Uruguay secretly concluded a Bilateral Investment Agreement with the US
RadioMundoReal | Wednesday, 08 September 2004
Free translation by Anoosha Boralessa (December 2015); not reviewed by bilaterals.org or any other person or organization.
54 days away from the elections, Uruguay secretly concluded a bilateral investment agreement with the US.
The Minister of the Economy, Isaac Alfie, and the US Trade Representative Robert Zoellick, concluded a Bilateral Investment Agreement without disclosing its contents to either the Uruguayan members of parliament or to the Uruguayan society as a whole. This type of agreement is characterised by the unlimited protection it provides to North American investors and by the fact that national legislatures know nothing about it.
According to the Office of the US Trade Representative, the US-Uruguay bilateral trade agreement negotiations were concluded this Tuesday. Zoellick declared:
“This agreement will allow us to consolidate our economic relations with Uruguay and strengthen the protection of North American investors.”
“Today marks another important step forward in President Bush’s work towards constructing strong economic relations between the United States and Latin America”
informed the North American Leader, according to a press communication released by the US Office of the Trade Representative.
The content of this agreement is completely unknown to Uruguayan Members of Parliament and to society as a whole, which will, for sure, be affected by its provisions as will whichever government takes office following the elections on 31 October.
According to information that has reached Uruguay through North American organizations opposed to Bush’s neoliberal policies, it is possible that the number of votes in the US Congress required to prevent this agreement being ratified will be obtained; to enter into force, the support of two thirds of the members of US Congress is required.
The agreement struck between the Uruguayan Ministry of Economy and the US Trade Representative is part of the clear pro-Bush policy that has characterized the President Jorge Batlle administration. The latter has faithfully pushed through the different proposals that have emanated from the White House.
The most important model of this type of agreement is already operative: NAFTA (the North American Free Trade Treaty between Mexico, Canada and the US) Chapter 11, under which the three governments party to this treaty have had to pay multi-million compensation to claimant businesses or to amend laws passed to protect health, the environment or other public interests.
But by virtue of the difficulties it has experienced by imposing its will on the FTAAs (the Free Trade Area of the Americas), the US has chosen to proceed by preparing the terrain through signing bilateral agreements such as the Uruguay-US agreement, other similar agreements with Central American countries and Andean countries and also other countries, most importantly in Asia.
What is the potential reach of this Bilateral Investment Treaty?
Starting from the documents referred to, it is possible to predict what would be the effects of an agreement of this type.
In all these documents, rules that protect North American investors control. Several clauses give meat to “national treatment” or the investor is recognized to meet the conditions that trigger “most favoured national” treatment”.
Treaties of this type generally modify the legal concept of "investment", by extending it to cover financial speculation; also, even intellectual property rights and patents may also be considered investments.
At the same time, international Company-State dispute resolution tribunals were established. These are nothing other than a tool for subjugating national sovereignty. This is due to the fact the Arbitral Tribunals generally are composed of three judges: one [appointed] by the claimant business, the other by the World Bank and the other by the respondent state. Generally speaking, the first two agree and the award is always favourable to international business and detrimental to the government. This would mean that central questions that are within the competence of Uruguayans will be defined in tribunals to which Uruguayans would not have access.
As has been raised in other similar situations, the US’s major interest in concluding a bilateral investment agreement with Uruguay does not lie so much in its big corporations setting up shop in our country but in establishing a “foothold” in MERCOSUR, where Brazilian and Argentine foreign policy have not been at all favourable to it in recent years, seeking to break MERCOSUR’s unity as a bloc opposed to US plans in the FTAAs.
The interest implicit in “disembarking” in MERCOSUR is based on appropriating the resources shared by the countries making up the bloc. Such could be the case of the natural reserves of water, from which projects the Acuífero Guaraní, one of the biggest reserves of soft water in the world.
Also, it raises some doubts that at issue is a “bilateral” agreement for investment protection. Which Uruguayan investors are going to establish themselves in the US, and how will they be protected by this agreement? Or are such investors fictional, in which case, either the agreement works only in one sense or we do not know the other implications of the agreement which are as secret as the contents of this document.
Due to the importance that this kind of agreement has for the life of the country, the contents of this agreement must be published and parliamentarians must play their role and prevent this affront to the sovereignty delegated to them.
The Uruguayan parliament does not have to ratify an agreement with the aforementioned characteristics, given that it would signal serious damage for the economy, environment, employment and lives of the Uruguayans. This damage occurs, for other reasons, on account of the supranational character of an agreement like this. National legislation on the environment, industry protection, production, national work, or health, can be denounced by investors as “impediments to their establishment in the country”.
To be opposed to an agreement of this type does not signal opposition to “foreign investment”. Firstly, an agreement of this genre does not guarantee the arrival of investment and secondly, where they do arrive, what is lost outweighs what is won, with the fulfilment of this type of “conditions”.
The saying goes that free trade agreements are said to be “neither free nor about trade”. This is completely true in the case of this Bilateral Investment Agreement given that it overreaches, by far, the strictly commercial sphere. This is precisely where one of its greatest dangers lies.
By signing an agreement of this size, two months away from the national elections, the government’s message is nothing other than confirming its attitude of “handing over” the country to the interests of the George W. Bush administration and his big corporations.