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Abstract
BRICS was constituted as a group during the global financial crisis, and was considered a Global South alternative to traditional Western powers. This article critiques the negotiations and political economy of investment agreements, in support of the position of those negatively impacted and resisting the overall loosening of trade restrictions associated with the rise of the BRICS (“BRICS from below”). The article presents an empirical overview and analysis of bilateral investment treaties (BITs), which demonstrate that, to a large extent, the BRICS BITs maintain the broader neoliberal economic order, although the locus of power might be partially shifting. It concludes that, in a broader context of capitalist accumulation, the BRICS’s actions are based on a logic of competition over natural resources and market access that is imperialist in nature and is taking colonialism back to Africa in modern times.
Keywords:
Notes
Acknowledgements
This article is based on the study “BRICS in Africa: More of the Same? A Comparative Study of Investment Treaties between the BRICS and African Countries,” conducted by the Rio-based Institute PACS. This research counted on the work of student assistants, Yasmin Bitencourt and Barbara Dias, and on comments and suggestions made by Miguel Borba de Sá, Karina Kato, and Sandra Quintela. A full version of this study is available at http://www.pacs.org.br/files/2016/05/Publicao-Africa-BRICS-EN.pdf.
Disclosure statement
The author reports no conflicts of interest. The author alone is responsible for the content and writing of this article.
About the author
Ana Garcia teaches International Relations at the Federal Rural University of Rio de Janeiro in Rio de Janeiro, Brazil.
Notes
1 The first BRICS Summit took place in Russia in 2009 to discuss, among other issues, common policies for overcoming the international crisis. Since then, the group has met annually. According to Prashad (2013), the prehistory of BRICS is located in two related processes: the defeat of the Third World Project in the 1980s, and the rise of Northern-led neoliberalism. BRICS derives its agenda from the India-Brazil-South Africa (IBSA) Dialogue, and the group of 20 developing economies that resisted the World Trade Organization agenda at the Cancun meeting in 2003. See Prashad, “Neoliberalism with Southern Characteristics.”
2 See, for example, Bello, “The BRICS: Challengers to the Global Status Quo”; Desai, “The BRICS are Building a Challenge to Western Economic Supremacy.”
3 A collection of analyses about the BRICS from a Left-critical perspective can be found in Bond and Garcia, BRICS: An Anti-Capitalist Critique.
4 Other tension came about when Russia hosted former NSA agent Edward Snowden, and in different attempts to substitute the US dollar for local currencies in trade and finance relations between them. See Bond and Garcia, “Introduction.”
5 Bond and Garcia, “Introduction,” 6–7.
6 Lechini, “BRICS e África.”
7 Amisi et al., “BRICS Corporate Snapshots During African Extractivism.”
8 The first BIT between Germany and Pakistan was signed in 1959. In the 1980s, there were approximately 400 treaties in force, jumping to approximately 1,800 in the 1990s. See Guiotto, “La protección a las inversiones como corazón del libre comercio.”
9 According to UNCTAD, a Bilateral Investment Treaty (BIT) is an agreement between two countries regarding promotion and protection of investments made by investors from respective countries in each other’s territory. The great majority of International Investment Agreements (IIAs) are BITs. The IIA category includes the BITs, Free Trade Agreement (FTA), and other treaties containing structuring investment clauses. See “Terminology” in http://investmentpolicyhub.unctad.org/IIA/.
10 The most common ones include national treatment and fair and equitable treatment to foreign investors (which prevents domestic investors from receiving differential treatment); the most-favoured nation principle (which allows international investors to take advantage of more favourable conditions under other treaties); intellectual property rights; stability of contractual terms after ratification (terms cannot be modified by the parties); and prohibition on investor performance requirements by host states and residual treaty validity, which extends the protection provided for in a BIT for years after it expires. See Guiotto, “La protección a las inversions.”
11 Godinho, Daniel and Carlos Cozendey. 2015. “Novos acordos de investimento no menu”. Valor Econômico, June 24. Godinho and Cozendei, “Novos acordos de investimento no menu.”
12 According to UNCTAD, the cumulative number of claims presented by investors against nation-states (in ICSID and other forums) reached 608 between 1987 and 2014, about 354 of which have been completed and where 101 countries are respondents of lawsuits filed by one or more investor. See UNCTAD, “Recent Trends in IIAS and ISDS.”
13 According to Godinho and Cozendei, the 1965 Washington Convention created the foundations for this foreign investor protection system in the context of decolonization and national liberation struggles in the so-called “Third World.” During this period, the argument presented was that the newly created judicial systems would not be impartial and that international forums would be free from political interference.
14 Hernandez, Las empresas transnacionales frente a los derechos humanos.
15 Hernandez, “Arquitectura jurídica de la impunidad.”
16 Social movements in Latin America launched a “Say No to the ICSID” campaign, and, together with other social organizations from other parts of the world, are pushing the United Nations to create a binding treaty on transnational corporations and human rights. See http://www.enlazandoalternativas.org/IMG/pdf/Campana_CIADI-TBI_s.pdf, and https://www.tni.org/en/publication/8-proposals-for-the-binding-treaty-on-transnational-corporations-and-human-right.
17 Arroyo and Guiotto, “Brasil y la nueva generación de Acuerdos de Cooperación y Facilitación de Inversiones.” According to the authors, Ecuador requested a full audit of investment treaties and of the arbitration system, which was carried out between 2014 and 2015.
18 Kuzina, “BRICS International Investment Regime from the Perspective of Foreign Investment Protection.”
19 Cheru and Obi, “Chinese and Indian Engagement in Africa,” 93.
21 The Chinese treaties ensure companies equal treatment between international and domestic investors and the most-favoured-nation principle. The definition of investment includes products and services, as well as intellectual property assets, including industrial property, as in the case of Benin, Madagascar, Algeria, Ethiopia, and Ghana. We have examined the contents of agreements between China and Algeria, Benin, Botswana, Congo, Cote d’Ivoire, Djibouti, Egypt, Ethiopia, Ghana, Madagascar, Mauritius, Morocco, Nigeria, Tunisia, Uganda, Zimbabwe, and South Africa.
22 South African policy of protection and promotion of the black population has already led the country to ICSID by investors from Luxembourg and Italy based on the national treatment principle. See Jackwell Feris, “Challenging the Status Quo—South Africa's Termination of Its Bilateral Trade Agreements.”
23 See https://icsid.worldbank.org/apps/icsidweb/cases/Pages/casedetail.aspx?caseno=ARB/10/20&tab=PRD.
24 Lopes et al., “FOCAC: estratégia econômica e política de cooperação sul-sul sino-africana.”
25 See CAD-Fund: The company overview, in http://www.cadfund.com/en/index.aspx.
26 Cheru and Obi, “Chinese and Indian Engagement in Africa,” 97.
27 Statistical data drawn from UNCTAD’s data base (available in http://unctad.org/Sections/dite_fdistat/docs/webdiaeia2014d3_CHN.xls), elaborated on the basis of China’s Ministry of Commerce (MOFCOM) between 2003 and 2012. The numbers may be underestimated and outdated.
28 According to Cheru and Obi, Chinese investors enjoy state support through diplomatic initiatives (such as the FOCAC) and high-level visits by Chinese officials to Africa. Cheru and Obi, “Chinese and Indian Engagement in Africa,” 99.
29 Amisi et al., “BRICS Corporate Snapshots During African Extractivism,” 421.
30 Amisi et al., “BRICS Corporate Snapshots During African Extractivism,” 427.
31 Odigha, “In Defence of the Property of the Common.”
32 The dam will affect a huge area of fragile ecosystems along the Omo River region and the Turkana Valley. It will influence their natural cycle of floods and reducing their flow into the Turkana River, which is now threatened by salinization. Approximately 300,000 people live off a lake in the area, where they carry out agricultural, fishing, and grazing activities. See Ke Zhang, “Ecological Destruction? Chinese Loan for Ethiopian Dams Draws Controversy.”
33 Justo, “As conflituosas relações da China na África”; and Prádaig Carmody, “The New Scramble for Africa.”
34 Justo, “As conflituosas relações.”
35 Carmody, “The New Scramble for Africa.”
36 Carmody, “The New Scramble for Africa.”
38 An exception to this clause is made in cases of customs union, free trade areas, common market etc.
39 We have examined the contents of agreements between South Africa and China, Algeria, Madagascar, Mauritius, and Zimbabwe.
40 https://icsid.worldbank.org/apps/ICSIDWEB/cases/Pages/casedetail.aspx?CaseNo=ARB(AF)/14/2&tab=PRD.
41 Feris, “Challenging the Status Quo.”
42 Bond, “South Africa: Talk Left, Walk Right.”
43 Taken from the UNCTAD database (http://unctad.org/Sections/dite_fdistat/docs/webdiaeia2014d3_ZAF.xls) based on numbers disclosed by the South Africa Reserve Bank between 2001 and 2012. Some data for important countries such as Madagascar, Angola, and Nigeria are outdated. It is worth noting that, despite the lack of a BIT between Nigeria and South Africa, Nigeria is the main recipient of South African investments.
44 Alden and Schoeman, “South Africa’s Symbolic Hegemony in Africa.”
45 Amisi et al., “BRICS Corporate Snapshots,” 422.
46 Carmody, “New Scramble for Africa.”
47 Bond, “South Africa’s Resource Curse and Growing Social Resistance.”
49 We have examined the contents of agreements between India and Egypt, Ghana, Libya, Mauritius, Morocco, Mozambique, Sudan, Senegal, and Russia.
50 The United Nations Commission for International Trade Law (UNCTRAL) was established in 1966 with the aim of developing an international framework to assist in the harmonization of international business rules. It developed a model of rules aimed at preparing and promoting the use of legislative instruments in subject areas related to international trade law. Today, it has 60 member-states.
52 See http://www.pcacases.com/web/view/46; and http://investmentpolicyhub.unctad.org/ISDS/Details/484.
54 The case that triggered this process involved the Australian miner White Industries against the Indian state, which the company won, alleging that India had violated the most-favoured nation principle. See https://www.iisd.org/itn/2012/04/13/the-white-industries-arbitration-implications-for-indias-investment-treaty-program/.
55 Bhatia, “India's Africa Policy: Can We Do Better?”; Lechini, “BRICS e África.”
56 Paul, “India Foreign Direct Investment in Africa.”
57 Data extracted from the UNCTAD database (http://unctad.org/Sections/dite_fdistat/docs/webdiaeia2014d3_IND.xls, Table 4). The numbers disclosed are from between 2010 and 2012 and might be underestimated or outdated.
59 Cheru and Obi, “Chinese and Indian Engagement in Africa,” 99–100.
61 Anwar, “Indian Foreign Direct Investment in Africa: A Geographical Perspective.”
62 Cheru and Obi, “Chinese and Indian Engagement in Africa,” 103.
63 Cheru and Obi, “Chinese and Indian Engagement in Africa,” 103.
65 With the exception of free trade areas or economic unions, treaties signed by the Russian Federation with countries of the former USSR and in relation to treaties against double taxation or treaties involving tax issues.
66 We have examined the contents of agreements between Russia and China, and Ethiopia and Egypt. Agreements with other countries are available at the United Nations Transitional Authority in Cambodia (UNTAC) webpage, in Russian only.
67 Arkhangelskaya and Shubin, “Is Russia Back? Realities of Russian Engagement in Africa.”
68 Data extracted from UNCTAD’s database (http://unctad.org/Sections/dite_fdistat/docs/webdiaeia2014d3_RUS.xls, table 4). Elaborated with data between 2009 and 2012 from the Bank of Russia. The numbers may be underestimated or outdated.
69 Barka and Mlambo, “Russia’s Economic Engagement with Africa.” Others draw attention to the fact that some of the Russian investments are difficult to identify because Russia uses subsidiaries in other countries to send their investments to African countries. This is the case for Renova Holding, registered in the Bahamas, Evraz plc in the United Kingdom, and Gazprom International in the Netherlands. See Arkhangelskaya and Shubin, “Is Russia Back?” 31.
70 Amisi et al., “BRICS Corporate Snapshots.”
71 Lechini, “BRICS e Africa,” 143.
72 See http://mepc.org/journal/middle-east-policy-archives/russian-libyan-rapprochement-what-has-moscow-gained; http://www.usnews.com/news/articles/2014/04/25/with-world-watching-ukraine-russia-makes-energy-moves-in-africa; http://www.geeskaafrika.com/ethiopia-russian-energy-companies-delegation-led-by-foreign-minister/5575/.
73 Amisi et al., “BRICS Corporate Snapshots.”
75 Morosini and Ratton, “The Brazilian Agreement on Cooperation and Facilitation of Investments (ACFI).”
76 Similar to traditional BITs, the Brazilian agreements ensure protection to all investments made before and after their ratification. With regards to the definitions of investments and investors, the ACFI with Angola provides that such definitions must be in accordance with domestic laws, while the ACFI with Mozambique contemplates investments in production and services. Intellectual property is addressed within the framework of the WTO. The agreements ensure a free flow of capital, except when litigation is initiated or there is a crisis in the balance of payments, according to IMF rules. We have examined the contents of agreements with Mozambique, Angola, and Malawi.
77 Arroyo and Guiotto, “Brasil y la nueva generación de acuerdos.”
78 This is a recent trend in new BITs, such as the treaties elaborated by Canada. See UNCTAD, “Recent Trends in IIAs and ISDS.”
79 Data extracted from UNCTAD’s database (http://unctad.org/Sections/dite_fdistat/docs/webdiaeia2014d3_BRA.xls), elaborated with data between 2001 and 2012 from the Brazilian Central Bank. The data related to major countries such as Mozambique and South Africa are not disclosed, rendering the accumulated data underestimated and outdated.
80 See “BNDES inaugura escritório de representação na África.”
81 Vale has faced conflicts of many kinds—social, environmental, and labour—inside and outside Brazil. At home, its 1997 privatization is still the subject of protests and legal disputes inside Brazil. Abroad, its truculence provoked the longest strike in Vale’s history—a dispute with the United Steel Workers (USW) in Canada. Notably, shortly before the confrontation against Canadian workers, Vale had massive layoffs of workers in Brazil. In fact, contradicting the argument of those who assume that the “national interest” is at play in the internationalization of Brazilian companies, the disruption of Canadian workers’ rights did not benefit Brazilian workers. For Vale’s global actions in Canada, Brazil, and Mozambique, see Judith Marshall, “The Worst Company in the World.” For the role of Brazilian multinationals and the state, see Virginia Fontes and Ana Garcia, “Brazil’s Imperial Capitalism.”
82 See, for example, João Mosca and Thomas Selemane, Eldorado Tete: os megaprojetos de mineração; International Movement of People Affected by Vale, Vale Unsustainability Report 2012; Human Rights Watch, What Is a House without Food? Mozambique’s Coal Mining Boom and Resettlements. http://www.hrw.org/sites/default/files/reports/mozambique0513_Upload_0.pdf.
84 Garcia, Kato, and Fontes, A história contada pela caça ou pelo caçador? Perspectivas do Brasil em Angola e Moçambique.
85 See Schlesinger, Cooperação e Investimentos do Brasil na África: o caso do Prosavana em Moçambique; Justiça Ambiental and UNAC, Senhores da Terra: análise preliminar do fenômeno da usurpação da terra em Moçambique.
88 Juan Hernandez, Las empresas transnacionales frente a los derechos humanos.
89 Garcia and Kato, “Políticas públicas, interesses privados: uma análise a paritr do Corredor de Nacala.”