Time To Get Rid Of Corporate Sovereignty? USTR Robert Lighthizer Seems To Think So
from the you-either-are-in-the-market,-or-you're-not-in-the-market dept
As we noted a couple of months ago, the topic of corporate sovereignty — also known as investor-state dispute settlement (ISDS) — has rather dropped out of the public eye. One post on the subject from earlier this year pointed out that an editorial in the Financial Times had called for ISDS to be “ditched“. That was welcome but surprising. At the time, it seemed like an outlier, but it now looks more as if it was simply ahead of the field, as many more have started to call for the same. For example 230 law and economics professors are urging President Trump to remove corporate sovereignty from NAFTA and other trade deals (pdf). From a rather different viewpoint, here’s Dan Ikenson, a director at the Cato Institute, calling for ISDS to be absent from a re-negotiated NAFTA:
U.S. negotiators should offer to drop their rules-of-origin and sunset provision demands in exchange for agreement to expunge the controversial dispute settlement provisions under Chapters 11 and 19. These provisions are unnecessary, raise fundamental questions about sovereignty and constitutionality, and fuel trade agreement opposition on both the political left and right.
It’s all very well for professors and pundits to call for corporate sovereignty to go, but what do the people who have the power — the politicians — think? Well, here’s the newly-elected prime minister of New Zealand, Jacinda Ardern, speaking on the topic:
We remain determined to do our utmost to amend the ISDS provisions of TPP. In addition, Cabinet has today instructed trade negotiation officials to oppose ISDS in any future free trade agreements.
Finally, and arguably most importantly, this is what the US Trade Representative, Robert Lighthizer, said recently (reported on Forbes):
It’s always odd to me when the business people come around and say, ‘Oh, we just want our investments protected.’ ? I mean, don’t we all? I would love to have my investments guaranteed. But unfortunately, it doesn’t work that way in the market. ? I’ve had people come in and say, literally, to me: ‘Oh, but you can’t do this: you can’t change ISDS. ? You can’t do that because we wouldn’t have made the investment otherwise.’ I?m thinking, ‘Well, then why is it a good policy of the United States government to encourage investment in Mexico?’ ? The bottom line is, business says: ‘We want to make decisions and have markets decide. But! We would like to have political risk insurance paid for by the United States’ government.’ And to me that’s absurd. You either are in the market, or you’re not in the market.
Whether that extraordinarily sensible analysis is ultimately converted into action remains to be seen: there will be plenty of lobbying against the idea. But the fact that so many are now making the call for corporate sovereignty to be dropped from existing and future trade deals does, at least, make it much more likely that it will happen soon.