One of these things is not like the other: Why the U.S. Model BIT will not adequately protect the world environment

By Hudson Kingston

Last week, I wrote on how Myanmar’s new influx of corporate investment was something to watch, especially with a history (both ancient and recent) of brutal corporate involvement in empire building and resource extraction. While the United States is planning to open investments to Myanmar with no treaty in place, it is pertinent that the U.S. recently rewrote its Model Bilateral Investment Treaty – a document that guides bilateral agreements between our country and every country we negotiate a Bilateral Investment Treaty (BIT) with in the future.

The Model BIT is largely like its earlier iterations, except for a few new articles regarding labor and environmental Law (Articles 12 and 13). Unfortunately, the new provisions remain fairly toothless. While a large portion of the Model BIT is devoted to how investment disputes can be resolved by binding arbitration (as was the case in BITs immemorial), the environmental and labor provisions are only supported by a weak consultation procedure. Moreover, the new articles do not flesh out requirements to protect the environment; they merely require states to hold up their own law despite their wish to violate to attract investment.

Now there is no question that developing countries sometimes have trouble administering both investment and environmental protection. This story is but one in a disturbing trend where a quick buck took precedence over shrinking biological diversity. But how would the new BIT provisions function to stop such a tragedy?

Taking up the example of Myanmar, its laws are massively outdated and it is not a leader in the adoption of environmental and labor rights treaties. Moreover, it has vast forest resources and practically no legislation to prevent wholesale harvesting of trees.  How will a provision in an investment treaty that allows the U.S. to consult with Myanmar do anything to stop government-condoned resource raiding? Without a very strong Burmese news industry, which does not exist, I would be surprised if anyone heard of an environmental disaster until it was well underway. It seems unlikely that a weak provision in a BIT would do anything at all.

Moreover, relying on a Model BIT implies that “one size fits all” in terms of investment treaties. The United States is negotiating BITs with both India and China, and it seems unlikely that both those countries will accept investment deals on identical terms. What’s more, many countries have complicated histories that lead to take-it-or-leave-it legislation. This is the case in Zimbabwe, another poor but extremely resource-rich country, which has a law that mandates majority black ownership in any ventures. In the face of this law, which is not only comes from a long history of discrimination but is also politically popular, the Model BIT’s principles on nondiscrimination towards foreign investment will fail.

Looking at the insufficiency of the Model BIT to the task that it was meant to accomplish, I believe that the best alternative is to follow the advice of the UN Special Rapporteur on Food and institute compliance assessments on investment negotiations’ effects on human rights and other duties. Accountability is possible, but it seems that the Model BIT is not enough to protect the world’s environment or workers.

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