U.S. Conference of Catholic Bishops, Small Business Groups, Leading Economics and Law Professors, State Legislatures Oppose ISDS as Corporate Lobby Incites Deadlock in NAFTA Renegotiations by Urging Canada, Mexico to Reject U.S. Proposal to Cut Investor Privileges
WASHINGTON, D.C. – Trade experts and constitutional scholars from the left and the right who battle over most issues – including the North American Free Trade Agreement (NAFTA) – joined together at a Capitol Hill briefing today to support elimination of Investor-State Dispute Settlement (ISDS) from NAFTA. Corporate lobbying groups have shrilly attacked an administration proposal to limit NAFTA’s investor privileges that make it less risky and costly to outsource jobs and empower corporations to attack domestic policies by going before tribunals of three corporate lawyers who can order unlimited compensation to be paid to investors by taxpayers.
The improbable transpartisan consensus reveals that the corporate lobby has become increasingly isolated in trying to save the controversial ISDS regime as countries around the world withdraw from or renegotiate ISDS-enforced pacts. The U.S. Chamber of Commerce has threated to oppose a renegotiated NAFTA if it does not include ISDS. U.S. corporate interests are encouraging the Canadian and Mexican governments to refuse to engage on the U.S. ISDS rollback proposal, a strategy that increases the prospect that President Donald Trump will withdraw from the pact. Interestingly, the American Auto Policy Council has called ISDS unnecessary, noting that its inclusion could imperil NAFTA altogether.
The speakers reflected the breadth of ISDS opposition, which includes the U.S. Conference of Catholic Bishops, the National Conference of State Legislatures, state attorneys general, small business organizations, unions and hundreds of the nation’s leading legal and economics professors, who released a letter last month 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. Sen. Elizabeth Warren (D-Mass.), former Vice President Joe Biden’s chief economist Jared Bernstein and Clinton-era Labor Secretary Robert Reich.
Multinational corporations already have pocketed $392 million from North American taxpayers under NAFTA ISDS attacks on toxic bans, environmental and public health policies, and more. Tens of billions are pending in ongoing NAFTA cases.
At the forum, Joseph Stiglitz, Nobel Prize-winning economist and professor at Columbia University, said:
“Provision of justice should not be privatized and ISDS does this for no good reason other than to prioritize benefits to corporations. It is a system that treats foreign firms more favorably and encourages American businesses to invest abroad. So instead of creating jobs here, we will continue to lose them. Americans should not be held up by business groups’ threat to not move forward with a renegotiated NAFTA that doesn’t include ISDS. If something is wrong with our system of adjudication, why not change it to benefit every firm and not just foreign ones?”
Dan Ikenson, director of Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies and longtime supporter of free trade agreements, outlined his arguments against ISDS in his recent Forbes piece: “ISDS is a subsidy that encourages outsourcing and should be removed from free trade agreements because it undermines how the free market is supposed to work. It is protectionism that socializes investment risk. Multinational companies that invest internationally should be savvy enough to conduct the appropriate cost benefit analysis for their investments. The U.S. government should not be subsidizing risk averse outsourcing through ISDS.”
Bruce Fein, a constitutional law expert and former associate deputy attorney general under President Ronald Reagan, raised the constitutional questions surrounding ISDS that he noted in his recent Washington Times op-ed on the subject: “ISDS is completely wrongheaded and unconstitutional. According to the appointments clause of our Constitution, private individuals who are not accountable to our legislative or executive branch are alien to our constitutional universe and have no authority to interpret and render final judgment over U.S. laws. Rule of law is not honored under ISDS.”
Lori Wallach, director of Public Citizen’s Global Trade Watch and longtime progressive critic of the corporate protectionism at the center of U.S. trade policy, noted: “The corporate lobby’s panic about losing the expansive protections they slipped into NAFTA is unsurprising, but the more they scream about the proposals to limit their use of NAFTA ISDS tribunals to grab millions in taxpayer funds and grease the skids to outsource American jobs, the more the public realizes NAFTA’s rigged rules need replacing.”
Matthew Porterfield, deputy director and adjunct professor at the Harrison Institute for Public Law at Georgetown University Law Center, moderated the panel.
After the Trans-Pacific Partnership debate elevated ISDS from obscurity, demands to remove it from NAFTA have emerged in recent letters from GOP members of Congress and 100 small business leaders, and more than 400,000 petitions to the administration. Congressional Democrats have long opposed these terms, the removal of which was at the center of 2009 legislation enumerating a more inclusive trade policy, the Trade Reform Accountability Development and Employment (TRADE) Act, that was sponsored by 150 congressional Democrats.
See PDF here.