The Hidden Costs of RCEP and corporate trade deals in Asia

This report compiles available data on ISDS cases taken against countries party to the RCEP negotiations. The report also highlights the emblematic cases of India, Indonesia, Philippine, South Korea and Australia.

Key findings

• 50 investment arbitration cases already filed against 11 RCEP (Regional Comprehensive Economic Partnership) countries since 1994, over 50% of which have been filed after 2010.
• India alone has been the target of 40% of the cases filed against RCEP countries.
• 68% of the cases filed against RCEP countries have been initiated by European-based investors.
• Foreign investors have claimed at least 31 billion USD from RCEP countries. Given the secrecy surrounding investor-state dispute settlement (ISDS) proceedings, this could be much more. This amount is 7 billion USD less than India’s entire health budget for 2015.
• Of the 31 billion USD claimed by investors, 81% has been claimed from just four countries, India, South Korea, Australia and Vietnam.
• The largest known amount paid to a foreign Investor by an RCEP country is 337 million USD as part of the settlement in the Cemex versus Indonesia case.
• 36% of cases against RCEP countries concern environmentally relevant sectors.
• 42% of ISDS cases against RCEP countries are still pending.
• Investors can be considered to have won 67% of the cases against RCEP countries.
• RCEP countries have been sued for measures taken to protect public health, adjust corporate taxes, promote industrialisation, and review contracts acquired through allegations of corruption, among others.
• RCEP countries have signed a total of 831 international investment agreements (IIAs), out of which 676 are in force. Most of them were signed between 1990-2009.
• China, South Korea and India have signed the highest number of IIAs. New Zealand, Myanmar and Brunei have signed the least IIAs.
• 87% of the BITs signed by RCEP countries currently in force are likely to have passed the initial duration period and could be terminated.
• RCEP countries are currently negotiating at least six Free Trade Agreements with investment protection chapters which grant investors the right to sue governments at international investment tribunals. Together they are negotiating the Regional Comprehensive Economic Partnership (RCEP). Thailand, Malaysia, Indonesia, Philippines, Myanmar and India are also negotiating bilaterally with the European Union.

The report highlights the ongoing corporate attack on Asian governments’ right to regulate, including actions following the introduction of measures to protect the environment. It also underlines the costs that this system has already had to democracy in the region.

The dangerous impacts of investment treaties are likely to increase if governments in the region agree to grant far-reaching protection rights to investors in RCEP and other ongoing free trade negotiations. Furthermore it can reasonably be expected that RCEP would undermine governments’ efforts to safeguard their right to regulate in the public interest.

The evidence is compelling in showing that the risks of ISDS are higher than its proclaimed benefits.

RCEP governments have a golden opportunity to work together to build a new trade and investment regime that helps to develop sustainable societies, by supporting local economies, workers’ rights, a clean environment and food sovereignty.