Mega-Regional Trade Agreements

While the multilateral GATT/WTO system has been accompanied by “bilateral”, “regional”, “free” or “preferential” trade agreements since quite some time, the recent increase in number and relevance of such agreements, including “mega-regional” agreements may be seen as a categorical change. These new agreements do not only contain quite extensive “deep” rules, which go much further than WTO disciplines and address a number of issues, which had been controversial in the WTO so far. Nevertheless, these new agreements do not formally mark a deviation from the WTO system, but can be seen as set-top agreements. The resulting “hybrid” structure needs care in order to prevent duplication and conflict. Mega-regionals and other recent trade agreements raise a number of questions, which go beyond the traditional rules at hand, mainly Art. XXIV GATT and V GATS. Critical issues do arise not so much in view of the “exclusivity” of provisions but to the contrary, because they attempt to write rules and standards for the world economy at large.

Like any other trade and investment agreement, the primary objective of the Transatlantic Trade and Investment Partnership (TTIP) is to remove obstacles between the contracting parties, boost trade and investment and contribute to economic growth and job creation in the corresponding economies. However, thanks to the size and influence of the parties involved, TTIP has far greater potential than just another trade and investment agreement. It is a unique laboratory for filling in the gaps in the multilateral rulebook and can provide a benchmark for the kind of deep and comprehensive trade agenda that the World Trade Organization (WTO) still needs to develop. It can also create incentives for WTO members to come back to the negotiating table, thereby contributing to unlocking the multilateral process.

The legitimacy of law depends on its justifiability vis-à-vis citizens and peoples in terms of constitutionally agreed principles of justice. This chapter explains why constitutional democracies, EU law and UN law define “democracy” in different ways; and why multilevel governance institutions often resist protecting individual and democratic rights in multilevel governance of transnational public goods like a transatlantic common market. It examines the democratic legitimacy of the intergovernmental free trade negotiations of the EU and criticizes the lack of constitutional, parliamentary, deliberative and participatory democracy during the EU negotiations on the CETA. The chapter concludes that citizens and democratic parliaments have good reasons to insist on replacing “anti-citizen clauses” (like Article 30.6 CETA) and investor−state dispute settlement privileges (e.g. in Chapter 8 CETA) by citizen-oriented FTA provisions protecting equal rights and judicial remedies of all citizens as “democratic principals” and main economic actors. EU citizens must assume “cosmopolitan responsibility” for multilevel governance of international public goods by holding government agents more accountable. The inadequate parliamentary control of intergovernmental treaty-making must be compensated by stronger constitutional, participatory and “deliberative” democracy in the design and implementation of FTAs of the EU with other constitutional democracies in order to avoid “commodification” of citizens.

Preferential trade agreements (PTAs) are not as preferential as they used to be. Traditional PTAs mainly exchanged club goods, that is goods or tariff concessions that are non-rivalrous (use by one does not diminish their availability to others) but excludable (some can be excluded from use). Modern PTAs are increasingly providing public goods, i.e. goods or concessions that are non-rivalrous and non-excludable: they are available to everyone irrespective of whether one contributed to producing the good. More precisely, whereas most commitments in traditional PTAs (tariff concessions) were exclusive to PTA partners, many commitments in twenty-first century PTAs are—or ought to be—either de facto or de jure extended on a most-favored nation (MFN) basis to outsiders too, often unconditionally, sometimes conditionally. This contribution explains why this is the case with reference to recent PTAs of the United States and the European Union, especially those with South Korea. It also offers some thoughts on what this means for the global trading system and the World Trade Organization (WTO) moving forward, and why countries might be willing to offer public goods in bilateral and especially mega-regional trade agreements.

This chapter examines the growing body of treaty law which is designed to clarify areas of ambiguity which have emerged in investor–state jurisprudence and, more particularly, to preserve the regulatory autonomy of states from arbitral decisions and interpretations which appear to overreach the original intentions of the states party to bilateral investment treaties and investment protection chapters in regional trade agreements. Many different approaches are adopted in the drafting of recent treaties, especially recent mega-regional trade treaties, both substantive and procedural. The different methods of framing exceptions are examined as well as procedural devices, such as the Investment Tribunal (or, "Investment Court System") recently included in the EU Canada CETA text.

Mega-regionals are transforming and shaping the future of international investment law, concerning both the settlement of investment disputes and the substantive disciplines governing investor–state relations. Focusing on the latter, the present chapter shows how mega-regionals depart from the so far dominant European model of investment protection by going beyond crudely worded post-establishment protections for foreign investment. Instead, Mega-regionals pursue the twin policy goals of investment liberalization through greater market access commitments and strengthening state control by ensuring host governments sufficient space to regulate in the public interest. In light of these policy goals, and considering the deeper reasons for structural changes to the investment rules in mega-regionals, the chapter argues that the models and conceptual foundations of mega-regionals build on prototypes first developed in the context of US and NAFTA investment practices. This suggests that the future of international investment law will be shaped to a considerable extent against the background of US experiences, rather than be forged anew by the mechanics of international diplomacy and negotiation.

All of the mega-regionals recently concluded or currently negotiated are envisioned or at least highly likely to, among other subjects, provide for a regulatory framework on foreign investments. Against this background this contribution takes a closer look at some of the specific aspects of interactions between these investment chapters and the in principle by now already traditional treaty-making through the conclusion of bilateral investment treaties (BITs). The first section addresses the factual background and some of the underlying expectations shaping the present discussion on the relationship between investment chapters in mega-regionals and BITs. In the second part an attempt will be made to systemize the various potential connections based on the identification of two main dimensions of interaction between mega-regionals and BITs. Finally, the contribution will provide a kind of bird’s-eye view and some tentative conclusions on the expected consequences of these interactions for the future development of—and scholarly research on—international investment law as a whole.

This chapter argues for the necessity of inclusiveness of all stakeholders and the balance between public and private interests in the negotiation of future intellectual property clauses in regional and mega-regional trade and investment agreements. Since the conclusion of the TRIPS agreements in 1994, negotiations of trade and investment agreements have resulted in a series of ‘plus’ clauses that point towards overwhelming lobbying success of corporations in defending private commercial agendas while the interests of the public, be it as consumers, citizens or states are neglected. Driven by curiosity as to what might be in store for future mega-regionals such as the TTIP, we trace the emergence of these plus-clauses, sketch their development, and advise negotiators of future intellectual property clauses in trade and investment agreements to make use of the academic discourse and to deliver on democratic values.

Most free trade agreements (FTAs) signed by the United States, the European Union and the members of the European Free Trade Association (EFTA) in the last 15 years contain chapters on intellectual property rights with provisions applicable to pharmaceuticals. Such provisions considerably expand the rights recognized to pharmaceutical companies under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) established in the context of the World Trade Organization (WTO). The text on intellectual property of the Trans-Pacific Partnership (TPP) goes further than those FTAs. It reflects the ambition of such companies to obtain even higher levels of protection. This paper discusses some characteristics of the TPP negotiations and their main outcomes and how they may negatively affect access to medicines, notably in developing countries that may become parties to that agreement.

Despite being included within the scope of International Investment Agreements (IIAs) for many decades, several recent high-profile cases have revealed the extent to which intellectual property rights (IPRs) can be deemed investments under an IIA. With substantive standards and textual language differing between and among the more than 3000 IIAs the situation is highly fragmented. Health advocates are concerned that non-discriminatory measures taken to promote health and safeguard public welfare may be deemed to violate an obligation under an investment treaty. Certain governments have been responsive to this concern and have begun to refine and improve the textual language of treaties. This chapter evaluates the most recent treaty language used in relation to IPRs and public health, with a particular focus on treaties negotiated by the United States and the European Union. The chapter finds that governments which are making efforts to safeguard public health and welfare are indeed providing enhanced protection for public welfare measures in key parts of IIAs, namely clauses on expropriation, fair and equitable treatment and through the use of stand-alone provisions. That being said, the article does identify potentially problematic textual language which warrants further consideration from treaty drafters in the future.

A serious and ambitious implementation of the Paris Agreement on climate change of December 2015 requires rapid worldwide decarbonization implying a complete phase-out of the use of fossil fuels. Curiously, references to the role of international trade are entirely lacking in the text of the Paris Agreement. As trade liberalization is moving forward nonetheless and increasingly in regional or bilateral fora, this contribution looks at the role the mega-regional agreements play for the post-Paris decarbonization agenda. The analysis comprises both feasible risks and possible opportunities and takes into account the draft texts and negotiating mandates of the Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP) and the Comprehensive Economic and Trade Agreement (CETA).

In light of recent negotiations on mega-regional trade agreements this chapter analyses if and how such agreements approach the liberalization and regulation of energy services. In particular it discusses how liberalization commitments can be reconciled with regulatory principles and rules. In this regard, the chapter addresses the Transatlantic Trade and Investment Partnership (TTIP), the Comprehensive Economic and Trade Agreement (CETA) and the Energy Charter Treaty as a special case of a mega-regional agreement. It is shown that mega-regionals have failed so far to deliver better and fairer results concerning energy services. As a consequence, renewed efforts to negotiate an agreement on energy in the multilateral trade system are called for.

The liberalisation of access to government procurement markets is an important element of recent vintage preferential trade initiatives, including the Transatlantic Trade and Investment Partnership (TTIP), and has been a long-standing focus of the European Union (EU) and the United States of America (USA) in the context of the World Trade Organization (WTO). The stylised fact is that for the most part government entities continue to “buy local”, suggesting that efforts to negotiate market opening have not been very effective. This paper argues for a reconsideration of the design of international cooperation on procurement regulation to focus more on improving the efficacy and efficiency of procurement procedures more generally.