I- The State’s Obligation to Protect Human Rights
The European Framework
7. The European Union (EU) [page 17]
… It also promoted the inclusion of social, environmental and governance standards in trade and investment agreements …
8. Trade and Investment Agreements [page 19]
In its 2013 opinion, the CNCDH underlined that “the need for coherence should guide France’s foreign policy” and recommended that, in accordance with Guiding Principle no.10, “the Government support and promote the aforementioned instruments within multilateral institutions dealing with economic, commercial and financial issues, including those that are binding, that are designed to ensure that businesses respect human rights.”
As for the National CSR Platform, it issued the following recommendations:
- “Promote CSR and human rights in international trade, finance and investment agreements;
- Increase the involvement of stakeholders in impact studies completed before trade negotiations with respect to CSR;
- Ensure social and environmental clauses are included and respected under these agreements;
- Reinforce the monitoring and evaluation of these agreements.”
France discussed CSR issues in a report on its international trade strategy and European trade policy (December 2015), clearly indicating that CSR is a concern addressed in its trade policies.
State measures to control access to domestic markets are powerful tools when it comes to protecting and supporting businesses that respect human rights. However, in a document dated 24 June 2016, the Committee on Economic, Social and Cultural Rights expressed its concern at “the failure to devote sufficient attention to the impact that bilateral or multilateral trade or investment agreements concluded or being negotiated by the State party or the European Union have or will have on the enjoyment of Covenant rights in the other countries that are party to those agreements. The Committee is particularly concerned by the fact that the mechanisms for settling disputes between States and investors provided for in several agreements could reduce the State’s ability to protect and achieve some of the Covenant rights (art. 2 (1)).”
Indeed, most bilateral investment agreements and a growing number of bilateral and regional trade agreements implement mechanisms for investor-State dispute settlement (ISDS). ISDS enables foreign investors to bring arbitration proceedings when they consider that host States have not complied with the terms of the original agreement. ISDS makes it possible to obtain rulings against States that do not respect their commitments (for example, due to discrimination on the basis of gender, religion, nationality, etc.). In 2014, more than 600 cases were registered around the world, not including private disputes between parties whose details were kept confidential.
In 2013, the EU and the United States began negotiating a Transatlantic Free Trade Agreement (TAFTA,) also known as the Transatlantic Trade and Investment Partnership (TTIP), which originally featured an ISDS clause. The EU has suggested replacing the ISDS clause with a bilateral investment dispute court or Investment Court System until a permanent multilateral court can been established. This reform is being defended in all European trade negotiations, and has already been accepted by Canada and Vietnam.
European trade agreements incorporate CSR and adherence to international conventions on labour and the environment. EU free trade agreements all include sustainable development chapters, which contain provisions on labour law and environmental protection. These chapters also refer to CSR. Provisions mainly reiterate key existing multilateral agreements (for example, ILO’s fundamental conventions in the labour field and multilateral environmental agreements in the environmental field). They also set out cooperation mechanisms for the parties in order to support progress in these fields. Sustainable development chapters in EU free trade agreements and investment agreements contain two further important provisions: one prevents parties to the agreement from lowering social and environmental standards to promote trade and attract investments; the other confirms States’ right to regulate in the social and environmental fields.
These provisions have been included in European trade agreements since 2008. They are now systematically incorporated into agreements being negotiated, including the TTIP. The European Commission can adapt commitments to social and environmental standards based on a country’s level of development.
Otherwise, France is currently revising its model agreement for the protection of investments. In particular, it is planning to significantly reinforce provisions on CSR and the State’s capacity to regulate in the social, environmental, health and cultural fields, as per the European draft model.
From the French perspective, addressing these issues in free trade agreements results in a number of weaknesses:
- Firstly, State-to-State dispute settlement (SSDS) mechanisms do not apply to social and environmental standards and human rights clauses. If standards are not met, consultations take place between the EU and the third country, after which an expert committee is created to suggest possible solutions. Moreover, European trade agreements do not provide for sanctions, unlike US agreements, which have lower human rights standards than those concluded by the EU. The lack of sanctions makes these provisions difficult to enforce.
- Secondly, although trade agreements include social and environmental standards and human rights clauses taken from the main international texts on labour laws and the environment, international organizations (the UNDP, ILO, etc.) are not involved in negotiations, despite the fact they carefully monitor the implementation of these texts (through regular reports by State parties, etc.). Instead, in trade agreements, a committee meeting at least once per year is charged with monitoring the implementation of sustainable development chapters. Civil society (NGOs and nonprofit organizations) can also act as whistleblowers if these regulations are breached, although this power is not institutionalized. Discussions with civil society are generally formalized by way of an annual forum or consultative committee bringing together stakeholders from different backgrounds. To respect human rights and support responsible practices, social and environmental costs must be included in cost prices. The EU condemns social and environmental dumping and selling at a loss. France must encourage the international bodies to which it is party to implement measures guaranteeing fair and undistorted competition.
In 2013, France issued a number of proposals to improve the way in which social and environmental standards were addressed in European trade agreements. These proposals are still relevant.
These proposals focus on five main areas:
- Improving cooperation with international organizations working in the labour and environmental protection fields (ILO, UNDP, UNEP, etc.). Some of these organizations, particularly UN organizations, are running cooperation projects in countries currently negotiating trade agreements with the EU. Some of these cooperation activities are oriented in such a way that they directly support the social and environmental goals set down in agreements. This is the case for some countries that have just concluded trade agreements or countries benefitting from Europe’s Generalised Scheme of Preferences (GSP).
- Improving the evaluation of sustainable development chapters through rigorous impact assessments. These impact assessments must provide a clear overview of social and environmental standards in countries negotiating agreements with the EU. France has completed a major revision of the European manual used to write these impact assessments. This could lead to progress in the field.
- Giving civil society more power to monitor these chapters. In addition to the annual forums currently planned by the European Commission, European trade agreements could give civil society (NGOs and trade unions) a formal “whistleblower” role, denouncing breaches of social and environmental standards. The Commission has decided not to look further into this option at this stage.
- Improving the enforcement of existing sustainable development chapters by reinforcing implementation mechanisms. In November 2015, the French Minister of State for Foreign Trade sent a letter to European Commissioner Cecilia Malström asking the European Commission to investigate ways of including these chapters in dispute settlement mechanisms in trade agreements.
- Increasing the involvement of businesses by including CSR requirements in sustainable development chapters in trade agreements. Currently, these chapters contain a short paragraph on CSR, but this should be reinforced by adding references to key international texts on the subject (particularly the OECD Guidelines).
Actions Underway [page 21]
- France has undertaken to promote the UN Guiding Principles in its trade relations with other States and confirms its commitment to the hierarchy of norms when signing trade and investment agreements.
- France also checks that all trade and investment agreements comply with international human rights law.
- France, working with other European partners who support this initiative, is building on proposals made to the previous European Commission (in March 2013) to reinforce social and environmental standards in free trade agreements and monitor their enforcement.
- France supports the inclusion of a new European model investment chapter in all EU trade negotiations and, in the long run, the adoption of this approach in bilateral French agreements, in order to reinforce States’ right to regulate and overhaul investor-State dispute settlement procedures.
- France contributes to the debate on setting up a permanent multilateral court to deal with investment disputes.
Actions to be Implemented [page 22]
- Monitor compliance with the recommendations issued by the Committee on Economic, Social and Cultural Rights in its opinion of 24 June 2016.
- Encourage impact assessments to be completed before and after agreements are concluded and make all free trade agreements conditional on the inclusion of human rights clauses and the prioritization of the UN Guiding Principles.
- Ensure that sustainable development chapters in EU free trade agreements are binding and enforceable under these agreements’ dispute settlement mechanisms.
- Support responsible businesses by giving goods and services produced in compliance with human rights obligations better access to French and European
- Initiate discussions on the consequences of failing to respect human rights and the inclusion of human rights in policies tackling unfair competition.
- Contribute to debate on recognizing the concept of a group of companies in the EU.
France’s General Secretariat for European Affairs will support this work and distribute relevant documentation to lead ministries, in order to guarantee inter-ministerial coordination on European issues and their assessment by European institutions.
10. The Reinforcement of Legislation [page 23]
Recent public policies have led France to adopt new legislative measures supporting CSR.
- … The Act of 12 July 2010, also referred to as the Grenelle II Act, reinforced transparency requirements in two ways:
- Under Article 224 of this act, the annual reports of asset management companies must mention the ways in which their investment policies take into account environmental, social and governance criteria.
The National Framework
15. Economic Sectors and Human Rights
The Agriculture and Food Sector [page 32]
The strategic importance of national food security and economic opportunities in the agricultural sector have led a number of countries and businesses to invest (and support investment) in agrifood production. Given this large-scale investment, which often involves large-scale land purchases, the international community has sought to implement guidelines and directives to regulate these projects. Two major initiatives have been launched:
- The Principles for Responsible Investment in Agriculture and Food Systems (also known as the RAI), adopted by the CFS in October 2014, which are partly based on the UN Guiding Principles on Business and Human Rights.
… Working with actors involved in French cooperation efforts, it developed the Guide to Ex-Ante Analysis of Agricultural Investment Projects that Affect Land and Property Rights to facilitate the enforcement of these principles …
- Partner States are encouraged to apply the Voluntary Guidelines on the Responsible Governance of Tenure of Land (VGGT) and the Principles for Responsible Investment in Agriculture and Food Systems (RAI).
- Recommendations in the Guide to Ex-Ante Analysis of Agricultural Investment Projects that Affect Land and Property Rights are being integrated into the AFD’s due diligence procedures in the land, social and environmental fields.
Actions to be Implemented
- Ensure the VGGT and RAI are respected by French economic actors abroad. Training on the implementation of these principles and directives will be offered to government employees (in embassies and economic services) and agencies.
The Financial Sector [page 34]
… There have been a number of voluntary international initiatives by the financial sector to promote human rights (…, the development of Socially Responsible Investment, …).
Footnote: Socially Responsible Investment (SRI) is an investment that reconciles economic performance and social and environmental impact by financing enterprises and public bodies that support sustainable development, regardless of their sector of activity. By influencing governance and behaviour, SRI encourages the development of a responsible economy. In France, SRI represented €170 billion in 2013.
- France promotes, at the national and European levels, investment policies that incorporate due diligence and highlight the principles and practices of institutional investors.
- France is examining whether to extend environmental, social and governance reporting requirements for institutional investors in Europe to cover human rights.