Oral Statement of International NGO Forum on Indonesian Development (INFID)
The 2nd Session of The Open-ended Intergovernmental Working Group on TNCs and Other Business Enterprises With Respect To Human Rights
24-28 October 2016
State Obligations on Trade and Investment Treaty
Thank you Madam Chair
My name is Rachmi Hertanti, from Indonesia with the Ecosoc Status from International NGO Forum on Indonesian Development (INFID). Thank you to allow me to speak in this session. I would like give our statement for panel 2 in the morning.
This statement is supported by Indonesia Focal Point on Legally Binding Treaty Initiative. And we are also part of The Treaty Alliance and The Global Campaign to Dismantle Corporate Power. The Indonesia Focal Point for Legally Binding Treaty Initiative, hereinafter IFP, is a coalition of Indonesians organizations working on human rights, migrant workers, women rights, environment, rule of law, indigenous groups, right to water, and other protection of rights of groups.
The deepening of economic liberalization regulated in the current Mega-FTA models, both within TPP, ASEAN RCEP, EU CEPA, and TTIP, is in attempt to maintain the domination position of corporate power which is also strengthened by the monopolistic rules for multinational corporations, one of them is the ISDS Mechanism. At the end, these rules create injustice in development for the host-country. The establishment of international trade norms have undermined the legitimacy of the State, which led to a normative problem for State responsibility in providing protection and fulfillment for human rights. The role of States in turn has been replaced by the strengthening of global institutions susceptive to multinational corporations’ interests.
In response to one point raised by the Council for International Business on panel 2 in the morning, we respectfully disagree with any assessment that ISDS mechanisms are a system designed to respect human rights. This is in fact not possible since corporations do not have human rights. Rather, ISDS is a system that is only designed to protect the priorities of investors.
The case of Newmont Mining against Indonesia in ICSID under BIT between Indonesia and Netherland, including a threat actions from Freeport against Indonesia Mining law under ISDS, is a powerful example of how ISDS, particularly in Bilateral Investment Treaties (BITs), are used by companies to get exemptions from national regulations, undermining democracy and our national interest stated in the Constitution. Adverse effects of this dispute settlement mechanism does not stop just there. It also has negative impact on the Country’s finance if the government is sued billions of dollars to replace the losses suffered by the corporation.
For example, in 2012 Churchill Mining sued the Government of Indonesia of US $ 1.2 billion, equivalent to IDR14.4 trillion. The values of the lawsuit is almost equivalent to the allocation of our food subsidies.
There is strong indication that state party looses their relevance in conducting international affairs, mostly on human rights including women rights. The Indonesia Focal Point would also refer to the report of the Independent Expert on the promotion of a democratic and equitable international order, Mr. Alfred de Zayas, A/HRC/30/44, 14 July 2015). In this case, we agreed to encourage the State’s obligation to make Human Rights Impact Assessment as legal requirement, with inclusive and transparent processes.
There is an example from Indonesia. The Government of Indonesia believes that Investment Treaty, especially Bilateral Investment Treaty (BIT) will give only a small advantage to Indonesia. The Indonesian government awareness followed by conducting a proper and deep review of BITs which is as the basis for termination to all Indonesia’s BITS with all States and drafting a new model of Investment protection agreement.
It was recorded that up to March 2015 Indonesia has terminated its 18 BITs of 64 BITs signed by Indonesia. The review process undertaken by Indonesia has addressed almost all the common provisions in investment treaty, including BITs. The new draft of investment treaty or BIT not only put on critics to the crucial matter such as definition of investment, fair and equitable treatment, expropriation, Investor-State Dispute settlement mechanism, and survival clause, but also an effort to includes the fulfillment of public rights protection.
Regarding to the process we would like to stressed that The State has to be strengthened through the enforcement of human rights instruments as a guarantee of human rights protection from the threat of the corporations using ISDS mechanisms. In this second IGWG session, it is needed also to encourage the existence of binding human rights instrument not only for the state but also for the international organizations who are responsible in trade and investment issues.
A point that is sometimes forgotten about the State’s obligation is to provide a public complaint mechanism as a tool in the review process on trade and investment agreements which affect the enjoyment of human rights. In Indonesia we have already our Trade Law No.7/2014 that provide the review mechanism on FTA. In this case, We are encourage this mechanism not only to the national regulation, but also to develop the public complaint and the review mechanism into trade and investment agreements, thereby enabling the parties in the agreements to amend or cancel the FTA. Moreover, international organization, such as WTO, also must have the same obligations to adopt the public complaint mechanism.
Regarding to the State responsibility in trade and investment agreements, The treaty should also refer to the norms that have been popularized by The Maastricht Principles on Extraterritorial Obligations of States in the Area of Economic, Social and Cultural Rights, so that, this dimension of State responsibility be strengthened.***
Thank you very much
 Members of Indonesia Focal Point for Legally Binding Treaty Initiatives are International NGO Forum on Indonesian Development (INFID) – Indonesia for Global Justice (IGJ) – Indonesian Human Rights Committee for Social Justice (IHCS) – Mining Advocacy Network (JATAM) – Institute for Policy Research and Advocacy (ELSAM) – People’s Coalition For The Right To Water Indonesia (KRuHA) – Pusaka Indonesia – Sawit Watch – Bina Desa – Peoples Coalition for Fisheries Justice (KIARA) – WALHI – KontraS – TUK Indonesia – Publish What You Pay (PWYP) – Woman Solidarity – The Institute National for Democratic Studies (INDIES).