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.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Hide this

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: corporate sovereignty, isds, nafta, robert lighthizer, ustr

Reader Comments

Subscribe: RSS

View by: Thread

  1. icon
    Coyne Tibbets (profile), 1 Nov 2017 @ 4:57pm

    Re: Re:

    So, you're saying that it's better for countries with no industry and a massive poverty rate to not be paid for the resources they have or the work needed to extract them...

    Just for laughs, name two countries where the foreign investors changed that. I don't think you can: mostly what foreign investors bring third world countries is crushing debt, deeper poverty, public health problems, dictatorship and a government coup. And, of course, a lack of resources due to their having been extracted.

    See that's what this ISDS nonsense is really about, aversion to risk. But only risk to the company; the company still wants to sell lots of risk to everyone else. It just doesn't want any risk for itself.

    Take Enron as a poster child. What it did for third world countries was sell them an enormous debt they risked not being able to pay, an industrial infrastructure that they risked not being able to maintain, huge health risks for their people, a risk of government collapse, and the risk of the resources Enron took not being compensated.

    That should not be surprising because the company was also selling risk to its investors, risk to the banks that lent it money, and risk to other companies. Basically, Enron was in the business of selling a flood of risk and taking none itself. Not just small, managed risks either: extinction-event level risks. And it would still be in business if the blinkety-blank banks hadn't stopped buying risk.

    If Enron were still around, it would be a prime lobbyist in favor of ISDS. And then it would sue the banks for not buying more risk.

Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here

Subscribe to the Techdirt Daily newsletter

Comment Options:

  • Use markdown. Use plain text.
  • Remember name/email/url (set a cookie)

Follow Techdirt
Special Affiliate Offer

Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Recent Stories

This site, like most other sites on the web, uses cookies. For more information, see our privacy policy. Got it

Email This

This feature is only available to registered users. Register or sign in to use it.