If the UK is serious about climate action, it must end the UK-Colombia investment deal
By: Cleodie Rickard
Date: 14 November 2024
Campaigns: Climate, Trade
In October, the UK-Colombia Bilateral Investment Treaty quietly rolled over from its initial 10-year term. And with it, the dangers of a contentious mechanism at its core.
The UK-Colombia treaty contains something called Investor-State Dispute Settlement, or ISDS, an investment arbitration mechanism which allows corporations to sue governments for policies they allege harm their profits – outside national legal systems, in secretive, private tribunals for sums running into the billions.
Colombia has been particularly devastated by these claims. Many have been raised by foreign mining companies in direct response to measures taken by Colombia to protect the natural environment and the rights of Indigenous peoples.
Consider Colombia’s páramos – rare, high-altitude wetland ecosystems that host rare flora and provide 70% of the country’s drinking water. After huge public mobilisations led by the Committee for the Defense of Water and the Santurbán Páramo, Colombia’s Constitutional Court ruled to create mining-protected conservation areas within them. In response, mining giant Eco Oro sued Colombia using ISDS for almost $700 million.
Colombia has been subjected to 23 ISDS claims over the last decade, three of which by UK investors using the UK-Colombia treaty. At the end of 2023, Colombia’s pending ISDS claims exceeded $13 billion – over 13% of the government’s annual budget. The financial burden of such claims clearly shows how it functions to pass the costs of the green transition and progressive policies onto the taxpayer, or it creates a ‘chilling effect’ where just the threat of claims makes governments back down from proposed legislation – as UN climate scientists at the IPCC have warned.
As countries gather for the COP29 summit in Azerbaijan to come to agreements on climate action, they must ensure their trading relationships aren’t tying their hands to act at the very same time. The UK has already recognised the threat of ISDS to its policy space: earlier this year, it left the notorious Energy Charter Treaty, citing its risks to the UK’s efforts to reach net zero.
It is illogical, and hypocritical, to not extend this stance to its wider stock of investment treaties, which leave the UK open to more fossil fuel investor claims as it decarbonises and enable UK corporations to overturn action on climate, nature, health and human rights around the world.
The UK-Colombia treaty is the best place to start. While automatically renewed, now its first ten years are up the deal can be renegotiated or terminated by either party. Last year the Colombian trade ministry announced it would review the nation’s investment treaties due to the impacts of ISDS. But it’s up against huge vested interests, even as it is making strides away from the fossil fuel past, committing to end new oil and gas contracts, and becoming the first producer country to endorse the Fossil Fuel Non Proliferation Treaty.
The UK must meet Colombia halfway: a mutual termination by the two countries would negotiate an end to the treaty’s ‘sunset clause’, which keeps its provisions applicable for 15 years after. While publicly advocating ambitious climate targets, global north governments cannot keep countries locked into fossil fuel dependence through the threat of investor claims in their trade deals behind closed doors.
And Colombia can look to other investment-seeking countries who proved the sky hasn’t fallen in after terminating their investment treaties – such as Ecuador and South Africa, whose ministers claim they saw no fall in foreign direct investment in the aftermath.
There’s no technical barrier to governments extricating themselves from ISDS treaties, just the matter of political will. UK ministers must come to the table.
Image credit: Fernanda Fierro / Unsplash
