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Argentina, Repsol and YPF: European Parliament Adopts Resolution on Legal Security of European Investments outside the EU (quotes)

As announced in a previous post, the European Parliament adopted a resolution on 20 April 2012 in reaction to the announcement by Argentina's government to expropriate and nationalise the major stake of the oil company YPF in which the Spanish company Repsol holds a majority share. As the measure is expected to only be the first of several ones, the European Parliament has adopted a broader perspective in its resolution addressing the legal security of European investments outside the European Union.

In the resolution (P7_TA-PROV(2012)0143), provisional version available here, at p.38), the Parliament:

REFERS TO the existing legal and political framework (among others):

  • Commission's proposal for a regulation establishing transitional arrangements for bilateral investment agreements between Member States and third countries (grandfathering regulation) (COM(2010)0344);
  • Commission communication of 7 July 2010 entitled "Towards a comprehensive European international investment policy" (COM(2010)0343);
  • WTO Joint Statement of 30 March 2012 on Argentina's Import Restricting Policies and Practices;
  • past G20 declarations, and in particular commitments to fight protectionism;
  • Agreements on the Reciprocal Promotion and Protection of Investments signed between Argentina and Spain and a number of other EU Member States;
  • undergoing negotiations on an inter-regional Association Agreement between the EU and Mercosur, and in particular the Free Trade Agreement (FTA);

TAKES NOTE of the following factual elements as to the Argentine government decisions (among others):

  • A.  whereas Article 207 of the TFEU establishes that European investments in third countries are a fundamental element of the Common Trade Policy of the European Union and are consequently an intrinsic part of its external action policy and whereas under the Treaty of Lisbon foreign direct investment (FDI) is an exclusive EU competence, as enshrined in Articles 3(1)(e), 206 and 207 of the Treaty on the Functioning of the European Union (TFEU);
  • B.  whereas the Union has begun to exercise this competence with ongoing negotiations for investment agreements with India, Singapore and Canada, and proposals for negotiating mandates with Morocco, Tunisia, Jordan and Egypt;
  • D.  whereas EU investments in Argentina are protected by Member State bilateral investment agreements, where they exist, and whereas18 Member States currently have agreements in force with Argentina;
  • G.  whereas over the last few months, the company [YPF/Repsol] has been the target of a public harassment campaign that, together with many decisions taken by the administrative authorities, has resulted in the loss in value of its shares with repercussions for all its shareholders and companies associated with it;
  • J.  whereas the Republic of Argentina, as a full member of Mercosur, is currently negotiating an Association Agreement with the EU;
  • K. whereas, in spite of these negotiations, the Commission has noted in its Trade and Investment Barrier Reports that Argentina has adopted a number of protectionist measures which have caused deterioration in the business climate for EU investors in Argentina;
  • L. whereas the European Commission has expressed its concern on many occasions to the WTO with regard to the nature and application of the restrictive measures applied to imports by the Argentine Government which have affected an ever-increasing number of countries that are part of the World Trade Organisation;
  • M.  whereas the Republic of Argentina has traditionally benefited from the generalised system of preferences (GSP) unilaterally granted by the EU;
  • N.  whereas Argentina, as a member of the G20, has committed itself at each G20 summit to fighting protectionism and keeping markets open to trade and investment;

  • 1. Deplores the decision taken by the Argentine Government, disregarding a negotiated solution, to proceed with the expropriation of the majority of shares of a European company; maintains that this represents a unilateral and arbitrary decision which entails an attack on the exercise of free enterprise and the principle of legal certainty, thus causing the investment environment for EU businesses in Argentina to deteriorate;
  • 2. Notes that this decision affects only one undertaking in the sector and only part of its shares, which could be considered discriminatory;
  • 3. Expresses its deep concerns regarding the situation as it represents the non-fulfilment of obligations under international agreements; warns about the negative effects that such measures might have, such as international disinvestment and adverse consequences for Argentina in the international community; [...] 
  • 5. Regrets that Argentina has not respected this principle and has introduced several restrictive trade and investment measures, such as non-tariff barriers, which have hampered EU businesses and global trade with Argentina;
  • 6. Calls on the Commission to respond to these restrictions using all the appropriate dispute settlement tools available at the World Trade Organisation and the G20 to cooperate with other countries facing similar discriminatory barriers to trade and investment;