The Regional Comprehensive Economic Partnership (RCEP), is currently being negotiated between 16 countries in the Asian region. The trade deal includes a focus on trade liberalisation, and seeks to address varying regulatory disciplines with all negotiations being held secretly.
RCEP also includes the controversial Investor-State Dispute Settlement mechanism (ISDS), which is facing increasing public criticism and scrutiny worldwide. ISDS is a one-way mechanism that empowers foreign investors to sue the state at international arbitration tribunals; it cannot be used by states.
According to a study on all the known ISDS cases taken against countries party to the RCEP negotiations, Foreign investors have claimed at least 31 billion USD from RCEP countries. India alone has been the target of 40% of the total cases filed. Given the secrecy surrounding investor-state dispute settlement (ISDS) proceedings, this could be much more.
Including the harmful ISDS clause in the RCEP trade agreement under negotiation contributes to cementing investors’ rights and expanding the scope of private arbitrators’ power and will lock in place a system of privatised justice. Governments will find it much more difficult to withdraw their commitments to the rights accorded to foreign investors in RCEP than in Bilateral Investment Treaties, because they would need to put an end to the whole agreement and not just the sections on investors’ rights.
ISDS jeopardises the ability of national and local authorities from RCEP countries to regulate public interest, and is diverting public money from essential policies such as on health, education and environment protect. This constitutes an unacceptable and unnecessary attack on democracy.
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