well and that Venezuela is being reasonable. This is in contradiction to what Conoco was claiming in public. Yet the arbitrators – at least, two of the three – now say that they can’t change their conclusion anymore and now have to proceed to the next phase, about the damages.

“In other words”, says Mommer, “the investor can lie. We can’t sue them anyway. They alone can sue us. This shows why Western countries have invented this system. It has been set up to break down the nation-state.”

Disaster

ISDS is structurally flawed, says Kahale. “Who are the judges? They are investment lawyers. Their commercial background shines through in their decisions. Every judge of course always brings his own views to his job. But in arbitration these people are deciding no longer private commercial disputes, but megacases of international significance, with sometimes vital importance for individual states, involving billions of dollars, with very little training in international law.”

Too many, conflicts of interest arise. “You will never see a supreme court judge acting as a counsel in another case. But many arbitrators also act as a counsel. It’s very hard to preside over the legality of something one day, and advocate the same issue the other day. It is natural that I’m holding back in one or the other, depending on which case is more important to me. There are very few checks and balances. Too many mistakes are made.”

Venezuela is fed up with ISDS claims. Soon after the claims were filed, they pulled the plug, not only from the ICSID convention (which acknowledges the World Bank as arbitration court) but also from a number of BITs. The Dutch BIT was the first to be terminated a few years ago. Unfortunately for Venezuela, this treaty contains a clause giving investors the right to arbitration until 2023.

Don’t challenge us

Arbitration can be an elegant method for solving a dispute. But is has developed into an instrument for multinational companies to pressure states.

“These oil firms were offered a brilliant compensation,” says Juan Carlos Boue, a Venezuelan researcher at the Oxford Institute of Energy. “But when the oil price rose, they decided to leave the country with as much money as possible.” For ExxonMobil, a giant with a revenue of 400 billion dollars, twice as big as the GDP of Venezuela, there is more at stake. “They have unlimited resources. They want to let the world know what happens if you challenge them.”

And the arbitrators? “Some of them are on the boards of multinational companies. They just don’t want the countries to get away with it. They have an extreme dislike towards countries like Venezuela.”

ExxonMobil and ConocoPhillips refrained from any comment.

(End)

]]>
http://www.ipsnews.net/2016/01/oil-giants-punish-venezuela-through-dutch-treaty/feed/ 0
Brazil 2015: The Year When Everything Went Wronghttp://www.ipsnews.net/2015/12/brazil-2015-the-year-when-everything-went-wrong/?utm_source=rss&utm_medium=rss&utm_campaign=brazil-2015-the-year-when-everything-went-wrong http://www.ipsnews.net/2015/12/brazil-2015-the-year-when-everything-went-wrong/#comments Wed, 30 Dec 2015 08:15:23 +0000 Fernando Cardim de Carvalho http://www.ipsnews.net/?p=143469

Fernando J. Cardim de Carvalho, economist and professor at the Federal University of Río de Janeiro.

By Fernando J. Cardim de Carvalho
RIO DE JANEIRO, Dec 30 2015 (IPS)

As 2015 approaches its end, Brazilians live a period of extraordinary uncertainty. The recession seems to get worse by the day. Inflation is high and shows unexpected resistance to tight monetary policies applied by the Central Bank. The sluggish international economy has largely neutralized incentive and the strong devaluation of the domestic currency could represent a reality to exporters and to producers who compete with now more expensive imports. After an initial resistance, employment levels began to fall.

Fernando J. Cardim de Carvalho

Fernando J. Cardim de Carvalho

All this, however, is not just a “normal” recession. It takes place against a background of a major corruption scandal, which has all but paralyzed investment by major firms, like Petrobras. It also raises the concrete possibility of seeing political figures such as the president of the Federal Chamber of Deputies go to jail. The government leader at the Federal Senate is already in jail, as are many former authorities in President Luíz Inácio -Lula- da Silva’s administration (2000-2011). Hardly a day goes by without any news about new scandals or arrests of authorities and businessmen. On top of it all, in the early days of December, the embattled president of the Chamber of Deputies accepted a request to open impeachment proceedings against President Dilma Rousseff for alleged violations of the Fiscal Responsibility Act.

Any subset of that list of events would be enough to generate widespread instability. All of them put together created a hitherto unheard of situation of political and economic crisis of which one has to make extraordinary efforts to see any way out.

Impeachment procedures against the president did not come out of the blue. The revelation of the Petrobras scandal has brewed rumors and suspicions, if not against the president herself, certainly against many of those who surround, or have surrounded, her (she is a former minister of energy in Lula’s government and a former chairman of the administration council of Petrobras.) So far, however, no accusations or evidence emerged against Rousseff. In fact, she does not even seem to be a major target of investigators, who seem to be zeroing in on Lula (and his immediate family.) The piece of accusation justifying the opening of impeachment proceedings relies on the use of accounting artifices to violate the constraints on public expenditure imposed by the Fiscal Responsibility Act, which a majority of opinion makers seem to consider too weak a case to sustain an impeachment. What makes the whole process more menacing is in fact her acute political fragility. Rousseff is universally seen as Lula’s creation, but never really relinquished his power over the party and the coalition it led.

Soon after Rousseff was reelected in November 2014, she announced a radical change of orientation in her administration’s economic policies. Austerity policies, cutting expenditures and raising taxes, seemed to be unavoidable in the face of the increased federal expenditure made to ensure her victory in the presidential elections.

The incumbent president repeatedly stated during the campaign that she rejected those policies, only to announce their implementation a few days after the result of the popular vote became known. Despite the apparent support of Lula, the change in orientation was badly received by the official Workers Party (PT), which grudgingly announced support for her, but conditioning it to a change in macroeconomic policies.

The party seemed to ignore the fact that during 2014, the increase in fiscal deficits failed to have any expansionary impact on the economy, which did not grow at all. The perception that the president had no political support of her own, however, stimulated her adversaries to aggressively advance proposals for her impeachment, based on whatever reason one could find, or the annulment of the election itself, or if nothing else worked, to force her to resign. With an aggressive opposition and unable to count on a supporting political base, the government was paralyzed for the whole year.

No relevant austerity measure has obtained Congress’ approval. Despite the effort of leftist parties to blame the pro-austerity Finance Minister Joaquim Levy for the contraction of the economy, it is impossible to ignore the fact that the failed attempts to get the proposed policies approved by Congress just made explicit the lack of political power that characterized Rousseff’s position. The impasse created by the inexistence of an effective government in the face of an aggressive opposition led decision-makers to postpone any but the most immediate decisions. Investment has fallen, workers have been fired in increasing numbers, consumption has been negatively impacted, etc.

The political crisis has transformed an expected recession into something that threatens to become a major depression, both in depth and duration. The situation is made more difficult by the difficulty to visualize any sustainable solution for the crises in the mediate horizon, let alone the coming months. If the impeachment process prospers, one could expect for sure increased political instability as a result, on the one hand, of attempts by PT and the social movements that are close to it to react somehow, and, on the other, by the fact that there is no organized opposition ready to take the place of the current administration. If the impeachment initiative is defeated, the problem remains that the president does not have any vision or power and it is overwhelmingly difficult to imagine how she could recover enough initiative to last the three remaining years of her term in office.

Paraphrasing the late historian Eric Hobsbawn, who observed that the Twentieth Century had been very short (beginning in 1914 and ending in 1991), 2015 may be a long year for Brazilians. The incompressible minimal duration of an impeachment process will take it to 2016, when the social situation may be more tense than it is now, with high inflation and increasing unemployment. If a national agreement of some sort, be it in terms of allowing Rousseff’s government to work or by removing it altogether, is not reached to avoid the worse, 2015 can last even longer. The country may dive into an unknown abyss of a combination of economic, political and social crises of which it is hard to see how, when and in what conditions it will recover.

(End)

]]>
http://www.ipsnews.net/2015/12/brazil-2015-the-year-when-everything-went-wrong/feed/ 0
Foreign Direct Investment: Myths and realitieshttp://www.ipsnews.net/2015/12/foreign-direct-investment-myths-and-realities-2/?utm_source=rss&utm_medium=rss&utm_campaign=foreign-direct-investment-myths-and-realities-2 http://www.ipsnews.net/2015/12/foreign-direct-investment-myths-and-realities-2/#comments Tue, 29 Dec 2015 08:10:27 +0000 Yilmaz Akyuz http://www.ipsnews.net/?p=143458 Yilmaz Akyüz is the chief economist of the South Centre, Geneva. http://www.southcentre.int/]]>

Yilmaz Akyüz is the chief economist of the South Centre, Geneva. http://www.southcentre.int/

By Yilmaz Akyüz
GENEVA, Dec 29 2015 (IPS)

Foreign direct investment (FDI) is perhaps one of the most ambiguous and the least understood concepts in international economics. Common debate on FDI is confounded by several myths regarding its nature and impact on capital accumulation, technological progress, industrialization and growth in emerging and developing economies.

Yilmaz Akyüz, chief economist of the South Centre, Geneva.

Yilmaz Akyüz, chief economist of the South Centre, Geneva.

It is often portrayed as a long term, stable, cross-border flow of capital that adds to productive capacity, helps meet balance-of-payments shortfalls, transfers technology and management skills, and links domestic firms with wider global markets.

However, none of these is an intrinsic quality of FDI. First, FDI is more about transfer and exercise of control than movement of capital. Contrary to widespread perception, it does not always involve flows of financial capital (movements of funds through foreign exchange markets) or real capital (imports of machinery and equipment for the installation of productive capacity). A large proportion of FDI does not entail cross-border capital flows but is financed from incomes generated on the existing stock of investment in host countries. Equity and loans from parent companies account for a relatively small part of recorded FDI and even a smaller part of total foreign assets controlled by transnational corporations.

Second, only the so-called greenfield investment makes a direct contribution to productive capacity and involves cross-border movement of capital goods. But it is not easy to identify from reported statistics what proportion of FDI consists of such investment as opposed to transfer of ownership of existing firms (mergers and acquisitions). Furthermore, even when FDI is in bricks and mortar, it may not add to aggregate gross fixed capital formation because it may crowd out domestic investors.

Third, what is commonly known and reported as FDI may contain speculative components and creates destabilizing impulses, including those due to the operation of transnational banks in host countries, which need to be controlled and managed as any other form of international capital flows.

Fourth, the immediate contribution of FDI to balance-of-payments may be positive, since it is only partly absorbed by imports of capital goods required to install production capacity. But its longer-term impact is often negative because of high import content of foreign firms and profit remittances. This is true even in countries highly successful in attracting export-oriented FDI.

Finally, superior technology and management skills of transnational corporations create an opportunity for the diffusion of technology and ideas. However, the competitive advantage these firms have over newcomers in developing countries can also drive them out of business. They can help integrate developing countries into global production networks, but participation in such networks also carries the risk of getting locked into low value-added activities.

These do not mean that FDI does not offer any benefits to developing and emerging countries. Rather, policy in host countries plays a key role in determining the impact of FDI in these areas. A laissez-faire approach could not yield much benefit. It may in fact do more harm than good.

Successful examples are found not necessarily among countries that attracted more FDI, but among those which used it in the context of national industrial policy designed to shape the evolution of specific industries through interventions. This means that developing countries need adequate policy space vis-à-vis FDI and transnational corporations if they are to benefit from it.

Still, the past two decades have seen a rapid liberalization of FDI regimes and erosion of policy space in emerging and developing countries vis-à-vis transnational corporations. This is partly due to the commitments undertaken in the World Trade Organization as part of the Agreement on Trade-Related Investment Measures .

However, many of the more serious constraints are in practice self-inflicted through unilateral liberalisation or bilateral investment treaties signed with more advanced economies – a process that appears to be going ahead with full force, with the universe of investment agreements reaching 3,262 at the end of 2014.

Unlike earlier bilateral treaties, recent agreements give significant leverage to international investors. They often include rights to establishment, the national treatment and the most favoured-nation clauses, broad definitions of investment and investors, fair and equitable treatment, protection from expropriation, free transfers of capital and prohibition of performance requirements.

Furthermore, the reach of bilateral investment treaties has extended rapidly thanks to the use of the so-called Special Purpose Entities which allow transnational corporations from countries without a bilateral treaty with the destination country to make the investment through an affiliate incorporated in a third-party state with a bilateral treaty with the destination country.

Many bilateral investment treaties include provisions that free foreign investors from the obligation of having to exhaust local legal remedies in disputes with host countries before seeking international arbitration. This, together with lack of clarity in treaty provisions, has resulted in the emergence of arbitral tribunals as lawmakers in international investment which tend to provide expansive interpretations of investment provisions in favour of investors, thereby constraining policy further and inflicting costs on host countries.

Only a few developing countries signing such bilateral treaties with advanced countries have significant outward FDI.

Therefore, in the large majority of cases there is no reciprocity in deriving benefits from the rights and protection granted to foreign investors. Rather, most developing countries sign them on expectations that they would attract more FDI by providing foreign investors guarantees and protection, thereby accelerating growth and development. However, there is no clear evidence that bilateral investment treaties have a strong impact on the direction of FDI inflows.

(End)

]]>
http://www.ipsnews.net/2015/12/foreign-direct-investment-myths-and-realities-2/feed/ 0
American Mining Giant Escaped Indonesian Law with ISDShttp://www.ipsnews.net/2015/12/american-mining-giant-escaped-indonesian-law-with-isds/?utm_source=rss&utm_medium=rss&utm_campaign=american-mining-giant-escaped-indonesian-law-with-isds http://www.ipsnews.net/2015/12/american-mining-giant-escaped-indonesian-law-with-isds/#comments Mon, 28 Dec 2015 13:52:32 +0000 Eve Schram http://www.ipsnews.net/?p=143451

American mining corporation Newmont escaped the domestic processing requirement from Indonesia’s 2009 Mining Law. It achieved this by using a clause in a Dutch investment treaty.

By Eve Schram
JAKARTA, Dec 28 2015 (IPS)

If you want to make your developing country more attractive for foreign investors, try signing bilateral investment treaties (BITs) with rich countries. With these treaties countries promise to look after each others’ investors.

That is the dominant idea in the world. Up until now, that is. More and more countries discover that BITs can be quite risky. Indonesia, for example. Last year it received a so-called ISDS claim from an American mining company, which used the Indonesia-Netherlands investment treaty to get exemptions from certain requirements.

Problem number one

“Our perspective on BITs has changed,” says Abdulkadir Jaelani, director of Economic and Social Affairs of the Indonesian ministry of Foreign Affairs in Jakarta. “It seems very much in favor of the investor. Our number one problem is ISDS.”

ISDS (Investor State Dispute Settlement) is a clause in BITs that enables investors to sue a host country, if it feels it has been treated unfairly. The investor will generally claim financial compensation from the host state. This claim will be judged by a panel of three arbitrators, appointed by the investor and the state. The verdict is binding.

Indonesia received five such claims in recent years. Financial compensation was not always the goal. A claim can be used by an investor to block new legislation.

Indonesia started to terminate BITs last year. The Dutch BIT was one of the first to go.

Newmont

The most recent claim against Indonesia came from the American mining corporation Newmont in the summer of 2014. Newmont has had an active copper mine on the Indonesian island of Sumbawa since 1999. Curiously, financial compensation appears never to have been the goal of Newmont. “I believe Newmont used the arbitration case to enforce an export license,” said Bill Sullivan, legal counsel in Jakarta and expert on the Indonesian mining industry.

In 2009, the Indonesian parliament voted for a new mining law, that served to kickstart the domestic processing industry. Every mining company was told to build a smelter, a plant to process mineral ores. “Indonesia is too dependent on natural resources for its budget,” said Rani Fabrianti, head of legal information at the Mining and Energy Ministry. “The Mining Law enables us to grow into an industrial economy and eventually to a service-oriented economy.”

The Mining Law dictated the mining companies to build a smelter no later than 12 January 2014. After that time, the government would enact an export ban on mineral ores.

On 11 January 2014, certain mining sectors, including the copper sector, were delayed. Copper mining companies would receive an export license for copper concentrate, if they showed progress with the building of smelters. In the meantime, the Indonesian government introduced export tariffs on copper concentrate from 25 per cent in 2014 to 60 per cent in 2017.

The two biggest copper miners in the country, the American corporations Freeport and Newmont, were not amused. Still, Freeport reached a compromise with the government soon after and received its export license. The company pledged over 100 million dollars for the construction of a smelter.

Difficult

The negotiations with Newmont were more difficult. The company said building a smelter would be ‘uneconomic’ and that its mining contract with Indonesia dating from 1986 safeguarded it from such activities.

When its storage facilities reached capacity just before the summer of 2014, Newmont called into force the Force Majeure clause of its contract. It means that the company had to stop production for reasons beyond its power. Force majeure is generally used when the contract area is hit by natural disasters or violent conflict.

80 per cent of the 4000 employees of the Batu Hijau mine on Sumbawa were sent on unpaid leave. After that, Newmont filed for financial compensation from the Indonesian government, through a Dutch business entity, citing the investment treaty between Indonesia and the Netherlands. It was able to do so, because the Dutch government does not require companies to have any economic activity in the Netherlands for using its investment treaties.

But just two short months later, news broke that Newmont and the Indonesian government had reached an agreement. Newmont received its export license and can export for significantly lower tariffs than before: 7.55 in 2015 and 0 per cent in 2017. Newmont in turn pledged 25 million dollars to the smelter that Freeport was set to build and annulled its ISDS claim.

Satisfied

Jaelani says he is satisfied with the compromise. “We negotiated, which we prefer over ISDS”, he says. But many Indonesians think differently. Yani Sagaroa is a mining activist on Sumbawa and is often consulted by the Mining ministry in Jakarta. He blames the government for inconsistency. “Newmont had to build a smelter between 2009 and 2014, but did not. Still they can export copper,” he said. “They did not abide by the law.”

In October 2015, Newmont responded to questions about the smelter by saying it is still negotiating with Freeport.

Meanwhile, Indonesia is writing a new model text for its investment treaties, of which the Dutch journalists have gotten hold. One of the most eye catching changes is that Indonesia will only allow ISDS, if they have provided written consent before each case. This means that companies can never use it as a threat or bargaining tool. Whether western countries are willing to swallow this radical departure from the current practice, remains to be seen.

This article is part of a research by De Groene Amsterdammer, Oneworld and Inter Press Service, supported by the European Journalism Centre (made possible by the Gates Foundation). See www.aboutisds.org.

]]>
http://www.ipsnews.net/2015/12/american-mining-giant-escaped-indonesian-law-with-isds/feed/ 1
French firm attacks Ugandan tax using ISDShttp://www.ipsnews.net/2015/12/french-firm-attacks-ugandan-tax-using-isds/?utm_source=rss&utm_medium=rss&utm_campaign=french-firm-attacks-ugandan-tax-using-isds http://www.ipsnews.net/2015/12/french-firm-attacks-ugandan-tax-using-isds/#comments Fri, 25 Dec 2015 10:04:41 +0000 Edward Ronald Segyawa and Frank Mulder http://www.ipsnews.net/?p=143443 By Edward Ronald Segyawa and Frank Mulder
KAMPALA, Dec 25 2015 (IPS)

The heavily criticized legal mechanism, known as ISDS, is an important tool for European companies to pressurize developing countries. This year Uganda joins the rank of developing nations asking themselves: “Why have we ever signed this?”

Earlier this year, the French oil company Total filed a request for arbitration against the government of Uganda. In essence, arbitration is a way to resolve a dispute, not by going to a public court, but by asking the verdict of a private court. Both parties choose an arbitrator, usually an investment lawyer, and the two of them choose a third one. The arbitration is hosted, in this case, by the World Bank.

This is a new step in the frustrating process of Uganda trying to turn its oil into cash.

Peaceful names

Crude oil reserves in Uganda are estimated by government geologists at 6.5 billion barrels, half of which lies beneath the famous Murchison Falls, a famous national park, known for its wild animals. Wells have been given exotic names, like Crocodile, Buffalo, Giraffe and Warthog.

These peaceful names contrast with the bitter fights that are being fought over the oil. Commercial production has been repeatedly delayed by disputes with explorers over taxes and development plans. Now it’s the French oil company Total refusing to pay tax. It acquired a 33 per cent share in a 2.9 billion dollar project owned by Tullow Oil. According to Ugandan law, when a stock is bought, a stamp duty must be paid.

However, the oil firm refuses to do so, citing no legal obligation to honor the government claims. Total has not disclosed how much tax is at the heart of the dispute or why it objects to the tax levy but a source at the Uganda Revenue Authority told Reuters earlier that the Production Sharing Agreement (PSA) includes a tax waiver.

Secret

From their offices in an eight-story glass building located in the lush green high-end Nakasero area in the capital city Kampala, Total’s Corporate Affairs Manager Ms. Ahlem Friga-Noy stated that “given the applicable confidentiality obligations, we are not in a position to comment further on the proceedings.”

The Office of the Attorney General of the Government of Uganda replies in the same manner: “We are under obligation not to disclose the content of the matter to the public until it is appropriate.”

This points exactly to the problem of arbitration. In a court room all affected parties and stakeholders have the right to speak, or at least listen, but an arbitration procedure is very secretive. No one is obliged to disclose details. Has the state really behaved badly? Or is it the company who abuses arbitration as a pressure to get a tax reduction? The public remains completely in the mist, until the final verdict of the tribunal is published, which can be a multimillion dollar fine.

The Dutch sandwich

The problem Uganda now faces has been made possible by the Bilateral Investment Treaty signed in 2000 with the Netherlands. According to the treaty, all Dutch investors in Uganda have the right to pursue arbitration before the World Bank court if they feel treated unfairly. The French company Total Uganda registered itself as a Dutch company.

This is known as the Dutch Sandwich; you put a Dutch company in between and then you become a Dutch investor. Which turns the treaty into a tool to drag a state before a tribunal of three men in Washington, having a commercial background and the ability to award billion dollar fines, without a possibility to appeal. If Uganda is condemned to a compensation but refuses to pay, the company has the right to seize Ugandan assets in the world.

Against Ugandan law

This is against Ugandan law, says the renowned Human Rights lawyer Isaac Ssemakadde. “According to the constitution, taxation is wholly the creation of the law of the state.” Which means that disputes have to be settled on the basis of the law alone. “Even an agreement between parties cannot supercede the obligation fixed in the law. There is therefore no room for arbitration on taxation,” he said.

“In an earlier tax dispute, between Heritage Oil and Gas against Uganda Revenue Authority, the High Court has forbidden the state to refer proceedings to the arbitration processes in London or anywhere else outside the jurisdiction of the Ugandan courts of law,” noted Ssemakadde.

In short, “Total is being treated differently to other business persons which is in violation of article 21 of the constitution of Uganda which states that all persons are equal before and under the law.”

Nobody can check Total’s claims about a tax waiver, because the Product Sharing Agreements are confidential. This is so despite the fact that Uganda has an Access to Information law that was promulgated in 2005. This limits the discussion, and knowledge, about the proceedings in the country’s oil sector to senior politicians and bureaucrats. The ordinary Ugandan is kept in darkness about what happens there.

The secrecy is not only advantageous for oil companies, but also for certain politicians, who seem to be interested in “personalizing” the oil resources. The Ugandan president Yoweri Museveni recently told Ugandans that those people who are challenging him politically in the forthcoming general elections “are after my oil.”

Why BITs?

A new interactive map made by Dutch journalists, with all known ISDS cases in the world, shows that ISDS is mainly used against developing countries. Sometimes because they clearly behaved badly towards an investor, but in other cases it’s more likely that it is used as a bargaining tool and a threat by multinational companies for better deals. Litigation costs amount to 8 million dollars on average, calculated the Organisation for Economic Co-operation and Development.

For lawyers and arbitrators this is simply an effective tool to defend the rule of law. “I’m happy there is arbitration”, a Dutch investment lawyer says. “There are many thug states in the world. And why do they complain? They signed the treaty themselves.”

“In the end, it’s the ordinary Ugandan taxpayer to bear the brunt and consequences for the enormous amounts of money that is going to be spent on this arbitration process,” says Ssemakadde. “Whereas Total can afford to maintain a given team of lawyers in Washington for, say, a month, Uganda can hardly afford this.”

The people remain ignorant about the deals that are made, and who exercises pressure on whom. Unless the general public starts to view the oil, as well as the treaties their government signs, as belonging to them and not the selected few in government, companies like Total will continue dragging the state into expensive arbitration processes, paid by the Ugandan taxpayers, who are the actual owners of the national resources.

This article is part of a research by De Groene Amsterdammer, Oneworld and Inter Press Service, supported by the European Journalism Centre (made possible by the Gates Foundation). See www.aboutisds.org.

]]>
http://www.ipsnews.net/2015/12/french-firm-attacks-ugandan-tax-using-isds/feed/ 0
WTO: Giant Steps in the World Conferencehttp://www.ipsnews.net/2015/12/wto-giant-steps-in-the-world-conference/?utm_source=rss&utm_medium=rss&utm_campaign=wto-giant-steps-in-the-world-conference http://www.ipsnews.net/2015/12/wto-giant-steps-in-the-world-conference/#comments Wed, 23 Dec 2015 18:50:42 +0000 Roberto Azevedo http://www.ipsnews.net/?p=143433

Roberto Azevêdo is the director general of the World Trade Organization (WTO).

By Roberto Azevêdo
NAIROBI, Dec 23 2015 (IPS)

World Trade Organization (WTO) members concluded the Tenth Ministerial Conference in Nairobi on 19 December by securing an historic agreement on a series of trade initiatives. The “Nairobi Package” pays fitting tribute to the Conference host, Kenya, by delivering commitments that will benefit in particular the organization’s poorest members.

Roberto Azevêdo

Roberto Azevêdo

The decision on export competition is truly historic. It is the WTO’s most significant outcome on agriculture.

The elimination of agricultural export subsidies is particularly significant.

WTO members, ¬especially developing countries,¬ have consistently demanded action on this issue due to the enormous distorting potential of these subsidies for domestic production and trade. In fact, this task has been outstanding since export subsidies were banned for industrial goods more than 50 years ago.

WTO members’ decision tackles the issue once and for all. It removes the distortions that these subsidies cause in agriculture markets, thereby helping to level the playing field for the benefit of farmers and exporters in developing and least-developed countries.

This decision will also help to limit similar distorting effects associated with export credits and state trading enterprises.

And it will provide a better framework for international food aid ¬ maintaining this essential lifeline, while ensuring that it doesn’t displace domestic producers.

There are also important steps to improve food security, through decisions on public stockholding and towards a special safeguard mechanism, as well as a package of specific decisions for Least Developing Countries (LDCs).

This contains measures to enhance preferential rules of origin for LDCs and preferential treatment for LDC services providers.

And it contains a number of steps on cotton, such as eliminating export subsidies, and providing duty-free-quota-free market access for a range of LDC cotton products immediately.

In addition, we have approved the WTO membership of Liberia and Afghanistan, and we now have 164 member countries.
And I think we are all committed to supporting these two LDCs to boost their growth and development.

We also saw continued commitment to help build the trading capacity of LDCs through the excellent support shown at the Enhanced Integrated Framework (EIF) pledging conference.

And, finally, a large group of members agreed on the expansion of the Information Technology Agreement (ITA). Again, this is an historic breakthrough. It will eliminate tariffs on 10 per cent of global trade ¬ making it our first major tariff cutting deal since 1996.

While we celebrate these outcomes, we have to be clear-sighted about the situation we are in today.

Success was achieved here despite members’ persistent and fundamental divisions on our negotiating agenda – ¬ not because those divisions have been solved.

We have to face up to this problem.

The Ministerial Declaration acknowledges the differing opinions. And it instructs us to find ways to advance negotiations in Geneva.

Members must decide, the world must decide, about the future of this organization.

The world must decide what path this organization should take.

Inaction would itself be a decision. And I believe the price of inaction is too high.

It would harm the prospects of all those who rely on trade today ¬ and it would disadvantage all those who would benefit from a reformed, modernized global trading system in the future ¬ particularly in the poorest countries.

So we have a very serious task ahead of us in 2016.

We came to Nairobi determined to deliver for all those we represent ¬ and particularly for the one billion citizens of Africa.

At the outset, I warned that we were not looking at a perfect outcome. And what we have delivered is not perfect. There are still so many vital issues which we must tackle.

But we have delivered a huge amount. The decisions taken in Nairobi this week will help to improve the lives and prospects of many people ¬ around the world and in Africa.

When we left Geneva, the international media had already written their headlines:

-‘WTO talks break down’

-‘Another failure at the WTO’

That’s exactly how it was in the Ninth Ministerial Conference in Bali two years ago. And we saw it again this year.

Well, we’re getting used to proving those catastrophic headlines wrong.

In the past, all too often, WTO negotiations had a habit of ending in failure.

But, despite adversity ¬ despite real challenges ¬ we are creating a new habit at the WTO: success.

(End)

]]>
http://www.ipsnews.net/2015/12/wto-giant-steps-in-the-world-conference/feed/ 0
Mexican Government Ignores Social Impact of Energy Projectshttp://www.ipsnews.net/2015/12/mexican-government-ignores-social-impact-of-energy-projects/?utm_source=rss&utm_medium=rss&utm_campaign=mexican-government-ignores-social-impact-of-energy-projects http://www.ipsnews.net/2015/12/mexican-government-ignores-social-impact-of-energy-projects/#comments Wed, 23 Dec 2015 17:03:38 +0000 Emilio Godoy http://www.ipsnews.net/?p=143430 The oil industry contracts granted by the Mexican government since 2014 have not included the social impact assessments required by law. The photo shows the Abkatun-A Permanente shallow-water platform in the Campeche Sound, where a fire broke out on Apr. 1, 2015 off the coast of the state of Campeche in southeastern Mexico. Credit: Courtesy of PEMEX

The oil industry contracts granted by the Mexican government since 2014 have not included the social impact assessments required by law. The photo shows the Abkatun-A Permanente shallow-water platform in the Campeche Sound, where a fire broke out on Apr. 1, 2015 off the coast of the state of Campeche in southeastern Mexico. Credit: Courtesy of PEMEX

By Emilio Godoy
MEXICO CITY, Dec 23 2015 (IPS)

Mexico’s hydrocarbons law stipulates that oil contracts must include a social impact assessment. But this has not been done in the case of the oilfields granted to the country’s former oil monopoly, Pemex, or to private companies since the industry was opened up to private investment.

Civil society organisations argue that concessions that do include a social impact asessment are illegal.

“The authorities have the obligation to carry out the consultations,” Manuel Llano, the founder of Cartocrítica, a Mexican NGO, told IPS. “One interesting detail is that the law says the evaluation must be conducted prior to the public tenders.”

Article 120 of the hydrocarbons law in effect since August 2014 states that the energy ministry must organise consultations to obtain free, prior and informed consent from indigenous communities that will be affected by oil industry projects in their territories.

And article 121 establishes that those interested in obtaining a permit for oil industry activity must present a social impact assessment (SIA) to the energy ministry. The energy reform opened up oil exploration, extraction, refining, transportation, distribution and sale of oil and its by-products to local and foreign private investment.“With respect to the shallow water projects, the government argues that there is no social impact, which is why the SIAs weren’t conducted. But one of the long-time conflicts is with fisherpersons because of the damage they suffer due to oil industry activity.” -- Aroa de la Fuente

After Pemex’s monopoly was broken up by the new law in August 2014, the state oil company was allowed to keep 83 percent of the country’s probable reserves and 21 percent of the prospective reserves, equivalent to 20 billion barrels of crude. This selection process was known as Round Zero.

On Jul. 15, the Mexican government opened up Round One and assigned two contracts for the exploration and drilling of deep sea oilwells off the coast of the southeastern states of Campeche, Tabasco and Veracruz. The contracts were signed on Sept. 4.

On Sept. 30, the energy ministry assigned three more contracts, and on Dec. 15 the third public tender was held.

“They haven’t done the assessments,” Aroa de la Fuente, a researcher with the FUNDAR Centre for Research and Analysis, told IPS. “With respect to the shallow water projects, the government argues that there is no social impact, which is why the SIAs weren’t conducted. But one of the long-time conflicts is with fisherpersons because of the damage they suffer due to oil industry activity.”

She questioned the argument that there are no social impacts, if no studies have been carried out to demonstrate this.

Since March, the guidelines for the SIAs have been open to public consultation in the Federal Regulatory Improvement Commission (COFEMER).

According to the “general administrative guidelines on social impact assessments in the energy sector”, drawn up by the energy ministry, the evaluations must assess the likely social impacts from oil industry activity and outline the social impact plans and measures to mitigate potentially adverse effects.

The guidelines require a baseline, representing a starting point for companies to compare actual with projected impacts. The baseline should be established before any oil industry activity begins. It should provide statistics in the following areas: demographic, migration, households and families, education, health services, jobs and labour conditions, social security, housing, main economic activities, local public finances, and tangible and intangible cultural heritage.

The company must also include the results from the analysis of stakeholders – individuals, communities, groups, organisations and institutions – taking into consideration their rights, interests and expectations, as well as their levels of involvement, importance and influence regarding the project.

The SIA must specify whether the impacts are short, medium, long-term or permanent; whether the adverse effects are mild, moderate or severe or the benefits are mild or strong; and whether the impacts are low, moderate, high or very high.

The comments about the SIA process reflect the resistance of companies, especially in the storage and distribution sectors, to conduct them.

The energy ministry estimates 176 million dollars in losses from the cancellation of projects due to the lack of SIAs.

The government argues that the first two public tenders did not require SIAs because they involved shallow water drilling. But the law does not make any such distinction.

Llano said SIAs are important for the defence of territory and for those who wish to legally challenge the areas that have been granted in concession.

The position taken by the government “is serious, because many of the wells are on land,” he said. “They are not complying with the law. They say the first two tenders are in offshore areas, which means no assessment is needed, but there is no legal foundation for this argument. What about the issues of the environment and fisherpersons?”

The expert complained that the government assumes that there are no affected groups, “when it is the assessment that must determine this.”

The government has already suffered its first setbacks. On Dec. 11, a federal judge ordered the permanent suspension of the construction of a wind park in the municipality of Juchitán, in the southern state of Oaxaca, after accepting a legal plea for protection filed by Binnizá indigenous communities.

Native groups and NGOs have fought the Energía Eólica del Sur wind park project by the company of the same name, which would generate 396 MW to be fed into power grids in the region. Their argument is that no free, prior and informed consent was sought.

The SIAs can be a useful tool for local populations. “In the public tenders for oil wells on land, the situation will become more complex, because people are going to try to defend themselves, and this is a mechanism that allows them to do so,” said de la Fuente.

Edited by Verónica Firme/Translated by Stephanie Wildes

]]>
http://www.ipsnews.net/2015/12/mexican-government-ignores-social-impact-of-energy-projects/feed/ 0
Companies Sue Developing States through Western Europehttp://www.ipsnews.net/2015/12/companies-sue-developing-states-through-western-europe/?utm_source=rss&utm_medium=rss&utm_campaign=companies-sue-developing-states-through-western-europe http://www.ipsnews.net/2015/12/companies-sue-developing-states-through-western-europe/#comments Mon, 21 Dec 2015 15:32:38 +0000 Frank Mulder http://www.ipsnews.net/?p=143407 This article is part of a research project by De Groene Amsterdammer, Oneworld and Inter Press Service, supported by the European Journalism Centre (made possible by the Gates Foundation). See www.aboutisds.org.]]>

This article is part of a research project by De Groene Amsterdammer, Oneworld and Inter Press Service, supported by the European Journalism Centre (made possible by the Gates Foundation). See www.aboutisds.org.

By Frank Mulder
Utrecht, The Netherlands, Dec 21 2015 (IPS)

Many Europeans fear the Transatlantic Trade and Investment Partnership (TTIP) because it could enable American companies to file claims against their states. The strange thing, however, is that Western Europe is becoming a big hub in this mechanism, called the Investor-State Dispute Settlement (ISDS), leading to billion dollar claims against poorer countries.

Imagine this: a country is in the middle of the worst economic crisis in decades. One in four people is unemployed. Tens of thousands are homeless. Four presidents have been replaced in two weeks’ time. To halt the downward spiral, the government decides to nationalize previously privatized sectors and companies. In response, dozens of companies sue the government, because they feel disadvantaged by the new policy. The government is forced to pay hundreds of millions in financial compensation in the years after.

Surreal? It happened to Argentina after the economic crisis early this millennium. Argentina had signed dozens of bilateral investment treaties (BITs) meant to attract foreign direct investments (FDI). The treaties gave investors the right to sue the Argentinean government in case of a conflict. Argentina became easy prey. With 56 claims to date, it is the most-sued country in the world.

ISDS is a mechanism by which a company can sue a state without actually going to court. The investor can bring his dispute before a panel of arbitrators, which acts as a kind of privatized court. The hearings often take place at the World Bank. Both parties appoint one arbitrator, and these two appoint a third one, the chairman. They are usually investment lawyers. The trio then will decide if the state treated the investor unfairly, and if yes, what it has to pay. There is no possibility to appeal.

Explosion

The world of investment arbitration is very intransparent. After a few months’ research, journalists working for the Dutch magazines Oneworld and De Groene Amsterdammer have published a number of stories about the hidden world of ISDS. The stories are accompanied by an interactive map, showing all ISDS claims ever filed against a state. The database behind this map contains information about the disputes, the awards and the members of the tribunals.

What is remarkable is the rise of the popularity of ISDS. Whereas in 2000 just 15 claims were filed, in 2014 alone nearly 70 new claims saw the light. By 2014, there were a total of 629 ISDS cases filed. This may turn out to be even more, because not all cases are public. The number of billion-dollar claims is growing.

Canada, the US and Mexico are on the top list of most-sued states. The reason is NAFTA, the free trade agreement of which ISDS is a part. However, the US has never lost a case. If we exclude the cases won by the state, a completely different picture emerges: Argentina, Venezuela, India, Mexico, Bolivia. In other words, developing and emerging countries. Many of these countries have now come to the conclusion that this arbitration system is unfair, or even neocolonial.

Dutch sandwich

Where do the claims originate from? In the list of home countries of investors the US is still number one, but in the last few years they have been surpassed by Western Europe. In 2014, more than half of all claims were filed by Western European investors. Claimant country number one is the Netherlands, with more claims than the United States.

However, a closer look at the companies involved shows that more than two-thirds of all Dutch claims have actually been filed by so-called mailbox companies. They choose to settle in the Netherlands for its attractive network of investment treaties, 95 in total, which are deemed investor-friendly.

“This is known as the Dutch sandwich,” says George Kahale III, an American top lawyer, who defends states in large investment cases. “You put a Dutch holding in between, and you can call yourself Dutch. This is how the system is misused.”

White men

In 88 per cent of the cases, the researchers found the names of the arbitrators involved. From this a picture emerges of a highly select club of men – and two women – who are assigned time and again to judge. A top-15 of arbitrators have been involved in a striking 63 per cent of all cases. In 22 per cent of the cases, even two members of the top-15 were involved, which means that they have been able to make or break the case.

“This is not strange,” says Bernard Hanotiau, a Belgian arbitrator who is also a member of the top-15. That a few arbitrators dominate the scene, he says, is just because they are the best ones. “If you look for lung cancer specialists in Belgium, you also end up with a small group. We are specialists.”

Yet this is problematic. After all, the arbitrators are not judges who have sworn an oath and have been appointed publicly. Most of them are commercial lawyers, who even continue to act as counsels next to their work as arbitrators. It is possible that a state is condemned by a judge whose law firm partner is a lawyer for an investor in a comparable case. The possibility of conflicts of interest is big.

According to Kahale, this leads to too many legal mistakes. “Their business background shines through in their decisions. Their background is commercial arbitration. The aim there is not to create correct legal precedents, but to get parties back to business again as soon as possible. Which is very bad. This is not about some little disputes, this is about multi-billion dollar claims, about principles that are crucial for countries, many of which have just a small GDP.”

Future

Criticism against the current system of investment arbitration is rising, as a growing number of countries decide to terminate the investment treaties behind ISDS. Not only countries like Venezuela, but also Indonesia, South Africa, Ecuador and India. Brazil is working on a model in which only states can file a claim on behalf of an investor.

Even the European countries, in their negotiations with the United States about TTIP, have now decided to plead for an independent investment court, in which investment cases are handled by former judges. The Dutch government has announced it will renegotiate existing investment treaties and make it harder for mailbox companies to abuse the system.

Whether these good wishes will be translated into real policy remains to be seen.

(End)

]]>
http://www.ipsnews.net/2015/12/companies-sue-developing-states-through-western-europe/feed/ 1