US Government To Start Working On NAFTA 2.0 Immediately; What Will It Do On Corporate Sovereignty?

from the probably-not-what-it-should-do dept

Alongside his general dislike for existing trade deals, Donald Trump singled out the North American Free Trade Agreement (NAFTA) for particular scorn, calling it “the worst trade deal maybe ever.” It looks like he not only plans to renegotiate NAFTA, but he also wants to make that one of his priorities, judging by this story in The Globe and Mail:

Billionaire investor Wilbur Ross, chosen by U.S. president-elect Donald Trump to reshape U.S. trade policy, has informed Canada that rules of origin and independent dispute tribunals will be central to talks aimed at resetting the North American free-trade agreement.

Canadian officials say the nominee for commerce secretary has indicated a formal-notification letter to open negotiations on NAFTA will be sent to Canada and Mexico within days of Friday’s presidential inauguration.

Techdirt readers will have noticed the reference to “independent dispute tribunals,” or corporate sovereignty as we term it around here. Its presence confirms the almost universal view that such investor-state dispute settlement (ISDS) chapters in trade deals have big problems. What’s not clear is how Trump’s administration will tackle them. Another article in The Globe and Mail, this time a commentary, is convinced that the US will seek to keep corporate sovereignty in trade deals:

A number of indicators, however, suggest that the coming administration will stick closely to traditional U.S. policy of promoting ISDS.

The author is David Schneidermann, a professor of law at the University of Toronto, who offers three main reasons why he believes that is the case:

First, there is good reason to believe Mr. Trump will want to have these protections available as a backstop for the Trump organization overseas.

Here’s the reasoning:

Consider how vulnerable Trump foreign properties will be once the Trump administration takes a position that is unpopular in some other part of the world. Or consider how a foreign government may choose to target Trump properties in order to seek U.S. government concessions. Why wouldn’t Mr. Trump insist upon, among other protections available in investment treaties, “full protection and security” for Trump properties? One can safely predict that, the more the president-elect thinks about this, he is likely to act in the best interests of his family?s business concerns.

It’s extraordinary that Schneidermann believes one of Trump’s main concerns when formulating US policy will be its impact on himself and his businesses, but highly plausible. The second reason has to do with Trump’s nominee for secretary of state, Rex Tillerson:

As former head of Houston-based Exxon Mobil, Mr. Tillerson will be aware of the advantages of having ISDS as a means of challenging government regulation. Under his watch, the company has successfully launched investment disputes against a number of countries with which the United States has investment treaties, including Venezuela and Argentina.

Finally, corporate sovereignty is likely to remain in NAFTA and other trade deals because it’s part of the Republicans’ DNA:

House and Senate Republicans have long been supportive of placing constraints on state action abroad via investment treaties.

There’s plenty of sound logic to be found in this analysis. However, if we have learned anything over the last few months, it is that old-fashioned logic is relatively unimportant in the new political landscape. Since it looks like moves to renegotiate NAFTA are going to be made quickly, we should find out soon enough what the Trump administration’s new line on ISDS will be.

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Comments on “US Government To Start Working On NAFTA 2.0 Immediately; What Will It Do On Corporate Sovereignty?”

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Anonymous Coward says:

Re: Re:

Nah, ISDS was but one of MANY reasons to oppose the TPP. And we already have ISDS in many cases through other treaties already.

Now, I am fairly certain that whatever renegotiation we end up with will not be ideal by the standards of the usual Techdirt reader. However, Trump would have to work really really hard to achieve something worse than the TPP.

My big worry is that given his protectionist tendencies, he might be ripe for MAFIAA influence via the whole “copyright is good for American business” line of BS.

Wendy Cockcroft (user link) says:

Re: Re: Re:

The maximalists have only to frame it as a property rights issue, at which point the public interest goes flying out the window. They then cite “upholding the rule of law” as a justification for screwing us.

So if you complain, you must be a…

…and partisan pattycake strikes again. The smart thing to do is refuse to play the game. If you allow them to divide us they will surely conquer us.

Baron von Robber says:

“Why wouldn’t Mr. Trump insist upon, among other protections available in investment treaties, “full protection and security” for Trump properties? One can safely predict that, the more the president-elect thinks about this, he is likely to act in the best interests of his family’s business concerns.”

Yep, no conflict of interest there! Look over there, not here!

Paul Clark (profile) says:

We Need Bidirectional ISDS

ISDS would not be as bad if countries can file claims against corporations as well as in the other direction. For instance, countries have expectations on royalties from natural resources. If a company buys up natural resources and then sits on them for more than a reasonable length of time, say 20 years for mines, then the country should have the right to extract royalties from the company regardless of whether the company has developed the resources. The collected royalties would be deducted from future royalty payments on some prorated scale.

Anonymous Coward says:

Re: We Need Bidirectional ISDS

Utter tripe!

The very idea of ISDS is nothing more than a usurpation of a Sovereign Nations right to their own fucking rulers.

Any nation fool enough to sign on deserves destruction because the ONLY WAY there is through the sacrifice of its citizens.

ISDS, TTP, SOPA, TTIP, UN, League of Nations, etc… all ideas of the globalist agenda that seeks to do nothing other than turn businesses into world powers that control governments like puppet states!

Anonymous Coward says:

Re: Re: We Need Bidirectional ISDS

UN is about the furthest from business you can come on the international stage. The main concerns with UN would be how extensive human rights and ESC powers extent. But UN is pretty transparent and it is mainly a diplomatic central which ensures some much needed stability in/between countries. UN is not a main priority if you want to fight the globalist and business agendas. Only if you want to
change the world order towards more classic values like “might makes right”, which… Yeah, is pretty good for certain strong businesses relying on political pork.

The trade deals and the lack of political respect for the internet and smoothness of publication is a serious concern. But there are other globalist forums where select few world leaders can meet with global corporations in private.

In all honesty, the only true concern untill we have it, is an opening of the processes. That would ensure the ability to say no to bad deals for the public both in political and “judicial” agreements. Right now the “global agenda” is controlled by the few in the know. Only way to avoid them usurping agendas is transparency…

Anonymous Coward says:

Re: We Need Bidirectional ISDS

How exactly is the country owed royalties? The company PAID for the resources, or more exactly, the RIGHT to develop those resources.

But back to the point: If the contract doesn’t say “Company A will mine /extract /whatever these resources within the next YY time period,” then it’s the negotiator’s fault. Just because they were looking at “the million up front, 15% gross when we sell it.” instead of “500K now and royalties of 10% gross over the next 20 years with extraction to begin no later than 6 months from signing.”

Oftentimes, the company will pay for the right to develop them IF they are found in the next 99 years, on speculation. There’s no guarantee in those circumstances that there is even anything worth their time. (Yeah, I have oil on my property, but drilling to get it would cost more than it is expected to produce with CURRENT tech. and prices)

This lease can also just be used to keep those resources off the market. (DeBeer’s [sp?] anyone?) The land owner gets money, the company gets the resource rights, the price stays high. End of story.

That One Guy (profile) says:

Re: Gold dust on a cow-pie does not jewelry make

I’m thinking the better option would be to just scrap corporate sovereignty provisions entirely, as it’s both toxic and unnecessary, and leaving it in at all sets the wrong precedent, namely that corporations have equal if not more power than governments.

Corporate sovereignty is a ‘solution’ to a self-solving problem, one that simply requires that companies show merely a tiny amount of self-restraint and not expect that every single venture be profitable.

Anonymous Coward says:


“…has informed Canada that rules of origin and independent dispute tribunals will be central to talks aimed at resetting the North American free-trade agreement. “

Only one slight problem here. NAFTA negotiations require three parties to be at the table, and to actually agree on the final version.

Trump has already alienated Mexico (not to mention causing Ford to cancel its plans to expand in Mexico), and Canada isn’t a fan of his either. NAFTA is a compromise that nobody likes; renegotiating is bound to not go well.

Anonymous Coward says:

Re: Re: Re: Hmm...

Don’t blame me. I voted for Bernie in the rigged primaries and booked a vacation to Montréal for November. Lovely country is Canada, very peaceful save for the belligerence and paranoia of Mr. Trudeau’s increasingly frothing and desperate opposition. They seem to want to emulate their “big brother” to the south by poisoning the well enough and setting him up to fail so that a Canadian Trump will take over. They’ll be (dare I say it) sorry if it happens; Trudeau’s not perfect, and he’s certainly not his father (for better or worse). But if I was a Canadian, I would consider myself lucky that my PM is primarily known for his Instagram selfies in various (polite) states of undress, rather than insulting this or that world leader with a 140-character yo-mama joke followed by “SAD!” Which, of course, stands for “Socially Assured Destruction,” not that Don Queso cares of course.

No way I was going to flush the handle for either Cheeto Mussolini or the She-Wolf of Wall Street. If the world still exists in a few years and we’re not all a bunch of neon skeletons because Orange Julius Caesar won’t get off Twitter and trolled the wrong guy — oh, like, I dunno, Kim Jong Un or something — I’m doing a write-in for Jeremy Corbyn’s hat or Justin Trudeau’s boxing trunks. Keep calm and turn the online rage machine off.

trump vader says:

trudeau should just give trump 6 montsh notice and leave NAFTA

just dont bother ….better to leave it now and suffer a few eyars as we get the chinese , russian , and european deals on to a good front….

remember we have oil we can sell to europe and china….that will make jobs acorss the country if they keep pushing , and hte next wanker actor you yankies end up here better not get involved were tired of your hilary and trump stupid crap.

Anonymous Coward says:

Re: trudeau should just give trump 6 montsh notice and leave NAFTA

I like Trudeau and don’t think he deserves a lot of the sh!t that the Tories are flinging at him. Everything from the elbow thing to trying to paint his father’s charity endowment as a Clinton Initiative 2.0 to the Fidel Castro meme (Birtherism and slüt-shaming his mother, how nice!) and some “illegal” helicopter ride he took on holiday vacation… Now Hanoi Jane has popped another screw loose and is on a chopper tour of her own, attacking the guy for “failing” and “lying to” environmentalists and the First Nations because he hasn’t turned the whole country into an agricultural Amish colony. Poor Canada.

If you don’t follow the soap opera that is Canadian politics, you’d laugh that these are what counts for “scandals” in the relatively peaceful neighbor to the north. Stephen Harper’s entire cabinet was so corrupt as to be held in contempt of Parliament. Yet a significant number of them are shameless enough to turn around and run for the party leadership in hopes of becoming Prime Minister the next time around!

I’m actually worried for the guy that a lot of the flak he’s getting comes from the same Russian trolls who socially engineered the Internet (granted, it was against a highly unpopular and corrupt opponent herself, but that’s the DNC’s fault for backstabbing Bernie), to facilitate the victory of the pro wrestler occupying 1600 Penn. Call me a conspiracy theorist all you want, but it’s not farfetched to say there’s a certain element of Russophilic troglodytes spamming YouTube comment sections and even the CBC itself, on behalf of their “alpha male” leader. If you’ve got the stomach for it, go to YouTube and find a random video of Trudeau, then count how many maroons call him a “cück” and smear him as a promiscuous hømøsëxual who’s sold off Canada to his alleged Arab and Chinese pímps. The infiltrated CBC board isn’t much better, the only difference being less swearing because it isn’t “polite.”

Putin would be delighted to have another puppet installed who will be completely subservient to Moscow. And if he did, it’d be the one “outsider” who isn’t connected to Harper but is only running for PM to improve his own personal branding — and has a large social media following of frat-boy a$$høles just the same. Kevin O’Leary, the snake-oil salesman from yet another dopey reality show. He’s had some shady business dealings of his own and once described a potential Trudeau-Trump meeting as “Bambi versus Godzilla.” Wouldn’t he love to sign up for the Trump Train and cash in bigly selling off the whole country to the Dragon’s Den — or Bear’s Cave — in Siberia!

As much as I’d like to see Trudeau and Peña-Nieto get together as the “two amigos” in Obama’s constitutionally-mandated absence and box in Trump for a two-front war (btw, Trudeau is great at boxing LOL), I’m doubtful that he’ll be so bold as to poke the “elephant” to the south as his father described the U.S. He’s too “nice” to have a “just watch me” personality like dad and clearly takes after mom’s empathetic side. He won’t say so verbatim, but he’s disgusted by Trump’s grab-em-by-the-you-know-what Mad Men attitudes toward women and rightly so. But if he thinks he needs to get tough against Trump, and pokes the elephant too much, he’s going to get eaten by the bigger bear — Putin, Donald’s stage dad and the #1 business partner of Rex Tillerson.

No doubt T-Rex would love to score himself a few million rubles selling the Alberta oil sands to the Kremlin, and there’s enough Albertans who’ve spit on the Trudeau name since dad tried and failed to nationalize petroleum production in 1979 amid the oil shortage and the Iranian hostage crisis, who’d jump at the chance to give Trudeau Jr. the finger this time. Justin makes the foolish mistake of getting in the middle to find “common ground,” and suddenly Vlad fires off a few fuddle-duddle ICBMs over the Bering Strait, leveling the western provinces to dust. “You’re fired, comrade… eh.”

Neither Canada nor Mexico is really all that significant as a global power on the world stage, and by that I mean militarily rather than economically. But never underestimate the willingness of an irrational megalomaniac — or two — to start escalating the stakes in a yuuuuuge way when there’s money to be had. God Save Justin Trudeau.

trump vader says:

OH Ya another one for trumpites

dont forget our free trade deal with the #2 economy the european union

you alienate china we’ll add a good deal there and eat your breakfast and perhaps with Mexico and add in a lil russia and the usa is gonna drop like a fudge ball turd

oh yes a few years this is gonna cause world wide issues , but you wont come ahead mark my words

Anonymous Coward says:

Re: OH Ya another one for trumpites

Well, the great Pan-European experiment is toast thanks to Merkel overplaying her hand on the perpetual German apology mandate and opening the floodgates to a mass of third-world itinerants from wholly incompatible cultures. Le Pen is going to make France French again and get right to work on Frexit. Other countries will no doubt follow and on that account I don’t blame them. The problem is the pendulum never seems to swing to the middle especially in Europe, and before you know it there’s another struggling landscape painter penning a manifesto from his loft in Bavaria…

Mr. Trudeau is going to be the last nominally liberal world leader still standing, so he or whoever’s advising him (with mixed results, I might add), better get to work on coming up with a contingency alternative for that Can-EU trade agreement that’s palatable to the everyday folk in maple country. Otherwise, enough pitchfork-carriers who demanded a miracle and went home dissatisfied will fall right into Putinism. The Kremlin’s army of trolls will be very glad to come to the aid of the screeching Harpies in setting the poor kid up to fail come 2019, and move to install a Trumpist puppet of their own like O’Leary. Just watch them.

Anonymous Coward says:

It is a complicated problem.

On one hand some states try shifting gears to "nationalist mode" after considerable foreign aid & investment (i.e. China) and create laws that target the exact same foreign corporations that invested in that state in the first place.
It is this LIMITED case that ISDS was created for and it is mostly justified.

On the other hand many corporations will use ISDS to target any new non-specific Environmental and Health Regulations. Which is bad because as science becomes more accurate those regulations will need to change.

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