Trade Proponents Champion Investor-State Benefits for Investment Pacts
U.S. supporters of the investor-state dispute settlement are doing a bad job of accurately describing the mechanism,and major corporations often fare poorly at the arbitration forums already set up in investment agreements worldwide, said Scott Miller, senior analyst at the Center for Strategic and International Studies, during an Oct. 31 event (here). The vast majority of investment treaties brokered globally in recent decades lack the mechanism, but disputes have spiked over the last ten years in those agreements that include investor-state, said Miller.
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Union leaders and many activists continue to call for the removal of the mechanism, particularly in the Transatlantic Trade and Investment Partnership, saying it allows corporations to erode the regulatory sovereignty of countries (see 14100208). But governments involved in cases with large corporations win the dispute roughly two-thirds of the time in the 144 cases arbitrated, said Miller and Susan Franck, a professor at Washington and Lee University and investor-state researcher. The Office of the U.S. Trade Representative has tried to hit back at public concerns over investor-state, arguing it aims to only uphold regulations in place (see 14032721).
Investor-state is a critical asset to the global economy and the U.S.-European economic relationship, and its inclusion in investment pacts provides more certainty to investors that want to challenge state infringement and false claims, said another panelist and senior executive at the National Association of Manufacturers, Linda Dempsey. “Directly suing a foreign government is an enormous step and never one that is undertaken by an investor without substantial review and consideration,” said Dempsey. “Governments treat investors of different nationalities in a discriminatory manner, helping domestic investors and penalizing foreign investors, like has happened in the Czech Republic, Canada and Poland. Governments use their sovereign authority to destroy the credibility of an investor or an investment. They harass. They lie to investors, as has happened in Argentina, Canada and elsewhere.”