Trade Groups Align in Support of NAFTA ISDS Mechanism
Trade associations representing several industries on Sept. 22 united to promote the continuation in NAFTA of a stable and certain investor-state dispute settlement system, amid concerns the Trump administration will move to change or remove ISDS provisions from the deal (see 1708090014 and 1708250013). Anything that would weaken or “not guarantee” ISDS in NAFTA would have costs for U.S. foreign investments and would translate to harming U.S. jobs, National Association of Manufacturers Vice President for International Economic Affairs Policy Linda Dempsey said on a conference call with reporters. Select changes or a lack of certainty with regard to ISDS in NAFTA wouldn’t just hurt “the direct jobs that we see of the exports of pipe or steel, or mining equipment, or all of these other types of products; it’s the jobs associated in those communities -- the suppliers, the small businesses that support the production in those communities,” she said.
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U.S. Trade Representative Robert Lighthizer told senators in June that the U.S. isn’t committing to strike ISDS from NAFTA, but seeks to strengthen it, and cited “sovereignty issues” associated with the current ISDS framework as “offensive” (see 1706210045). American Forest and Paper Association CEO Donna Harman said one of her group’s member companies faced expropriation of assets through a Canadian provincial government action, but used NAFTA ISDS to challenge the expropriation, and reach a $130 million settlement with Canada in 2010. Without ISDS, she said, the provincial government would have taken the U.S. company’s asset without compensation.
The U.S. should champion the inclusion of ISDS in an updated NAFTA not only because it allows small and large investors to maintain certainty in their investments, but also sends a message to China that they must adhere to international laws, U.S. Council for International Business (USCIB) Senior Vice President for Policy and Government Affairs Rob Mulligan said. USCIB in July expressed concern that the Office of the U.S. Trade Representative’s published objectives for the NAFTA renegotiation omitted specific references to ISDS (see 1707180022).
Mulligan added that NAFTA could benefit from aligned de minimis thresholds and more transparent customs policies, laws and regulations among the three parties. Other business leaders on the call who urged USTR to extend an authoritative ISDS mechanism into a renegotiated agreement were American Petroleum Institute CEO Jack Gerard, American Chemistry Council CEO Cal Dooley, Securities Industry and Financial Markets Association CEO Kenneth Bentsen, and National Retail Federation Vice President for Supply Chain and Customs Policy Jonathan Gold.