68 Groups Urge Governments to Keep Investors’ Right to Sue Governments out of RCEP Trade Deal

Sixty-eight civil society organisations (CSOs) across a majority of the 15 Regional Comprehensive Economic Partnership (RCEP) member countries* have signed a letter urging governments to maintain the exclusion of controversial Investor-State Dispute Settlement (ISDS) rules from the agreement. Malaysian CSOs endorsing this letter are the Consumers’ Association of Penang, Forum Kedaulatan Makanan Malaysia (FKMM), Positive Malaysian Treatment Access & Advocacy Group (MTAAG+), Sahabat Alam Malaysia and Third World Network.

ISDS is a fundamentally unbalanced system that enables foreign investors to claim millions or even billions in compensation from governments if they can convince an international tribunal that a change in law or policy would reduce their future profits and/or they were not consulted sufficiently about it, even if the change was in the public interest.

There have been cases against laws protecting workers’ rights, public health and the environment, including many cases by fossil fuel companies against government actions to reduce carbon emissions needed to address the climate crisis. Some governments were cancelling ISDS arrangements because of their impact on their national finances and sovereignty.

Strong community opposition led governments to agree to exclude ISDS from the RCEP during negotiations, with the Malaysian Government at that time initiating this exclusion.

However, the RCEP members committed to “enter into discussions” on ISDS within two years of entry into force of the agreement. The RCEP came into force for all members in June 2023. As discussions may begin soon, the letter urges RCEP governments not to revisit a system that enables foreign investors to sue states over public interest policies. ISDS cases have more than doubled to 1,401 globally, and awards of billions of dollars continue to place a heavy burden on public budgets, especially in low-income countries.

A United Nations report has warned that ISDS is a major obstacle to addressing the climate change crisis. The Organisation for Economic Co-operation and Development (OECD) has acknowledged that ISDS is not aligned with the global transition to a sustainable, low-carbon economy and canvassed options, including coordinated government withdrawals from ISDS arrangements.

Amid the current economic turmoil caused by the US Trump administration’s application of unilateral tariffs, RCEP governments should not add the additional risk of possible ISDS cases. Given the overwhelming evidence against ISDS, and threats to Malaysian public interest policy, we call on the Malaysian government to exclude ISDS from the RCEP.

Mohideen Abdul Kader
President
Consumers’ Association of Penang

Press statement, 8 July 2025 

See full letter attached:
https://consumer.org.my/wp-content/uploads/2025/07/250702-RCEP-Keep-ISDS-out_letter-with-endorsements.pdf

* RCEP member countries are: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam, Australia, China, Japan, Korea, and New Zealand.