Wednesday

21st Feb 2024

Opinion

EU-Vietnam trade deal a bad day for workers' rights

  • Shoes, some made in Vietnam, on sale in the EU. There is not a single independent trade union in Vietnam (Photo: EUobserver)

Behind the smiles and handshakes, the signature of the EU-Vietnam trade and investment deals - being agreed on Tuesday (25 June) and to be signed at the end of this week - have dire consequences for human well-being and our ability to prevent climate and ecological breakdown.

The deals bear all the hallmarks of the ones with the USA and Canada that caused so much public outcry a few short years ago, but with a twist.

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Once again, the inclusion of an Investor-State Dispute Settlement (ISDS) system threatens public budgets and put social and environmental protections are under threat.

But this time, the EU is salting the wound by pushing these corporate courts on a country where citizens have precious few rights in the first place – there is not a single independent trade union in Vietnam.

Meanwhile, freedom of speech could barely be more curtailed – it ranks fifth-last on the World Press Freedom Index, ahead of only China, North Korea, Turkmenistan and Eritrea.

The Vietnamese experience with investment deals and the ISDS system shows that this deal can be used by foreign investors to sue the country's government and empty its public coffers.

ISDS has already been used by two oil firms to avoid paying taxes in the country.

In this lawsuit, one of the eight current ISDS cases against Vietnam, two companies are suing the Vietnamese government for receiving a tax bill after the takeover of one company (ConocoPhillips Vietnam) by another (Perenco).

ConocoPhillips made a profit of $896m [€787m] on this sale, and refuses to pay taxes on this gain.

This pattern is also replicated elsewhere around the world, where these courts have been used to trample on democracy and suck public money into private accounts.

In Dubrovnik, a majority of local citizens rejected a massive tourism project, which ended up being upheld by national courts.

So far, so good – but it quickly turned into an ISDS nightmare via a Netherlands-Croatia investment treaty: the locals are now being pursued for voicing their opposition and Elitech and Razvo, the two foreign investors, are suing the Croatian government for €500m to compensate for a project that never got off the ground.

ISDS is so powerful that it can also deter much-needed government action to regulate in the public interest, such as in France, when the Canadian oil company Vermilion managed to water down a climate change law by threatening an ISDS case, or in Colombia on access to medicine for cancer patients.

One-way justice?

One of the most fundamental problems with ISDS is that it is a one-way system that only provides rights to investors, with no corresponding obligations to support the public interest.

Affected communities cannot use it to sue companies that violate their human rights or cause them financial or other damages, and nor are they allowed to have a voice during ISDS cases brought against governments.

These grave injustices have not changed how the EU approaches investor privileges in trade deals. Despite public outcry across Europe – over half a million people have signed a petition to stop ISDS in EU trade deals – when the EU revised its approach to ISDS in 2016, very little had changed.

This updated version of ISDS, the Investment Court System (ICS), remains a parallel justice system for rich individuals and corporations to circumvent domestic courts and demand huge sums of money in compensation from governments.

It contains no obligations for EU corporations in Vietnam to respect human rights.

EU officials might affirm they aim to foster sustainable development in Vietnam but the reality behind those words is that they foster corporate greed.

While their leaders congratulate themselves on a done deal, European and Vietnamese citizens should not lose sight of the real winners of this investment agreement: big business and rich individuals, whom the EU enables to hijack justice and democracy for their profits.

Author bio

Lora Verheecke is a trade and investment researcher and campaigner at Friends of the Earth Europe. She has been working for several years on how EU trade deals impact on democracy and the environment.

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

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