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Wednesday, 12 February 2020 - Strasbourg
EU-Viet Nam Investment Protection Agreement (Resolution)

European Parliament non-legislative resolution of 12 February 2020 on the draft Council decision on the conclusion, on behalf of the Union, of the Investment Protection Agreement between the European Union and its Member States, of the one part, and the Socialist Republic of Viet Nam, of the other part (05931/2019 – C9-0020/2019 – 2018/0358M(NLE))

The European Parliament,

–  having regard to the draft Council decision (05931/2019),

–  having regard to the draft Investment Protection Agreement between the European Union and its Member States, of the one part, and the Socialist Republic of Viet Nam, of the other part (05932/2019),

–  having regard to the request for consent submitted by the Council in accordance with Articles 207(4) and 218(6), second subparagraph, point (a)(v), of the Treaty on the Functioning of the European Union (TFEU) (C9-0020/2019),

–  having regard to the negotiating directives of 23 April 2007 for a free trade agreement (FTA) with the member states of the Association of Southeast Asian Nations (ASEAN), which were supplemented in October 2013 to include investment protection,

–  having regard to the decision of 22 December 2009 to pursue bilateral FTA negotiations with individual ASEAN member states,

–  having regard to the Framework Agreement on Comprehensive Partnership and Cooperation (PCA) between the European Union and its Member States, of the one part, and the Socialist Republic of Viet Nam, of the other part, signed in Brussels on 27 June 2012, which entered into force in October 2016(1),

–  having regard to its resolution of 6 April 2011 on the future European international investment policy(2),

–  having regard to Regulation (EU) No 1219/2012 of the European Parliament and of the Council of 12 December 2012 establishing transitional arrangements for bilateral investment agreements between Member States and third countries(3),

–  having regard to its resolution of 5 July 2016 on a new, forward-looking and innovative future strategy for trade and investment(4),

–  having regard to the Commission communication of 14 October 2015 entitled ‘Trade for all – towards a more responsible trade and investment policy’ (COM(2015)0497),

–  having regard to the opinion of the Court of Justice of the European Union of 16 May 2017 in procedure 2/15(5), pursuant to Article 218(11) TFEU, requested on 10 July 2015 by the Commission,

–  having regard to its resolution of 9 June 2016 on Vietnam(6),

–  having regard to its resolution of 14 December 2017 on freedom of expression in Vietnam, notably the case of Nguyen Van Hoa(7),

–  having regard to its resolution of 15 November 2018 on Vietnam, notably the situation of political prisoners(8),

–  having regard to the decision of the European Ombudsman of 26 February 2016 in case 1409/2014/MHZ on the European Commission’s failure to carry out a prior human rights impact assessment of the EU-Vietnam FTA(9),

–  having regard to its resolution of 4 October 2018 on the EU’s input to a UN binding instrument on transnational corporations and other business enterprises with transnational characteristics with respect to human rights(10),

–  having regard to the United Nations Commission on International Trade Law (UNCITRAL) Rules on Transparency in Treaty-based Investor-State Arbitration(11),

–  having regard to the Treaty on European Union (TEU), and in particular Title V thereof on the Union’s external action,

–  having regard to the Council conclusions of 20 June 2016 on child labour, which encouraged the Commission to continue exploring ways to use the trade instruments of the EU more effectively, including free trade agreements to combat child labour,

–  having regard to the Council conclusions of 20 June 2016 on business and human rights, which stipulated that ‘the EU recognises that corporate respect for human rights and its embedding in corporate operations and value and supply chains is indispensable to sustainable development and achieving the SDGs’ and that ‘all partnerships in implementing the SDGs should be built on respect for human rights and responsible business conduct’, and which encouraged EU companies ‘to establish operational-level grievance mechanisms, or create joint grievance initiatives between companies’,

–  having regard to the Treaty on the Functioning of the European Union (TFEU), in particular Part Five, Titles I, II and V thereof, and specifically Article 207 in conjunction with Article 218(6)(a)(v),

–  having regard to its legislative resolution of 12 February 2020(12) on the proposal for a Council decision,

–  having regard to Rule 105(2) of its Rules of Procedure,

–  having regard to the opinions of the Committee on Foreign Affairs and the Committee on Development,

–  having regard to the report of the Committee on International Trade (A9-0014/2020),

A.  whereas the EU is the leading recipient and source of foreign direct investment (FDI) in the world;

B.  whereas the EU ranks fifth out of 80 foreign direct investors in Vietnam;

C.  whereas Vietnam is a vibrant economy with the fastest growing middle class in ASEAN and has a young and dynamic workforce, a high literacy rate, high education levels, comparatively low wages, good transport connections and a central location within ASEAN;

D.  whereas Vietnam’s infrastructure and investment needs massively exceed the amount of public funding currently available;

E.  whereas in 2017, Vietnam received FDI worth 8 % of its GDP – more than double the rate received by economies of a similar scale in the region;

F.  welcoming the fact that the trade, business and investment environment has improved significantly in Vietnam over the last few decades;

G.  whereas there are currently more than 3 000 international investment treaties in force, and EU Member States are party to some 1 400;

H.  whereas after the EU-Singapore Investment Protection Agreement, this represents the second ‘standalone investment protection agreement’ concluded between the EU and a third country following discussions by the European institutions on the new architecture of EU FTAs, on the basis of the opinion of the Court of Justice of the European Union (CJEU) 2/15 of 16 May 2017, which will serve as a reference point for future EU engagement with its trading partners;

I.  whereas the agreement will replace and supersede the existing bilateral investment treaties between 21 EU Member States and Vietnam, which did not include the EU’s new approach to investment protection and its enforcement mechanism, the public Investment Court System (ICS);

J.  whereas the ICS was integrated into the already finalised CETA agreement, which was ratified by Parliament on 15 February 2017 and is awaiting ratification by several Member States, thereby replacing the investor-state dispute settlement (ISDS) system;

K.  whereas on 30 April 2019 the CJEU ruled that the mechanism for the resolution of disputes between investors and States provided for by CETA is compatible with EU law(13);

L.  whereas the Parties have stated their commitment to pursuing a Multilateral Investment Court (MIC) – an initiative strongly and continuously supported by Parliament;

M.  whereas on 20 March 2018 the Council adopted the negotiating directives, which authorised the Commission to negotiate, on behalf of the EU, a convention establishing an MIC; whereas these negotiating directives have been made public;

1.  Welcomes the EU’s new approach to investment protection and its enforcement mechanism (ICS), which has reformed the ISDS and enhances the quality of individual approaches of bilateral investment treaties concluded by EU Member States; underlines the fact that the ICS represents a modern, innovative and reformed investment resolution mechanism as regards the procedural shortcomings of the ISDS; notes, moreover, that it marks a significant change in the level of substantive protection afforded to investors and the manner in which investor-state disputes are resolved; expresses concern that the scope of application extends slightly beyond mere non-discrimination between foreign and domestic investors; recalls that the establishment of an independent multilateral investment court would give greater legal certainty to all parties; welcomes Vietnam’s strong commitment to the rules-based multilateral trading system;

2.  Notes that the agreement will ensure a high level of investment protection and legal certainty while safeguarding the Parties’ right to regulate and pursue legitimate public policy objectives, such as public health, public services, and environmental protection; emphasises that the agreement will also ensure transparency and accountability; asks the Commission to take further account of the fight against climate change and respect for the Paris Agreement in safeguarding the Parties’ right to regulate, as has been done with CETA; insists on regular monitoring and reporting back to the European Parliament on the use of this provision by European investors;

3.  Stresses that the agreement guarantees that EU investors in Vietnam will get fair and equitable treatment, which is a higher standard of protection than national treatment; notes that the agreement properly protects EU investors from illegitimate expropriation; considers that this should go hand-in-hand with responsibilities for investors to exercise due diligence with regard to sustainable business practices in compliance with human rights and international labour conventions as well as environmental standards;

4.  Underlines that economic development and multilateralism are important tools to improve people’s lives; points out that one of the objectives of the IPA is to strengthen the economic, trade and investment relationship between the EU and Vietnam in accordance with the objective of sustainable development, and to promote trade and investment in full compliance with internationally recognised human rights, environmental and labour standards and agreements;

5.  Recalls that Vietnam is a developing country; emphasises that in order to help achieve the Sustainable Development Goals, in particular SDG 1 on poverty eradication, SDG 8 on decent work and SDG 10 on reduced inequalities, investment must contribute to the creation of quality jobs, support the local economy and fully respect domestic regulations, including tax requirements;

6.  Recalls that the ICS plans to establish a Permanent Investment Tribunal of First Instance and an Appeal Tribunal, whose members will have to possess comparable qualifications to those held by judges of the International Court of Justice, and will have to demonstrate expertise in public international law and not just commercial law, in addition to satisfying strict rules of independence, impartiality, integrity and ethical behaviour through a binding code of conduct designed to prevent direct or indirect conflicts of interests; stresses that the European Court of Justice sees the ICS as being in full compliance with EU law, as expressed in its opinion 1/17;

7.  Welcomes the transparency rules applying to proceedings before the tribunals, which include provisions guaranteeing that case documents will be publicly available, hearings will be held in public, and interested parties will be allowed to make submissions; believes that increased transparency will help to instil public trust in the system, as well as ensuring that all human rights and sustainable development aspects are effectively heard by the investment tribunals; welcomes, furthermore, the clarity regarding the grounds on which an investor can issue a challenge, which ensures a more transparent and fairer process;

8.  Stresses that third parties such as labour and environmental organisations can contribute to ICS proceedings through amicus curiae briefs;

9.  Underlines that forum shopping will not be possible and that multiple and parallel proceedings will be avoided;

10.  Recalls that the agreement represents an improvement on the investment protection provisions in CETA, as it incorporates provisions on obligations for former judges, a code of conduct to prevent conflicts of interests, and a fully functioning Appeal Tribunal at the time of its conclusion;

11.  Believes that the establishment of an Appeal Tribunal could improve the quality and consistency of decisions as compared to the current situation;

12.  Notes that the EU-Vietnam Investment Protection Agreement (EVIPA) does not contain a separate trade and sustainable development (TSD) chapter, as the latter applies to investment market access under the EU-Vietnam Free Trade Agreement (EUVFTA); stresses that the EVIPA also contains a provision establishing an institutional and legal link to the Framework Agreement on Comprehensive Partnership and Cooperation (PCA), as well as specific references in its preamble to the TSD values and principles, as enshrined in the EUVFTA, and to the Universal Declaration of Human Rights, thereby ensuring that human rights are placed at the core of the EU-Vietnam relationship; underlines that the Parties and investors must respect all the relevant international human rights standards and obligations; stresses the responsibilities of investors as outlined in the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights; points out, in addition, that the provisions of the EVIPA and the EUVFTA must be implemented in a complementary manner, especially with regard to human, environmental and social rights and sustainable development when these are applied under the Parties’ right to regulate; stresses the need, moreover, to ensure consistency with development cooperation objectives under Article 208 of the Treaty on the Functioning of the European Union (TFEU);

13.  Stresses the significance of truly positive trends in terms of human rights for a swift ratification of this agreement and calls on the Vietnamese authorities to outline concrete measures to improve the situation as a signal of their commitment; recalls its demands concerning the reform of penal legislation, the use of the death penalty, political prisoners and fundamental freedoms; urges the Parties to make full use of the agreements in order to improve the human rights situation in Vietnam and underlines the importance of an ambitious human rights dialogue between the EU and Vietnam; points out that Article 1 of the PCA contains a standard human rights clause which can trigger appropriate measures including, as a last resort, the immediate suspension of the PCA and, by extension, the IPA or elements thereof;

14.  Reiterates that Article 35 of the PCA and Article 13 of the FTA, in conjunction with a system of periodic evaluation, provide tools to address human rights concerns related to the implementation of the IPA, but must be accompanied by scrutiny by the EU and its Member States, and by an independent monitoring and complaints mechanism, providing affected citizens and stakeholders with effective recourse to remedy and a tool to address potential negative impacts on human rights;

15.  Expresses its concerns regarding the implementation of the new cybersecurity law, notably on localisation and disclosure requirements, online surveillance and control, and the protection of personal data measures, which are not compatible with the EU’s values-based and liberalisation trade agenda; welcomes the willingness to engage in an intensive dialogue, including the commitment of the Chairperson of the National Assembly of Vietnam to include both parliaments in the discussion and deliberation of the implementing decrees; calls on the Vietnamese authorities to take concrete measures and welcomes the EU’s assistance in this regard;

16.  Recalls that Article 8 of the TFEU states that ‘in all its activities, the Union shall aim to eliminate inequalities, and to promote equality, between men and women’; welcomes the fact that both Vietnam and the EU have signed the WTO Buenos Aires Declaration on Women and Trade and calls on the Parties to strengthen their commitments to gender and trade in this agreement; calls for the conditions of women to be improved so that they may benefit from this agreement, including through capacity-building for women at work and in business, promoting women’s representation in decision-making and positions of authority, and improving women’s access to, and participation and leadership in, science, technology and innovation;

17.  Calls for the EU and Vietnam to cooperate to develop an action plan to fight child labour, including the necessary framework for enterprises;

18.  Welcomes the Council’s decision to make public the negotiating directives of 20 March 2018 on the MIC, and calls on the Council to make public all previous trade and investment agreement negotiating directives;

19.  Highlights the fact that the agreement will replace the existing 21 bilateral investment treaties between EU Member States and Vietnam; considers that this constitutes an important step in increasing the legitimacy and acceptance of the international investment regime;

20.  Calls on the Commission to take accompanying measures for small and medium-sized enterprises (SMEs) in order to make the agreement transparent and accessible; encourages the Commission to continue its work on making the ICS more accessible to SMEs; underlines the potential for growth and the significant benefits that are hereby made available to European SMEs, which are of vital interest to European prosperity and innovation;

21.  Underscores the importance that the IPA could have in contributing to raising living standards, promoting prosperity and stability, and helping advance the rule of law, good governance, sustainable development and respect for human rights in Vietnam, while also enabling the EU to foster its objectives of peace and stability in the region; stresses that unequivocally upholding those universal values is a conditional part of any agreement between the EU and a third state;

22.  Considers that the approval of this agreement will robustly protect investors and their investments on both sides while safeguarding the governments’ rights to regulate, and will create more opportunities for free and fair trade between the EU and Vietnam; calls on the Member States to swiftly ratify the agreement in order to ensure that all stakeholders can reap its benefits as soon as possible, in the light of Vietnam’s endeavours to improve the situation of civil and labour rights in accordance with its commitments;

23.  Instructs its President to forward this resolution to the Council, the Commission, the Vice-President of the Commission / High Representative of the Union for Foreign Affairs and Security Policy, the European External Action Service, the governments and parliaments of the Member States and the government and parliament of the Socialist Republic of Viet Nam.

(1) OJ L 329, 3.12.2016, p. 8.
(2) OJ C 296 E, 2.10.2012, p. 34.
(3) OJ L 351, 20.12.2012, p. 40.
(4) OJ C 101, 16.3.2018, p. 30.
(5) Opinion of the Court of Justice of 16 May 2017, 2/15, ECLI:EU:C: 2017:376.
(6) OJ C 86, 6.3.2018, p. 122.
(7) OJ C 369, 11.10.2018, p. 73.
(8) Texts adopted, P8_TA(2018)0459.
(10) OJ C 11, 13.1.2020, p. 36.
(12) Texts adopted, P9_TA(2020)0028.
(13) Opinion of the Court of Justice of 30 April 2019, 1/17.

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