INTERNATIONAL ECONOMIC LAW: WATER FOR MONEYS SAKE

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INTERNATIONAL ECONOMIC LAWWATER FOR MONEYS
SAKE?

• Foro Centroamericano del Agua Avances, Retos y
  Desafíos para la Gestión Integrada del Agua
  Hacia el IV Foro Mundial del Agua
• San Salvador, El Salvador
• 30 Nov, 1 y 2 de Diciembre de 2004
• HOWARD MANN
• International Sustainable Development Law
• Ottawa, Canada
• 424 Hamilton Ave S., Ottawa, Ontario Canada
  K1Y1E3
• Tel [phone] e-mail h.mann_at_sympatico.ca
  web site www.howardmann.ca

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AGENDA

• Values in international law relating to water
• conflicting values
• International economic law and water
• Why is it relevant to water management?
• CAFTA Initial thoughts
• Implications of directions in international
  economic law for water management

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Water and Values in International Law Public
welfare

• International Watercourse law
• Navigable uses (trade) to non-navigable uses
• Equitable uses
• Basic human needs
• 1909 Boundary Waters Treaty Columbia River
  Treaty 1940 Boundary Waters Commission
• Human Rights Law
• Basic human needs
• Rights of disadvantaged
• Indigenous peoples rights
• International environmental law
• Water quality and pollution control
• Water allocation within resource limits

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Water and Values International Economic Law and
Private welfare

• Rationale of economic law Theory that all
  economic liberalization leads to growth leads to
  development
• Economic uses and value of water
• Trade Private rights to use water
• Investment Foreign investor rights to profit
  from water

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Points of Contact Water and International
Economic Law

• Trade in water resources
• Water services
• GATS
• Investment Agreements
• Bilateral and Regional Free Trade Agreements
• International financial agencies and banks (X)
• Foreign investors rights to access and use water

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Trade in water

• Does trade law compel trade in water resources?
• Government experts No but then refuse to ban
  such trade because of trade law
• Many others large questions
• Tripwire problem Once you start can you turn it
  off?
• Bottled, etc (from freshwater, groundwater)
• Bulk water removals
• Domestic sales for privatized public services
• Environmental conditionality on water withdrawals
  
• Can domestic use be a legislated priority?
• Uncertainty

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Water services 1 GATS

• Trade in services model Progressive
  liberalization
• In water sector, liberalization privatization
  foreign investment in developing countries
• Percentages of private sector varies by country
• GATS List in approach (national schedules)
• Water supply not listed in today (sewage
  treatment is by several countries)
• Listing in would mean foreign companies had right
  to bid on providing all services
• can be subject to conditions, limits, levels of
  government, grandfathering existing laws, etc.
• All limits and conditions are strictly
  interpreted in WTO
• Unclear if conditions can include universal
  service, price controls and differentials, etc.
  (scope of regulations)
• But failure to include them in a listing could be
  fatal to imposing them later

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Water services 1 GATS cont

• Doha Round Negotiations, services, environmental
  services
• July 2004 WTO Agreement on negotiations
• NO service sector to be a priori excluded
• No indication of differential treatment for basic
  services
• EU, US leading proponents of inclusion of water
  services, for others
• Also hidden in negotiations on environmental
  services
• Definition of environmental services crucial
• High pressure negotiation foreseeable
• Dont need GATS, WTO to allow investment, but
  having it in GATS, WTO may compel it

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Water Services 2 Investment agreements and FTAs

• IIAs
• Bilateral Investment Treaties
• Regional Investment Treaties
• Free Trade Agreements with investment and
  services chapters (bilateral and regional)
  (CAFTA, Chapter 10, 11)
• Progressive liberalization pre-establishment
  rights/rights of establishment in as many
  sectors as possible
• General approach All sectors in unless excluded
  in national schedules
• Can include water services

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Water services 2 IIAs (Cont)

• IIAs add special rights and remedies for foreign
  investors directly
• National treatment
• Minimum international standards of treatment
• Expropriation
• Apply before and after an investment is made in
  all sectors not excluded
• All uncertain today
• Great need for clarity
• Any changes after an investment is made may be
  actionable by the investor directly in an
  international arbitration

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Water Services 2 IIAs (Cont)

• Access to a private international dispute
  settlement arbitration system is a key difference
• Investor-state arbitration
• Makes commitments and conditions on
  liberalization enforceable by a foreign investor
• Can be triggered by any change in investment
  conditions changing the right to invest or the
  economics of the investment
• Universal access, increased services for poor,
  rights of indigenous users
• Use is often threatened as part of a campaign
  against a new measure
• Limited appeal against initial arbitration
  decision

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Non-water sector water rightsProtection of
foreign investor rights to use water (quantity)

• Right to access water for
• Industrial needs, agriculture, energy etc.
• Do international rights take priority over
• domestic laws
• Prior users
• Traditional and indigenous users
• Initial rules/controls on access to water
  critical
• Changes in access levels needed to run investment
  are critical legitimate expectation to needed
  resources
• Changes in charges for water?

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Non-water sector water rights Protection of
foreign investor rights to pollute? (Quality)

• Right to pollute?
• Arguments against new pollution control measures
  for foreign investors
• Expropriation
• National treatment
• Minimum international standards
• Polluter pays ? Pay the Polluter
• Changes to original laws, permits are being
  challenged
• Law on this very unclear

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Non-water sector water rights Relation to trade
law

• Combines with trade rules that
• limit ability of states to limit exports or
  imports for environmental reasons
• Expand opportunities, rights to trade in all
  goods
• Makes water as a critical process input a major
  element in comparative advantage
• of states
• also of companies
• Foreign investors will be supported by investor
  rights to access water as input resource, trade
  rights
• Water colonialism

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CAFTA and Water Issues Snapshot

• Trade no change from WTO law?
• Waters services
• Basically excluded from services chapter?
• But is it excluded from CAFTA?
• Is there a gap in the exclusion of public
  services in the investment Chapter (10)?
• Does Chapter 10 include a liberalization
  commitment for public services?
• Some state schedules not comprehensive in
  exclusion Water services liberalization not
  excluded across Central America
• is for US
• Non-water sectors
• Limited, specific exclusions in various areas,
  differ between states
• Additional clarity reduces risk for new laws and
  regulations

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Implications of Current directions in
International Economic law

• Conflict with original values based orientation
  of international law on water
• Very high pressure negotiations on services in
  Doha Round
• Domestic regulatory and administrative capacity
  in liberalizing/privatizing sectors is crucial
• Inadequate legal and admin systems
• Lack of recognition of traditional, subsistence
  users
• Inadequate negotiation skills and Corruption
• Lack of post-investment good governance
  structures
• Same holds for water-intensive investments in
  no-water sectors
• Economic law locks in the worst of the practices

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Implications of Current directions in
International Economic law

• KEY SUMMARY RECOMMENDATION
• The SEQUENCING must be right
• Domestic legislation must be in place to protect
  water rights
• Is it time for a MORATORIUM on international
  economic negotiations applying to basic human
  needs, UNTIL THE VALUES ARE MADE RIGHT?