Before the vote in the Federal Cabinet: EU-Chile trade and investment agreement contradicts global just transformation
Berlin, 21/11/2023: On Wednesday, the Federal Cabinet will vote on the approval of the EU-Chile trade and investment agreement. Should the ministers agree, the German side would be free to sign the agreement on 21 December 2023, as envisaged by the EU Commission.
“This agreement will lead to more exploitation of raw materials in Chile, but not to the development of more processing capacity on the ground”, says Bettina Müller, Trade and Investment Policy Officer at PowerShift. “Environmental protection and human rights are also lagging behind European economic interests in this agreement. One Partnership on an equal footing, which is needed for a globally just green transformation, looks different.”
Despite full-bodied promises to strengthen lithium processing capacity in Chile with this agreement, it would do just the opposite. European concessions are too small and only permissible under certain conditions. At the same time, however, the trade agreement imposes numerous restrictions on Chile and would further reduce the already low income from the exploitation and export of raw materials.
It would also increase the environmental impact. In particular, the mining of copper and the extraction of lithium, two strategically important raw materials for the German government, lead to serious socio-ecological problems such as pollution, water shortages or the expulsion of indigenous groups. Nevertheless, the agreement does not contain concrete, binding and enforceable measures and requirements on sustainability, gender equality and the protection of human and labour rights.
“The extended agreement contradicts both the German sustainability strategy and the cornerstone paper on trade policy of the traffic light coalition, as well as the principles of a feminist foreign policy”, says Bettina Müller. At the same time, the conclusion of transatlantic trade agreements also undermines Germany’s ambition to be climate neutral by 2045, as ‘the liberalisation of trade inevitably leads to more trade flows and thus to more CO2 emissions’.
Furthermore, the EU-Chile Agreement contains the particularly controversial investor-state arbitration procedure, which grants foreign companies the exclusive right to sue the governments of the Parties before international arbitration tribunals. Thanks to this parallel justice system, corporations were able to claim exorbitant compensation for environmental and climate protection measures. Against this background, the EU Commission is currently advocating the withdrawal of all EU members from the EU. Energy Charter Treaty One who allows these special rights of action and who has already terminated Germany. “EU trade policy is thus creating double standards”, criticises Thomas Fritz, trade expert at PowerShift. “While the EU countries reject this parallel justice among themselves for good reasons, they expect partners such as Chile to accept it in the interests of European corporations.”
The EU-Chile Treaty also contradicts the cornerstone paper of the traffic light government, which wants to focus investment agreements on ‘protection against ‘direct expropriation and national equal treatment’’. However, the agreement with Chile contains the particularly imprecise standards of ‘indirect expropriation’ and ‘fair and equitable treatment’ on which the lion’s share of investment lawsuits are based. “What countries like Chile need instead”, says Thomas Fritz, “is support for social-ecological investment management, legal assistance in dealing with transnational corporations and offers for the joint termination of investment protection agreements with EU countries. However, none of this is included in the agreement with the EU.” In this regard, PowerShift will publish a publication on 23.11.: “Global Just Green Transformation? – The role of trade agreements in securing European raw materials”.
Press contacts
Bettina Müller, trade expert, +49 (0)30 278 757 86 , bettina.müller@power-shift.de
Thomas Fritz, trade expert, +49 (0)30 275 937 38 , thomas.fritz@power-shift.de
