agua y libre comercio en inglÉs 2.pdf

7/27/2019 AGUA Y LIBRE COMERCIO EN INGLS 2.pdf

1/26

Guide

n2

International Conventions

Incompatibilities between Free Trade Treaties,ncompatibilities between Free Trade Treaties,Bilateral Investment Treaties and relevantilateral Investment Treaties and relevant

WAT

ERAND

FREETRADE


2/26

INTRODUCTION Pg. 3

WHAT ARE THE LEGAL FRAMEWORKS AND

INTERNATIONAL PRINCIPLES THAT REGULATE

WATER RIGHTS AND THE INTERNATIONAL

TRADE OF WATER AND THE PROTECTION OF

INVESTMENT? Pg. 5

WHAT IS THE STRUCTURE OF THE SYSTEM TO

RESOLVE INTERNATIONAL BUSINESS

CONFLICTS AND WHAT IS ITS IMPACT ON

COUNTRIES WATER MANAGEMENT? Pg. 8

WHAT ARE THE SOURCES OF INTERNATIONAL

LAW THAT CONFER THE REGULATORY

FRAMEWORK FOR THE PROTECTION OF

WATER AND WATER SERVICES?

Pg. 9

WHAT ARE THE LEGAL INSTRUMENTS OF

INTERNATIONAL LAW THAT RECOGNIZE THE

RIGHT TO WATER FROM A PERSPECTIVE OF

HUMAN RIGHTS AND WHAT IS THEIR

REGULATORY REACH?

Pg. 17

WHAT ARE THE LEGAL IMPLICATIONS OF

HUMAN RIGHTS AGREEMENTS WITH RESPECTTO THE CLAUSES INCORPORATED IN FREE

TRADE TREATIES AND BILATERAL INVESTMENT

TREATIES THAT COMMIT TO THE TRADE OF

WATER?

Pg. 19

Glossary of Terms and Acronyms Pg. 22

G U I D E

1

2

3

4

5

6

Incompatibilities between Free Trade Treaties, Bilateral Investment Treaties and relevant International Conventions

Incompatibilitiesbetween Free Trade

Treaties, BilateralInvestment Treaties and

relevant InternationalConventions

2

Water and Free Trade

I N D E X


3/26

Incompatibilities between Free Trade Treaties, Bilateral Investment Treaties and relevant International Conventions2


4/26

The Social Vision of Water, a project led by

the Institution AGUA SUSTENTABLE

(SUSTAINABLE WATER) with the help of

the International Development Research

Centre (IDRC) has developed variousguides on the theme of Water and Free

Trade based on diverse investigations

carried out primarily in Andean countries

between 2004 and 2007. The objective of

these investigations was to determine how

water and drinking water services are

impacted by Free Trade Agreements and

Treaties. The results of this research

permitted the design of a series of didactic

documents written principally for publicoperators, government negotiators of free

trade agreements, national and interna-

tional public authorities with decision-

making power pertaining to water, academ-

ics and consultants, and representatives or

leaders of civil society.

This Guide has been prepared primarily as

a synthesis of the introduction to the bookWater and Free Trade. Impact and implica-

tions of Free Trade Agreements on Water

and its Services by Miguel Solanes.

In addition, the guide incorporates reflec-

tions found in various investigations carried

out with trusted consultancies with different

analysts such as Howard Mann and

Michael Hantke - Domas and Jorge Barra-

guirre. The texts of these documents,including the introduction by M. Solanes

are available at

http://www.aguavisionsocial.org/

lineasDocs.html.

The supporting documents used to prepare

this guide have been systematized into a

summary, and complemented and

illustrated with facts, analysis and addi-

tional information by Nacy Yaez, with the

help of a team from SUSTAINABLE

WATER.

The central objective of the present Guide

called Incompatabilities between Free

Trade Treaties and Bilateral Investment

Treaties and Relevant International

Conventions, is to open of debate around

the following themes: i) points of interaction

between international law and water; ii)

legal principles that apply to the protection

of investment; iii) the impact of the systemof resolving international comercial

disputes on countries ability to govern

water resources and the exercise of water

rights; iv) sources of international law that

confer a regulatory framework for water

and its associated services, and v) interna-

tional legal rules that protect the right to

water from a perspective of human rights.

The proposed conclusions put forth in the

documents that comprise this guide, firstly,

emphasize the imperative need to modify

the decisions of the international arbitration

tribunals the principle mechanism for the

resolution of commercial disputes in the

international arena with relevant national

precedents that consider the nature of the

facts upon which the conflicts were submit-

ted for resolution and the context in whichthey take place, urging the international

trade community to change the mode of

designation, operation and procedure of

international arbitration. Secondly,

although it is affirmed that Free Trade Trea-

ties and other investment agreements open

the market for trade in water as a natural

resource and as services and establish

INTRODUCTION1



5/26

a legal commercial regime at the interna-

tional level that tends to override the

current international order, it is clear that

this market is not free of responsibilities.

Finally it establishes that these responsibili-ties are regulated by the rules established

by international law that protect water and

its related services through a regulatory

framework: principles that come from inter-

national agreements, international practice,

general principles of law applied by

relevant national systems in the regulation

of water resources (with an emphasis on

the contractors obligation of efficiency),

whose legal rulings allow challenges to

contracts when it suffers defects or if

current circumstances differ from the time

of its signing; international environmentallaw and standards of sustainability in the

planning and execution of development

policies; human rights; and international

water agreements.

4 Incompatibilities between Free Trade Treaties, Bilateral Investment Treaties and relevant International Conventions


6/26

The World Trade Organization (WTO),

the General Agreement on Tariffs and

Trade (GATT), and the General Agree-

ment on Trade in Services (GATS) are

well-known instruments that regulatecommerce and incorporate water in the

market of goods and services. Other

agreements with provisions similar to

GATT and GATS and which have simi-

lar impacts in relation to water, also

exist. One example is the Central

American Free Trade Agreement,

known as CAFTA, where water has not

been specifically excluded from the

trade rules. Furthermore, the agree-

ments with the United States of

America, in the services sector, only

exclude services when they have been

explicitly excluded, which differs from

GATS, where it is understood that only

listed services are included (through

the so-called positive lists, lists wherestates have committed services whose

inclusion of offers has been explicitly

accepted).

In the Central American Free Trade

Agreement (CAFTA), only Costa Rica

has excluded water services, which

means that if one of the other countries

party to the agreement permits a waterprivatization, the entire sector would be

opened to private investment. The

United States, by comparison, is not

subject to the same rule, given that the

commercial areas of jurisdiction of

each of the states of the Union have

been excluded from the agreement;

and because water is subject to the

regulation of each of the member

states of the Union, which means the

decision regarding its commercialisa-

tion remains subject to the sover-eignty of each federal state.

WHAT ARE THE LEGAL REGIMES AND PRINCIPLES OF INTERNATIONAL

LAW THAT REGULATE THE INTERNATIONAL TRADE OF WATER AND THE

PROTECION OF INVESTMENTS?

2

WATER AND THE RIGHTS OF U.S.

INVESTORS IN CAFTA

If there were already private water

services in the region of the Central

American Free Trade Agreement

(CAFTA), then the entire sector wouldbe open to U.S. investment.



7/26

Interaction between Interna-

tional Investment Law and WaterThe interaction between investment

and water can be illustrated in the

following areas: a) direct investment inthe water sector; b) investment in other

sectors that consume water in their

production processes; and c) the

impact of legal rules that include provi-

sions for investor protection after the

investment has been made.

Water is an important part of all invest-ment agreements that open up sectors

such as agriculture, energy and indus-

try, and foreign investment.

After an investment is made, the

foreign investor acquires certain rights.

The investment implies a situation of

permanency in the country that results

in relations between the investor andauthorities and regulatory entities of all

levels, and as a result in international

responsibilities for the State.

The principles of protection that

support an investor in this context are

the following:

1. National treatment: an investor

can not be treated in a less favor-

able manner than nationals, except

in the case of exceptions expressed

in the treaty;

2. Most Favored Nation: an investor

can take advantage of more benefi-

cial agreements signed by other

countries, except where explicitly

excluded in the treaty.

3. Standard of international mini-mum treatment, fair and equal treat-

ment: is a principle of absolute inter-

national law that is not linked to a

comparative like the two previous

principles. Its content is still in

formation, and includes transpar-

ency, due process, right to

defense, and day in justice (da

en justicia as it is defined in Span-

ish), as well as that of fair and equal

treatment. This is related to a

subjective standard based on the

legitimate expectations of the inves-

tors. Conforming to this principle

and in relation to the regulation of

the water sector, whichever modifi-

cation of the conditions of the rights,including tariffs not forseen at the

time of the investment, could be

seen as a violation of this standard.

4. Protection with respect to uncom-

pensated expropriation: This notion

is an absolute standard like that of

fair treatment. The problem it pres-

ents is not in its traditional applica-tion that requires the compensation

of expropriative actions, rather that

its expanded definition attempts to

block regulatory activities under the

rubric of indirect or regulatory

expropriation.



8/26

5. Prohibition of Performance

Requirements: Investment agree-ments prohibit performance require-

ments that investors must meet as a

condition for doing business in a

country. Nevertheless, water is

plainly an area where performance

requierements will continue to

increase given the nature of the

water problem.

RIGHTS OF INVESTORS

Versus

RESPONSIBILITES OF INVESTORS

TOWARDS STATES

The rights of investors are broad and

expansively interpreted, and the tendency

imposed by the new international

commercial order vis a vis Free Trade and

Investment Agreements is that investors do

not have a corresponding set of obligations

with respect to the states where they

operate.

INDIRECT OR REGULATORY

EXPROPRIATION

The doctrine of indirect expropriationconsiders that government measures are

undue interference on private activity. This

issue is particularly serious considering

that water will be subject to increasingly

severe regulations, in terms of quality,

environmental balance, and scarcity; and

therefore a broad conceptualization of

expropriation would translate into serious

social, environmental and sustainability

problems. It should be noted that the

United States has apparently never paidcompensation for measures resulting from

the application of environmental

legislation by the State even though

investors acquired rights may have been

restricted.



9/26

Investment agreements signed after1980 establish special mechanisms toresolve conflicts.

These mechanisms are based inprivate arbitrations between privatefirms, but in practice they have becomeactions taken by private investorsagainst States.

The majority of the cases submitted tointernational arbitration in the Americashave to do with important questions ofpublic interest, including the environ-ment, land use planning, the use andprotection of soil, and social questions.These issues are illustrated in thefollowing emblematic cases: a) in thecase of the La Villa wetlands in Lima,

Peru; and b) public service companies,in the cases pertaining to Aguas Argen-tinas y Aguas del Illimani (in Argentinaand Bolivia, respectively).

In spite of the importance of their deci-sions, the arbitration tribunals do notcomply with the basic rules of dueprocess: i) they are not independent; ii)its members are selected by the partiesand act indistinguishably as arbitrationjudges and litigant attorneys; iii) theproceedings are held in secret; iv) thereare no means to appeal decisions; andv) only one of the parties, in this casethe investors, have the active legiti-macy to initiate proceedings againstgovernments.

HOW IS THE SYSTEM OF INTERNATIONAL COMMERCIAL DISPUTE

RESOLUTION STRUCTURED AND WHAT IS ITS IMPACT ON COUNTRIES

WATER MANAGEMENT?

3

COMMERCIAL LAW TRUMPING

PUBLIC INTEREST

The international arbitration carried out inthe cases that involve Investor-to-Statehas been a frustrating imposition ofinternational commercial law over ques-tions of public interest, as demonstratedby 1) the nature of the questions submit-ted for arbitration: public services,environment, social questions; 2) theeconomic magnitude of the demandedreparations ($20 million only in Argen-tina); and 3) the tendency of arbitrationtribunals to undermine national judicialsystems by employing a pro-investor,supra-state jurisdiction.



10/26

I. Trade and Investment Law in the

context of other sources of Interna-

tional law, with special emphasis on

water and its services

Until the 1990s, the decisions of com-

mercial tribunals operating under GATT

applied to rules/ or applied rules that

were strictly linked to GATT itself, with-

out taking into account other sources of

international law. Nevertheless, after

the 1990s, the Tribunal of Appeals of

the World Trade Organisation com-

pletely reverted this jurisprudence and

decided that the Organisation would

exist as part of a much broader body of

international law, that should be consid-

ered when it was deemed relevant by a

panel or appeals.

The arbitration tribunals set up by

investment agreements have followedthe original restrictive tendency of

GATS, in terms of applicable law as

well as the consideration of the protec-

tion of interests, concentrating its

action in the protection of investors,

conforming to the purpose of the agree-

ments. In this way, the arbitration tribu-

nals have created a new constitutional-

ity, with principles, proceedings, andunique uses of exorbitant power.

The international arbitration tribunals

have taken no notice of either the exis-

tence of principles of common law or

regulatory law that are important to

arrive at balanced solutions that guar-

antee the sustainability of the global

institutional system.

In this scenario, it is important to note

that there are a wide range of prin-ciples, notions and concepts that are

extremely relevant for guaranteeing the

equity and the sustainability of the

international order and that provide a

dimension of balance and neutrality in

the system of international law.

II. International customary or

common law, source of interna-

tional law resulting from conduct

or repeated behaviour of States

Customary law or practice can be

applied as a tool for interpreting

contractual obligations, or as a source

of rights and obligations in and of itself.

Interpretive Practice

As a source of interpretation, in accor-

dance with the Vienna Convention,

customary law has negative and posi-

tive elements.

The negative is that it conditions theinterpretation of treaties on its object

and purpose. This has resulted in a

broad interpretation of the rights of

investors and has constrained the role

of the arbitration tribunals pushing

them to protect the private interests

stipulated in the contract.

WHAT ARE THE SOURCES OF INTERNATIONAL LAW THAT CONFER A

PROTECTIVE REGULATORY FRAMEWORK FOR WATER AND ITS RELATED

SERVICES?

4



11/26

The negative impacts of the system

have been ignored and have put into

question the States function to guaran-

tee the public interest. As a safeguard,

it has been argued that the agreementshave other explicit purposes, such as

the right to development and to regula-

tion, whose consideration will broaden

the range of interpretive criteria that the

clauses of the contract should be

subjected to and the balance of the the

arbitration decisions.

Another safeguard that emanates from

interpretive practice has been to estab-

lish provisions over specific institutions.

Here it is considered that the principle

of fair and equal treatment is evolving,

conforming to common law, in a type of

international administrative law, which,according to some arbitrations, could

be adjusted and applied to conform to

the level of development of the country

in question. It is argued that this differ-

entiation could be part of international

customary law as it is not realistic to

think that the same standard can be

applied to all the countries in the world,

regardless of conditions of economic,

social and institutional development.

The importance of interpretive common

law can be substantiated in the fact that

countries, such as the United States,

make an effort to ensure that their

domestic interpretation, related to

processes and/or legal expropriativeacts, is binding. This validates interna-

tional customary practice and gener-

ates legal certainty. Nevertheless, it is

important to note that this is only valid if

both or all of the parties on signing the

treaty agreed to apply this legal regime.

Custom as a Source of Law

Customary practice can be an autono-

mous source of laws; many interna-

tional agreements have broad clauses

about international law that permit refer-

ence to customary practice as a source

of international law. This permits prac-

tice to be invoked when a reasonable


EXPROPRIATION UNDER INVESTMENT

AGREEMENTS

The other institution whose normative reach

could be detemined by international

customary law is expropriation underinvestment agreements. This includes the

determination of when there is expropriation

and how much should be paid in the name of

indemnification. The claims of expropriation

can be based on administrative measures

that are based on: the loss of property rights

and the decrease of all or most of the value

of the goods and capital invested.

Nevertheless, there are cases in which the

demand is founded on indirect expropriationresulting from regulatory measures. It

should be noted that normal regulatory

measures of government are not

expropriation under international law if they

are not discriminatory, conform to due

process and have been adopted for public

purpose.

0


12/26

linkage exists between customary law,

general principles of international law,

and trade conflict generated in the

frame of an international agreement.

The expressed contents of applied law

vary with case to case, but use of

customary practice helps to mitigate

the impacts of an interpretation that

advocates for the breach or state

responsibility founded only in the text of

the agreements.

The crucial point is to determine if other

sources of international law are appli-

cable, from the moment that the

process of negotiating international

commercial agreements is initiated,

and to determine which is the relevant

applicable content.

General Principles of Law

The general principles of law are the

source of international law. These can

be used to fill gaps in agreements and

international customary law and also to

consolidate principles of international

law that have been broadly accepted in

domestic law.

The General Principles of law can be a

source for interpretation, or also of

contextualization and balance between

States and investors in the area of

rights and obligations derived from

investment agreements.

When these principles are found to be

sufficiently embedded in legal systems

that are stable and based on developed

institutions, they will apply to similar

situations or goals, and can be consid-ered as general principles of law and

applied in the international arena.

Specific principles exist that guide the

formation of consent and honouring of

investment contracts, their execution

and therefore the regulatory measures

by which governments, eventually, can

alter the contractual clauses or the

economic and institutional setting

where they are executed. Its applica-

tion will depend on the context and

whats done and the capacity to dem-

onstrate that it relates to a general prin-

ciple of law relevant to the concrete

case.

In terms of regulation of public

services, an examination of law in the

European Union, the United States,

England and Chile, suggests that a

general regulatory principle exists that

requires an obligation of efficency from

service providers, imposed in favor of

1Incompatibilities between Free Trade Treaties, Bilateral Investment Treaties and relevant International Conventions


13/26

the users and which justifies the regula-

tory action of the state aimed to prevent

undue profits, externalities and other

affects which are contrary to efficiency.

General principles applied to the forma-

tion and honouring of contracts

Acts contrary to public order, a domes-

tic notion held in civil courts, can not be

bases for legal actions. This has been

recognized in doctrines over arbitra-

tion, linked to the public international

order.

Corruption is one act considered

contrary to prescribed public order.

There are processes for signing agree-

ments outlined within the United

Nations and the Organization for Eco-

nomic Cooperation and Development

(OECD). Contracts affected by corrup-tion can not be taken to arbitration. But

while in some cases it has been

suggested that the state that invokes

corruption should have initiated

proceedings to the effect, in others

solid circumstancial evidence has been

admitted. In other cases, when it has

been invoked by a country, corruption

has served to get investors to drop theirdemands and pay costs. When there is

corruption, the investors can not argue

legitimate expectations.

Other principles to consider in the

writing of a contract, received in almost

all of the systems of the world, are: i)

physical or moral violence; ii) intimida-

tion; iii) undue influence; iv) falsifying

and hiding of material information; v)

abuse of law; vi) error or moral viola-

tions vii) good conduct and basicdecency. To summarise, the lack of

moral conscience.

Of course in all cases the factual base

should be clear and well founded. It has

been argued in cases linked to water

that one could investigate, for example,

if financing organisations, companies

and other possible beneficiaries of

privatisation actively promoted privati-

sations, that led to banks not financing

public enterprises, conditioning financ-

ing on privatisation.

Another argument that has been

suggested is that privatised companies

should have been aware, given theirworldwide experience, that the condi-

tions of the privatisation were not

sustainable, and therefore entered the

contracts knowing they would be rene-

gotiated. The reality is that the majority

of concessions have been renegoti-

ated, particularly in water and tranpor-

tation, which has had an impact on the

credibility of the country and sector inquestion, and which indicates both

poor design of contracts and exces-

sive opportunistic behavior. This

suggests that regulation, particularly in

poor countries, should consider the

imbalance of information and difficulties

of enforcing laws.



14/26

The limited frameworks for competi-

tion which have led to the capture of

markets also could give rise to the

invocation of the principles noted

above.

What should be made clear, is that in all

cases, proof of facts and determination

of applicability and procedure of the

principles invoked under international

law, will be fundamental. Subsequently,

it will be relevant to determine the civil

sanction in the event that the facts and

the legal jurisdiction of the principles

are applied, for example: annulment,

payment for damages, or adjustment

and compensation for shared faults, in

other words of mutual services.

Principles generally applied in the

execution of contracts

In the context of monopoly services such

as water, with sensitive imbalances of

information, and with problems and

costs for the associated government in

the disruption of the contract, the poten-

tial for abuse of law is significant, in the

same way as abuses of market power,

strategic behavior and the hiding of

information.

In this case, failure to complete obliga-

tions and violations of good faith can be

argued. This is linked to the specific

non-completion of the obligation of

efficiency for the benefit of users, which

is the basis for the decisin to open the

national market to the private foreign

investor.

Another possible defense is change of

circumstances. This principle, neverthe-

less, presents problems linked to the

unforseen nature of determining facts of

the situation. Not withstanding, if the

facts were forseen, whether serious or of

daily occurence, other elements enter

into play. These include ineptitude, bad

faith, lack of due diligence, ignorance,

whether culpable or intentional, of actsor information, formal or informal, that a

prudent and normal person should have

taken into account to determine if a com-

mercial operation in its context is viable

or not.

In this case the adherence to the obliga-

tion of diligence could vary related to the

degree of knowledge with respect to anactivity, its performance conditions, risks

or limitations. In American regulatory

law the term constructive notice has

been created to refer generically to the

situations in which it is considered if a

person has information sufficient to be

prudent.



15/26

General Regulatory Principles

The most important general principle is

that States, in the exercise of their

sovereignity, have the right to dictateregulatory rules in their territory. This

principle can only be limited in function

by expressed contractual rules.

In the area of water and its related

services the question can be better

understood if it is thought of as a com-

bination of the basic right to regulate

and an understanding of good practice

in the referred sector. In this respect it

would be unreasonable for an investor

to assume a permanent unchanging

regulatory universe if the local prac-

tices had not been developed to the

necessary level, or to a comparable

standard. This argument can be

strengthened if it can be demonstratedthat certain practices have elevated the

level of general principles to compa-

rable law.

In this sense there are principles in

water resources and in water services

that can be considered general.

The principles that are enumeratedinclude but are not limited to:

Water Resource

Among the most relevant water

resource principles are i) public domin-

ion; ii) assignation to and control by the

State; iii) control of monopolies; iv)

effective use; iv) prohibition of contami-

nation and risk creation; v) manage-

ment of sustainable use; vi) priority

assigned to potable water or water forhumans; vii) environmental discharges;

vii) respect for established and custom-

ary rights; and in certain conditions-

viii) charges for the water

Water Services

With respect to practices and regula-

tions in the field of services, there exist

relevant rules and practices that are

upheld in the principle of efficiency of

endeavour and that manifests in: i)

supply to the poor; ii) reasonable rates

levels; iii) sustainability; iv) quality of

services; iv) information; v) transfer

prices/pricing; vi) levels of corporate

debt; vii) capital structures; viii) usefuland usable property; ix) regulatory

organization; x) levels of reinvestment;

y xi) tariff/rate adjustments in times of

crisis.

In terms of regulation of water services,

it would be inappropriate to assume

that low levels of regulation, resulting

from ignorance or lack of information ina country, should remain indefinitely

simply because this was the state at

the time of the investment. In the expe-

rience of countries such as England,

the United States and Chile, to mention

a few, regulatory rules have been

adjusted and perfected progressively



16/26

over time. Therefore, as regulation and

the art of providing a service is devel-

oped, necessary regulation should not

be blocked by service providers via

undue influence, abuse of a dominantposition, misrepresentation of facts or

hiding of information.

III. Potential application of

international law unlinked to

international investment law

The principles of international invest-

ment law are not or should not be

considered in a context that does not

include other rules of international law.

For the reality is that they operate

within a complex set of norms that in its

entirety makes up the international

public order. As such we can observe

that the rules established by the World

Trade Organization, in setting legalprecedence, exist within a body of gen-

eral international law and are not

isolated in and of themselves.

From this perspective, international

law, in its entire legal complexity, deter-

mines the parameters of the legitimate

expectations of investors in the context

of the principle pacta sunt servanda(principle of international law and civl

law that means that the covenant

should be respected by all parties) and

also the principle of good faith.

The principles of international law can

refer to sustainable development,

which can include not only the environ-

ment, but also equitative development

in economic and social terms.

There is consensus that meeting envi-ronmental obligations constitutes a

justification for the exercise of environ-

mental regulatory authority, a principle

which the World Trade Organization

(WTO) accepts in practice. The same

principle exists in the obligation to not

cause cross-border harm.

The sustainable development compo-

nent of development can generally be

understood in terms of social and

economic equity, based on the need to

respect policies of distributive equity,

with particular reference to historically

mistreated minorities.



17/26

International Water Agreements

International rules pertaining to shared

water resources include causing no

harm, reasonable and equitativeallocation; and the priority of basic

human needs. The existence of treaties

to this effect condition the legitimate

expectations of the investor.

Human Rights

The water sector is particularly relevant

to the area of human rights, and the

growing recognition that international

corporations are obliged to meet basic

human rights standards. There is a

human right to secure drinking water.

Another area of human rights looks at

the protection of indigenous rights

which incorporates a collective dimen-

sion within the field of rights to water.



18/26

The discussion with regards to the right

to water dates to 1972, at the United

Nations Conference on Human Envi-

ronment which took place in Stock-

holm, Sweden, where it was estab-lished that water should be an object of

special protection by the legal system,

to guarantee its sustainable use by

current and future generations.

This same point was also asserted in

1977, in the United Nations Conference

on Water in Mar del Plata, Argentina

and, afterwards, in 1992 in the Interna-

tional Conference on Water and the

Environment in Dublin. In the same

year, the Rio Conference on Develop-

ment and the Environment established

the so-called Agenda 21, paragraph 18,

with a preferential right to the use of

water resources for the satisfaction of

basic needs and the protection ofecosystems. From a social perspec-

tive, paragraph 18 conceptualises that

the right to water is both a social good

and an economic good, and attempts to

harmonise this dual condition. The

mechanisms by which attempts to arbi-

trate these interests are: demand man-

agement, the conservation and reuse

of water, the evaluation of availableresources and financing instruments.

The implications that emanate from the

recognition of the fact that water is an

economic and social good are found in

pronouncements of the need to regu-

larize rate structures taking into consid-

eration opportunity costs, environmen-

tal impacts and ability to pay. On the

other hand, given the shortage and

vulnerability of the resource, the inves-

tor is obliged to recognize, in all plan-

ning and use of water, the full costs, thebenefits of investment and the costs of

environmental protection and exploita-

tion, as well as the opportunity costs in

terms of the most valuable alternative

use of the water.

In the institutional arena, there is a

need to adapt the institutional system

to new perspectives that require

integrated management of water reser-

voirs and local development. As well, it

is recommended that institutional

changes should be adapted to the

needs of intergrating water manage-

ment with land use.

Other international foras such as theWorld Conference on Human Rights

celebrated in Vienna in 1993, Global

Water Partnership (GWP) and the

United Nations Committee on Eco-

nomic, Social and Cultural Rights have

advanced the recognition of the right to

water as a human right.

The United Nations General Assembly,in 1999, recognized that the right to

water is based in the right to develop-

ment. In this manner, the United

Nations has put forward the right to

water as an economic, social and

cultural right that should be guaranteed

under the protection of the International

WHAT ARE THE JUDICIAL INSTRUMENTS IN INTERNATIONAL LAW THAT

RECOGNISE THE RIGHT TO WATER FROM THE PERSPECTIVE OF HUMAN

RIGHTS AND WHAT IS THE EXTENT OF THEIR LEGAL APPLICATION?

5



19/26

Covenant on Economic, Social and

Cultural Rights (ICESCR) of 1966. The

Comittee for Economic, Social and

Cultural Rights that founded the

covenant, in 2002 explicitly establishedthe relationship between human rights

and water and granted express recog-

nition of the right to water, adopting a

General Observation sindicated with

Number 15 which further uphold what

is established by Articles 11 and 12 of

ICESCR.

The General Observation Number 15

of ICESCR established as legal basis

the human right to water, the right of all

to have acess to sufficient, healthy,

acceptable and accessible water for

personal and domestic use.

The observation also linked the right towater to the obligation established in

paragraph 2 of article 1 of ICESCR,

that states that a person can not be

deprived of their own means of subsis-

tence, making the member States

responsible for guaranteeing sufficient

access to water for subsistence agricul-

ture and ensuring the survival of Indig-

enous People.


INTERNATIONAL INSTRUMENTS FOR HUMAN RIGHTS

The International Covenant on Economic, Social and Cultural Rights andits counterpart the Convenant of Civil and Political Rights are human rights

instruments that count on a significant number of State adherents. The

International Convenant on Economic, Social and Cultural Rights was

adopted on 16 December 1966, and entered into effect on 3 January 1975

(after its ratification by 35 States). Today, 141 States are adherents to the

Convention.

The International Convenant on Civil and Political Rights has established

in its articles 28 to 45, that rights related to these international treaties on

human rights are supervised in their application by the Committee for

Human Rights. However, only 45 States have adhered to the declaration

in article 41 of the Convenant, which establishes the competence of the

Committee of Human Rights (which entered into effect on 28 March 1979).

8


20/26

The international community has

reached consensus on the supremacy

of human rights with respect to other

rights recognized in international law.

Human rights constitute imperativerules of jus cogens, some of which are

rules that are at the will of the States

and through which international

customary law protects the superior

interests of the international community

such as the defence and protection of

the rights of the human person. The

imperative character of the rules of jus

cogens determines that these enter

into effect without requiring the accor-

dance or the will of the States and

rejects the acts of States that try to

minimize their effectiveness.

WHAT ARE THE LEGAL IMPLICATIONS OF THE HUMAN RIGHTS AGREEMENTS

WITH RESPECT TO THE CLAUSES INCORPORATED IN FREE TRADE TREATIES AND

BILATERAL INVESTMENT TREATIES THAT COMMIT TO THE TRADE OF WATER?

6

JUS COGENS:

OBLIGATORY RULES OR HIERARCHY

OF NORMS

The rules of jus cogens are established

in Article 53 of the Vienna Convention.

These rules establish that a treaty is null

and void if it is in opposition to an

imperative rule of general international

law. For the purposes of this

Convention, an imperative rule of

general international law is a rule

accepted and recognized by the

international community of States in its

entirety as a rule that can not bechallenged and that can only be

modified by a subsequent rule of

general international law that has the

same character



21/26

Experts from the United Nations Sub-

comission for the Protection and

Promotion of Human Rights have

specifically emphasized the supremacy

of human rights over internationalfinancial and trade rules.

The lawyers J. Oloka Onyango

(Uganda) and Deepika Udagama (a

substitute member of Sri Lanka), in a

report commissioned by the Subcomis-

son (E/CN.4/Sub.2/2000/13.) effec-

tively elaborated on the theme of

globalization and its consequences for

the full exercise of human rights. In this

document they stressed the indivisibil-

ity, interdependence, and universal

recognition of the civil, political,

economic, social and cultural rights of

the International Charter of Human

Rights. These rights, argue the experts,

were recognized as part of internationalpublic customary law and jus cogens

and also apply to the States and Inter-

national Multilateral Institutions includ-

ing the WTO and its trading system, the

World Bank and the International Mon-

etary Fund (IMF). They concluded that

human rights laws have a superior

position with respect to the charters of

the multilateral institutions which havea responsibility and obligation to

observe these laws.

For its part, the Meeting of High Level

Human Rights Authorities (MHLHRA)

of MERCOSUR and associated states

ruled in favor of the supremacy of

Human Rights over Free Trade Trea-

ties, a theme that has been discussed

in their past seven meetings. A consen-

sus declaration on the subject, how-

ever, has not yet been issued.

Based on these premises it can be

concluded that a State that permits

foreign investment of any kind in devel-

opment projects which are not socially

or environmentally responsible and, by

contrast, is indifferent to the negative

impacts of such projects on the funda-


PROPOSAL FOR THE

FULFILLMENT OF HUMAN RIGHTS

GOALS

In the VII/2007 Meeting of the High

Level Human Rights Authorities and

Foreign Ministeries of MERCOSURand Associated States, the

government of Brazil proposed that the

members of MERCOSUR devise a

long term plan for fulfilling international

human rights goals. The Chief Minister

of the Special Secretariat of Human

Rights, Paulo Vanuchi, signaled that he

himself would carry forward a proposal

for MERCUSOR as a whole to put into

effect a plan to convert this nice

discourse (regarding respect for

human rights) into reality in the world.

(We Are MERCUSOR Bulletin)

available at

http://www.somosmercosur.org/?q=es/

book/ export/html/153)

0


22/26

mental rights of people, communities,

indigenous peoples and the environ-

ment as recognized by international

law, is failing to fulfill its obligation to

protect human rights.

The Free Trade and Bilateral Invest-

ment Treaties that commit the trade in

water violate human rights, when via

this means, they put at risk access by

all citizens to drinking water and sani-

tary services or when they take advan-

tage of sources of fresh water that

impact the hydrological sustainabilityand the normal supply of water to indig-

enous communities and farmworkers

who have used such water resources

from time immemorial.



23/26

BIT Bilateral Investment Treaty

CAFTA Central America Free TradeAgreement

CAN Community of Andean Nations

CS Customs System

CNMCCA Common Nomenclature of theMember Countries of the Cartegena

Agreement

Dec. 291 Common Treatment Regime forForeign Capital and Copywright, Patents,

Licenses and Royalties

Dec. 292 Uniform Regime for AndeanMultinational Companies

Dec. 510 Adoption of Inventory ofRestrictive Measures of Trade in Services

Dec. 634 Modification of DeadlinesScheduled in Decision 629

Dec. 507 NANDINA Nomenclature Update

FDI Foreign Direct Investment

FTA Free Trade Agreement

GATS General Agreement on Trade inServies

GATT General Agreement on Tariffs and

Trade

GWP Global Water Partnership

HTS - Harmonized Tariff Schedule of theUnited States

ICSID International Center for theSettlement of Investment Disputes

ICWE 1992 Dublin InternationalConference on Water and the Environment

ICESCR International Covenant onEconomic, Social and Cultural Rights

IMF International Monetary Fund

MAI Multilateral Agreement on Investment

MERCOSUR Southern Common Market

MHLAHR Meeting of High LevelAuthorities of Human Rights

NAFTA North America Free TradeAgreement

OECD Organisation for EconomicCo-operation and Development

W/120 List of Sectorial Classifications ofServices

PCPC Provisional Central ProductClassification

TRIPS Agreement on Trade RelatedIntellectual Property Rights

UNCITRAL United Nations Commissionfor International Trade

WTO World Trade Organisation

GLOSSARY OF TERMS AND ACRONYMS



24/262Incompatibilities between Free Trade Treaties, Bilateral Investment Treaties and relevant International Conventions


25/26

3


WATER AND FREE TRADE Guide n2: Incompatibilities between Free Trade Treaties, Bilateral Investment Treaties and relevant

International Conventions Publisher: Agua Sustentable (www.aguasustentable.org) Translation: Nick Buxton

Cover: Pedro Guereca - Visual design: Pedro Guereca (www.taller64.com)

Fhotographs: Pedro Guereca (except: p. 1, 5 and 13 MOMOS; p. 4 Helena Cordero and p. 7 repertoire)

4


26/26

It is a publication of:

with the support of:

2

WWW.AGUAVISIONSOCIAL.ORGWAT

ERAND

FREETRADE

agua y libre comercio en inglÉs 2.pdf

Documents