International Economic Law Might Improve Water Governance in Peru

Abstract

Has the well-known fragmentation between Human Rights and Water and Investment Law been exacerbated by the protection offered to foreign investors under Peru’s recently signed Regional Trade Agreements and under WTO rules, both enforceable under their specific dispute settlement procedures? This chapter shows that commercial treaty rules are an evolving source of legal obligations which may actually help to improve Peru’s water governance. Traders and investors can still trust arbitrators to safeguard their legitimate interests. On the other side, trade-distorting social and environmental dumping can now be attacked under the new, comprehensive treaties. Regardless of the relative economic impact of different water uses, Peru cannot trade away its international obligations by condoning “water grab” investments and violations of fundamental human rights and environmental norms. The only caveat is the unilateralism even of well-meant standards “made in Washington”. Nonetheless, while WTO still ensures non-discriminatory treatment of foreign operators, it will not systematically protect investment treaties and contracts with regulatory “freeze clauses” in cases of serious violations of ius cogens or peremptory social and environmental law, including water grabbing. And developing countries accepting higher standards can count on their developed trading partners to enforce such standards in countries with competing producers.