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2021 FIPA model – Summary of main changes

Substantive/Policy issues

National treatment (NT) and Most-Favoured-Nation Treatment (MFN): NT and MFN are obligations that a Party cannot discriminate against foreign investors in favour of domestic investors or investors from another country.

Minimum Standard of Treatment (MST): An obligation requiring a Party to provide a minimum standard of treatment to foreign investments in accordance with customary international law.

Performance Requirements (PR): An obligation that prohibits a Party from placing conditions on investments that favour domestic industry, such as requirements that the investor purchase local goods.

Investor-State Dispute Settlement (ISDS): FIPAs include a mechanism to resolve disputes between States and investors in an impartial and timely manner. The new FIPA model features multiple technical changes to modernize the ISDS mechanism and make it more inclusive. This includes, but is not limited to:

Inclusive trade

Right to regulate: The new FIPA model includes an additional clause reaffirming that each Party maintains its right to regulate to achieve legitimate policy objectives, such as health, the environment, gender equality, rights of Indigenous peoples and cultural diversity.

Transparency of ISDS proceedings: The new FIPA model includes additional transparency provisions related to ISDS proceedings, including a stipulation that hearings and documents from the proceedings must be open and available to the public.

Gender equality and diversity: The new FIPA model includes a number of new provisions that aim to help women and other groups benefit more from the agreements, and to ensure that investment protections do not impede policies promoting gender equality. For example, the new FIPA model stipulates that Parties should encourage enterprises to consider greater diversity in senior management positions, which may include requirements to nominate women. Similarly, the model includes a new provision encouraging the Parties to promote gender equality when appointing arbitrators in ISDS cases.

SMEs: The new FIPA model proposes several features for SMEs to better access the benefits of the agreement. This includes the following:

Indigenous peoples rights & participation: The new FIPA model aims to better reflect Indigenous peoples rights and participation through a number of clarifications, exceptions and new provisions, including:

Responsible Business Conduct (RBC): The new FIPA model considerably expands the existing RBC provisions (formerly called “Corporate Social Responsibility (CSR)”), including by promoting internationally recognized RBC standards, an obligation to encourage enterprises to incorporate these standards into their internal policies, and encouraging enterprises to engage with local communities and Indigenous peoples.

Tobacco: The new FIPA model has an exclusion to ensure that all present or future tobacco control measures are automatically excluded from dispute resolution and, therefore, cannot be challenged by investors under ISDS or State-to-State dispute settlement.

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