300+ Professors of Law, Economics Urge Biden to Eliminate ISDS in US Trade Agreements
For immediate release: April 15, 2024
Contact: Omar Baddar, obaddar@citizen.org
WASHINGTON, D.C. — Today, more than 300 professors of law and economics urged the Biden administration to eliminate Investor-State Dispute Settlement (ISDS) in existing U.S. trade and investment agreements.
President Biden has followed through on his campaign promise to exclude ISDS from new trade negotiations. But, the professors note that, “dozens of existing U.S. trade and investment agreements still retain the ISDS mechanism… [and] thus continue to enable private companies to challenge public interest policies, resulting in squandered tax revenue and regulatory chill.”
“To align existing trade policies with the bipartisan consensus that ISDS is no longer a suitable feature of trade and investment agreements,” the letter reads, “we urge you to work with our trading partners to eliminate ISDS liability from existing agreements.”
The letter was led by Joseph Stiglitz (Columbia), Laurence H. Tribe (Harvard), William Snape (American), Kevin P. Gallagher (Boston University), Zephyr Teachout (Fordham), Alan B. Morrison (George Washington), Dani Rodrik, (Harvard), Alicia Ely Yamin (Harvard), Rob Howse (NYU), and Jayati Ghosh (UMass Amherst). Quotes from select professors are below.
The professors add their voices to a growing chorus calling for the elimination of ISDS in existing agreements. U.S. members of Congress Linda Sánchez and Lloyd Doggett recently led nearly 50 colleagues in calling for the removal of ISDS from the Central America Free Trade Agreement (CAFTA). Sen. Elizabeth Warren and Rep. Doggett led a bicameral letter with 40+ representatives and senators urging the elimination of ISDS in U.S. agreements, highlighting the $15 billion Keystone XL Pipeline case against the United States as evidence of the system’s threats to climate action.
That letter followed a similar one signed by 30 representatives and senators calling attention to the egregious case of U.S. company Prospera suing Honduras for $11 billion (two thirds of the country’s annual budget) over repeal of a law allowing for private cities. Just weeks ago, Honduras announced its departure from the ICSID Convention, the World Bank venue where most ISDS cases are adjudicated. But as Honduras and other countries move to exit ISDS, Ecuadoran voters face an April 21 referendum that could change the Constitution to allow ISDS once again.
Public Citizen has joined the AFL-CIO, Sierra Club, and over 200 civil society groups calling for the U.S. to eliminate ISDS.
Quotes:
“ISDS has failed to bring about the economic prosperity promised to developing countries. It has not even been effective in attracting foreign investment, as promised. Instead it has enabled large multinational corporations to undermine countries’ ability to address climate change and other urgent challenges, forced them into costly litigation, and unjustly enriched corporate coffers at the expense of the wellbeing of countries. President Biden is right to oppose expansion of ISDS and must now take action to end this system.” — Joseph Stiglitz, Nobel Laureate, Professor of Economics, Columbia University
“ISDS weakens the rule of law by empowering just one set of actors – foreign investors – to bring claims against governments via special, private tribunals that lack many of the procedural protections of a real court. I am gratified that, across party lines, policymakers including President Biden, no longer support expansion of the ISDS system, and I urge the administration to work with trading partners to remove this antiquated mechanism from existing trade and investment agreements.” –– Laurence Tribe, Professor of Law, Harvard University (former law professor to Barack Obama)
“The ISDS system, which originated with trade deals championed by former colonial powers, has enabled multinational corporations to continue exploiting people in the Global Majority countries in various ways. Even as we rethink what economic development should seek to achieve, one thing remains clear: ISDS has no place in our trade and investment agreements, if we want a global economic system with any claim to supporting inclusivity and sustainability.” –– Jayati Ghosh, Professor of Economics, University of Massachusetts Amherst
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