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.