AFTINET | 26 October 2017
Top US trade official opposition to ISDS in NAFTA undermines case for ISDS in TPP-11
US Trade Representative Robert Lighthizer said publicly last week that the US wants to opt out of ISDS in NAFTA, because of the risk and costs of US governments being sued by foreign corporations, and despite corporate lobby groups pushing to retain ISDS.
Speaking in a press conference, he said… I’ve had people come in and say, literally, to me: ‘Oh, but you can’t do this: you can’t change ISDS. … You can’t do that because we wouldn’t have made the investment otherwise.’ I’m thinking, ‘Well, then why is it a good policy of the United States government to encourage investment in Mexico?’ … The bottom line is, business says: ‘We want to make decisions and have markets decide. But! We would like to have political risk insurance paid for by the United States’ government.’ And to me that’s absurd. You either are in the market, or you’re not in the market’.
This week rejection of ISDS was reinforced across the political spectrum from the US National Conference of State Legislatures and state attorneys general to small business organizations and unions to hundreds of the nation’s leading legal and economics professors, who released a letter calling on the administration to remove ISDS from NAFTA. Stark criticism of ISDS has come from voices as disparate as U.S. Supreme Court Chief Justice John Roberts and pro-free trade think tanks such as the Cato Institute to U.S. Senator Elizabeth Warren (D-Mass.), unions and environmental groups.
US opposition to ISDS undermines ISDS in the TPP-11, New Zealand and others want change
Meanwhile, in the TPP-11 negotiations, which are trying to revive the TPP without the US, the Japanese and Australian governments have continued to argue that the TPP text on ISDS and other issues should remain unchanged, just in case the US should want to re-join the agreement!
Clearly the US government move away from ISDS in NAFTA undercuts this rationale, just as the overwhelming opposition to ISDS across the US political spectrum expose its substantive threats to public interest regulation. In Australia, opinion polls and numerous submissions to parliamentary inquiries have shown the same opposition to ISDS across the spectrum, ranging from the Productivity Commission and former High Court Chief Justice French to public health and consumer groups, environmentalists and unions.
Malaysia and Vietnam have said that they only reluctantly agreed to ISDS and other provisions like stronger monopolies on medicines in order to get access to the US market, and that these damaging provisions make even less sense without such access. The newly elected New Zealand Labor government has flagged that it wants changes to enable it to better regulate foreign investment in housing and farmland, and to revisit ISDS.
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