Testimony of Todd Tucker on the U.S. Model Bilateral Investment Treaty Program

Posted: 7/29/2009

Download and read the full testimony (PDF).

I’d like to thank the administration for the opportunity to testify on an important topic today: the model used for U.S. bilateral investment treaties (BITs) and investment provisions in trade agreements.

This is a perfect time for bold reforms in this area, as President Obama and 72 members of Congress in the last two elections campaigned and won on fair trade and investment policy, defeating those who advocated the status quo. It is also a bipartisan issue, as quotes from GOP and Democrats alike in my written testimony indicate. And the global recession and financial crisis have demonstrated the need for well-regulated capital and investment markets that focus on expanding broadly shared prosperity and productive capacity, rather than promoting speculative frenzies.

There are several alternative reforms to the Model BIT and the related model employed in the investment chapter of U.S. trade agreements that merit the administration’s consideration.

One option is to eliminate the BIT program altogether – and exclude the similar rules in FTAs. After all, both BITs and the homologous portions of our “Free Trade Agreements” (FTAs) promote predatory actions overseas and conflict with pro-public interest policies both at home and abroad. The record of NAFTA, for instance, is clear in this regard. Under NAFTA, around $69 million has been paid out by governments in corporate challenges against toxic-substance bans, logging rules, operating permits for a toxic-waste site, and more. And cases brought under the U.S.-Argentina BIT and CAFTA are also troubling.

Indeed, the public is asking: as our domestic infrastructure is literally collapsing under our feet, why is the U.S. government promoting policies which incentivize investment abroad rather than directing it to crucial needs here at home?

Read the full testimony here (PDF).