Achievements and Highlights

IISD'S program on international investment has evolved into an important offshoot of its work in international trade. Our work examines the broader impacts of foreign direct investment upon sustainable development, as well as the specific role that international legal rules can play in encouraging or frustrating sustainable development objectives. Over the last year, we continued to monitor the bewildering array of investment treaty negotiations at the bilateral, regional and multilateral levels, while also working to elaborate an international legal framework which could ensure that international investment promotes sustainable development.

In 1998, IISD took an interest in the North American Free Trade Agreement (NAFTA) Chapter 11 rules on foreign investment. This led to a presentation to the environment ministers of Canada, Mexico and the United States, and to an ongoing interest in specific cases. One such case was brought by Methanex Inc., a Canadian company, against the United States after California adopted a law requiring the complete phase-out of MTBE (methyl tertiary butyl ether) from gasoline sold in that state by 2003. Methanex makes methanol, one of the starting materials for MTBE. In 2000, IISD sought status as an amicus curiae or friend of the court, marking the first time any civil society group had formally sought such status in an investor-state arbitration under international rules. In January 2001, the tribunal ruled that it had, in principle, the power to grant such status, and, finally, in February of 2004, the tribunal issued specific rules on how IISD and others could formally apply for amicus status. In March 2004, IISD submitted its formal request and its written arguments to the tribunal and in April, the Tribunal accepted IISD as an amicus, making IISD and a U.S. NGO the first civil society groups to be recognized in this way. IISD believes that there are serious flaws in the NAFTA rules and in the dispute settlement process. In this instance, IISD took a leadership role in forcing the process open. As a result, not only is IISD the first NGO to ever receive such status in an investor-state arbitration, but the NAFTA parties have also set up a formal process for considering further such applications, have indicated they wish all hearings to be open to the public and have established Web sites with all major documents in the arbitrations being posted. On every count, IISD has forced the issue and won the point. Please click here for more information.

IISD's work on bilateral investment treaties (BITs) arose out of our earlier NAFTA analysis. Upon further study, it became clear that many of the problems that afflicted NAFTA—including a disturbing pattern of international litigation by foreign investors against health or environmental measures—also plagued the hundreds and hundreds of BITs. In recent years, our investment work has made particular efforts to monitor the proliferation of these poorly-understood treaties and to assess their implications for sustainable development. Our acclaimed INVEST-SD News Bulletin has rapidly matured into a leading publication on the linkages between investment and sustainable development. The Bulletin tracks the use of investment treaties in strategic litigation against developed and developing countries, in relation to a host of different investments: water, electricity, hazardous waste, land-zoning and various public services. Please click here for more information.

IISD's core belief about investment and sustainable development is simple: investment is critical to whether we will change unsustainable practices in energy, natural resource use, industry and critical infrastructure services into sustainable practices. The international regime governing investment must reflect this challenge. IISD is undertaking two interconnected projects that will further our reputation as the leading think tank on investment and sustainable development while setting a new marker for global, regional and bilateral investment negotiations. IISD has established a Southern Agenda on Investment (SAI) project, designed to articulate a developing country perspective on what the agenda for international investment negotiations should be. Working with partners in Thailand, South Africa, Argentina and Brazil, as well as the Heinrich Boell Foundation, IISD has promoted the development of four regional papers on investment and sustainable development and related multinational conferences in Bangkok, Cape Town and Sao Paulo. These efforts will lead to the development of a policy document setting out a Southern Agenda on Investment. This will then feed into the design of a Model Agreement on International Investment for Sustainable Development. The investment team anticipates this will result in a major conference of legal and policy experts in the early fall, leading to a single consolidated draft model agreement. This, in turn, will feed back to the SAI project, in the form of a negotiator's handbook on how to achieve the objectives illustrated in the model agreement. Please click here for more information

"...not only is IISD the first NGO to ever receive such status in an investor-state arbitration, but the NAFTA parties have also set up a formal process for considering further such applications..."

For years, most developing countries rejected expanding the environmental agenda in the World Trade Organization (WTO) because they saw such proposals as attempts by the rich countries to use green arguments to restrict market access for developing country products. While there is some justification for this fear, a rejectionist agenda is not in the best interest of any country. IISD has begun working with the developing countries to craft a trade and environment agenda that reflects their interests and priorities, and stimulates a stream of developing country policy proposals in the WTO on environmental issues. Through regional consultations and the production of a resource book for Southern trade negotiators, we hope to develop a positive agenda, through which environmental quality can become a trade advantage for poor countries. Please click here for more information.

IISD continues to play a key role in a Phase III of the China Council for International Cooperation on Environment and Development (CCICED). We are working with the Task Force on WTO and Environment to assess the environmental consequences of China's WTO accession. The aims are to develop appropriate strategies and policy measures to address environmental challenges; to support sustainable trade; to strengthen the Chinese government and academic expertise in post-Doha trade and environmental negotiations; and to enable China to contribute positively to the development of WTO rules governing the relationship between trade and environment. In addition, IISD also partnered with IUCN's Regional Environmental Law Program/Asia, China's State Environmental Protection Administration and the International Centre for Trade and Sustainable Development in the organization of a training workshop on trade, biodiversity and sustainable development. This event initiated a formal dialogue among government officials and academics on the interaction of trade and environment in the context of biodiversity. Please click here for more information.

IISD and The Center for International Environmental Law published The State of Trade and Environment Law, 2003. IISD and CIEL examined the decisions of the WTO Appellate Body since 1995, and other factors that have altered the content of trade law or its interpretation since the first challenging issues arose in the late 1980s. The book documents how the Appellate Body, in particular, has worked to establish a much more open balance between trade and environment in the WTO than in its General Agreement on Tariffs and Trade (GATT) predecessor. Different elements of the book have been presented at various international meetings, and IISD is now in discussion with the WTO on becoming members of the WTO international trade law capacity building team. Download the book here.

Some years ago, IISD raised the curtain on perverse subsidies—public money spent in ways that undermine the environment. Our publications revealed the extent of these practices but, while it may have raised some eyebrows, it did not lead to any specific action. IISD is taking another stab at the issue. Through our Van Lennep Initiative, led in cooperation with IISD's Economic Policy team, we have assembled a high-level group to address subsidies that distort trade, undermine development and spoil the environment. We hope to create a broad alliance to use the mechanisms of the World Trade Organization positively—to see if it is possible to negotiate the reduction or dismantling of these subsidies, or at least to re-orient them so that their negative impact is reduced. We hope that a combination of well-targeted communications, rock-solid research and the political clout of our Eminent Persons' Group will prove sufficient to address some of the more egregious misuses of taxpayer money and thus promote sustainable development. Please click here for more information.

The Sustainable Commodity Initiative (SCI), an initiative of IISD and the United Nations Conference on Trade and Development, seeks market-based approaches for improving sustainability in commodities trade. Since the beginning of the project in late 2003, the SCI has facilitated multi-stakeholder dialogue and research on opportunities for multi-stakeholder collaboration towards sustainability in the coffee sector. Through its work in coffee, IISD has organized two major multi-stakeholder conferences, established the "Sustainable Coffee Discussion Group" and facilitated a process for the establishment of a multi-stakeholder based "Sustainable Coffee Partnership." In pursuing the project, IISD has also been a major contributor to related processes being undertaken at the International Coffee Organization (ICO) and with the Common Code for the Coffee Community projects. Please click here for more information.

"...IISD is now in discussion with the WTO on becoming members of the WTO International Trade Law Capacity Building team."

Corporate Social Responsibility (CSR) has been described as a company's contribution to sustainable development. But it's an easier thing to describe than to achieve. There are two problems: first, organizations do not know what is expected of them and so do not know what their targets should be; second, organizations do not know how to manage the process of driving CSR through their business operations—including how to address diverse stakeholders concerned with often competing issues. So when the International Organization for Standardization invited IISD to advise on whether to develop standards in this area, we jumped at the chance. Although we identified more obstacles than opportunities, with perseverance and continued co-operation it is now very likely that, in the future, ISO will provide guidance on how organizations can be more socially responsible. This would be a big step towards mainstreaming sustainable development. Please click here for more information.

More than a decade after it came into force, the Convention on Biological Diversity (CBD) remains one of the most important international instruments for promoting sustainable development. The CBD has three basic elements: conservation, sustainable use, and the fair and equitable sharing of benefits arising from access to and use of genetic resources (commonly referred to as Access and Benefit Sharing, or ABS). ABS has proven to be the most politically and technically challenging because it involves wealth redistribution—and in many cases, from the powerful to the powerless. In April 2002, the Parties to the CBD adopted the Bonn Guidelines, which were the first attempt to provide guidance on the implementation of the Convention's ABS provisions. These guidelines were always intended as a work in progress—something to be tested and improved upon over time. Unfortunately, most of the organizations that should be using these guidelines are either unaware they exist or do not have time to analyze a politically negotiated text to understand what they should be doing. What has been needed is a simple, practical tool that outlines what is expected, and helps them to achieve it. In partnership with Stratos Inc., and with the support of the Swiss Federal Government, IISD is convening a process to develop a management tool to help organizations implement the ABS provisions in the CBD. In 2003–04 we developed a draft tool; in the new fiscal year, we will be field testing it to see how to most effectively build trust and cooperation between users and providers of genetic resources. Please click here for more information.

The Trade Knowledge Network (TKN) workshop in Bangladesh, held in late spring 2003, was an excellent example of the power of strategic research to build capacity. The research asked whether tough standards in export markets might be driving small-scale shrimp aquaculture toward consolidation, depriving small holders of an important source of income. The workshop gathered together farmers, processors, scientists, aid organizations and government. The TKN research acted as a spark to ignite the energies of this group— many of whom had never met—around a set of shared problems and common objectives. They asked how they could work together to ensure better quality control and environmental sustainability, to meet foreign standards and to ensure sustainable livelihoods. The meeting ended with strong demands for better training for farmers and processors, and more coordination among the various players. TKN's follow-up work in Bangladesh is now focused on developing capacity for farmers and processors through training and dialogue on developing an understanding about rules and compliance procedures in the Bangladesh shrimp industry. Please click here for more information.