Top US trade associations urged the Trump administration Friday to retain the North American Free Trade Agreement’s investor protection provisions.
The comments reflected big business’ fear that the White House will water down or even dump the NAFTA provision known as Investor State Dispute Settlement (ISDS) during the renegotiation of the trilateral trade deal. The third round of talks between the US., Mexico and Canada begin this weekend in Ottawa.
“ISDS is a critical part of the NAFTA agreement… It provides confidence for those investments outside the US,” said Jack Gerard, president of the American Petroleum Institute. “We are concerned that it has not been put forward as a priority by the current administration.”
Gerard’s comments were echoed by leaders of trade associations covering manufacturing, retail, chemical, paper and securities industries during a press conference Friday. They warned of severe negative consequences to the economy should the dispute system be weakened.
“Not having ISDS could directly impact U.S. exports and the jobs that depend on those exports,” said Rob Mulligan, senior vice president for the U.S. Council for International Business.
The NAFTA tribunal system — and others like it — works like this: If a business thinks it has been harmed by a country’s action, it can request that a tribunal be formed. The business picks one arbiter, the country picks a second and they jointly agree on a third. The tribunal then presides over the case and issues a binding ruling much like a regular court. The system has been highly controversial because it effectively puts all trade disputes outside the respective countries’ domestic courts.
Liberal groups, including organized labor, have been particularly critical. Also among those skeptical of the system in the current administration. U.S. Trade Representative Robert Lighthizer has proposed allowing the three member countries to voluntarily opt into the dispute resolution system. The proposal has roiled the talks to renegotiate the deal, which began in August in Washington DC. Canada is opposed to that particular change, a source in the government told the Washington Examiner.
Business groups are lobbying hard to retain the current language for the provision. “All of our industries are working closely with administration,” said the Linda Dempsey, vice president for international economic affairs at the National Association of Manufacturers.
The public call to retain the section suggests that the administration is still considering the idea however. Trump, a longtime critic of U.S. trade policy, has repeatedly warned that the United States will pull out of the deal if it feels the renegotiations do not advance American interests.
