Chile and Canada sign document that contradicts Boric’s statements

While the President said that Canada shares that there is “unequal treatment” between companies and States, the document signed by the chancellor points out the opposite: both countries recognize that in their treaties they “reflect the balance” in the commitments to protect investments and autonomy of governments.

Apec. On his first tour to Asia Pacific, within the framework of the Apec leaders’ summit, which is being held in Thailand, President Gabriel Boric highlighted the signing of “a memorandum of understanding” between Chile and Canada related to dispute resolution mechanisms. Investor-State Disputes (ISDS).

  • “From our perspective, which is also shared by Canada, there is inequality in treatment that often favors companies over States, and that is something that has to be reviewed,” Boric said Thursday at a point of press.
  • However, the joint statement disputes in the text what Boric described to the press in that particular aspect. Instead of “inequality”, what the governments signed is that there is the opposite: a “balance” between the protection of investments and the rights of governments to have their own rules:
  • “Chile and Canada jointly […] recognize the strong procedural and substantive safeguards included in the investment chapter of the CPTPP and in the Canada-Chile FTA, which reflect the balance between our investment protection commitments and a government’s right to regulate to achieve legitimate public policy objectives”, says the text of the memorandum.
  • “What is striking is that the ‘robust procedural and substantive safeguards’ of the investment chapter of the TPP11 are recognized, reaffirming the ‘right of a government to regulate to achieve legitimate public policy objectives’, thereby failing to understand the criticism of this chapter and the entire process of the side letters”, says Heraldo Muñoz, the Minister of Foreign Affairs who managed to close the TPP11 during the second government of Michelle Bachelet.

Similarities. Several observers noted that the joint declaration released by Boric and signed by Foreign Minister Antonia Urrejola on behalf of Chile is, except for some changes, a copy of the declaration between Chile, Canada and New Zealand of March 7, 2018.

  • “It is almost identical to the one that I signed with the ministers of Canada and New Zealand in March 2018, in parallel with the signing of the TPP11,” says Heraldo Muñoz.
  • For this reason, “the declaration seems good to me, since it is the vision we had when signing the TPP11, which included monitoring the evolution and changes in the debate on the issue of dispute resolution,” he adds.
  • In 2018 New Zealand sought to sign bilateral letters with TPP11 partners to exclude New Zealand from the chapter on investor-State arbitrations (the same ISDS). Five countries accepted the application to New Zealand. But Canada and Chile at that time, instead of slamming the door, proposed making a joint declaration, one of which included interest in continuing to work on ISDS issues.
  • In terms of ISDS, the first six points of the 2018 Chile-Canada-New Zealand declaration are almost identical to the first six points of the 2022 Chile-Canada declaration.
  • Curiously, in 2018 the idea that the ISDS stamped on the mutual agreements “reflects the balance” between investors and the State did not appear, as what is now signed by Chile says.
  • In 2018, the role of the private sector in ISDS was not highlighted either, as it is included in the document signed now.
  • It is also striking that if in 2018 the need to protect SMEs from the protection of their investments was recognized, Chile and Canada said nothing about SMEs in this new 2022 declaration.

Review both statements compared:

Side letters. The investor-State arbitration mechanism has been at the center of the political debate in Chile after Congress approved the TPP11 (CPTPP) despite the fact that the President was against it.

  • In particular, the head of the Undersecretariat for International Economic Relations (Subrei), José Miguel Ahumada, led the offensive due to his disagreement with the ISDS chapter of the TPP11.
  • This is how the so-called strategy of side lettersthrough which it was sought that the other 10 signatories of the treaty agreed to exclude Chile, bilaterally, from the application of the chapter on ISDS.
  • Ex-Ante confirmed that Japan objected and that Australia and Vietnam will not contest this year. This Thursday, Minister Urrejola reported that Canada did not accept the side letterwhich gave rise to the joint statement.

Revision. Boric highlighted another element this Thursday in Thailand: “Basically, a review of the dispute resolution mechanism between companies and States is promoted.”

  • The statement says that the technical experts will discuss “the possible modernization of the Investment Chapter of the Canada-Chile Free Trade Agreement”, and that “continuous improvement of the operation of the Investment Chapter of the CPTPP is promoted within the framework of the review mechanisms of the CPTPP”.
  • Both commitments, however, imply intentions and not obligations. Neither are specific objectives indicated.