Hillary Clinton and Bernie Sanders just unloaded more detail on investor-state dispute settlement (ISDS).
The Pennsylvania Fair Trade Coalition, an advocacy group, sent out questionnaires asking both candidates the following:
Would you support or oppose future trade agreements, including the TPP [Trans-Pacific Partnership] and the pending Transatlantic Trade and Investment Partnership (TTIP), if they included “investor-state” dispute resolution, a mechanism that allows foreign corporations to challenge U.S. federal, state and local laws, regulations, court decisions and government actions in private extrajudicial tribunals that circumvent the U.S. judicial system to obtain unlimited sums of taxpayer compensation for those that investors claim violate their new TPP rights and undermine investors’ expectations?
As I have said, I have 3 tests for any new trade agreements: do they (1) create American jobs, (2) raise wages, and (3) improve our national security? If the agreements won’t create good-paying jobs here at home and make our country stronger, I simply won’t support them. With respect to the flawed ISDS provisions in TPP – which I even wrote about in my book – I think we need to have a new paradigm for trade agreements that doesn’t give special rights to corporations that workers and NGOs don’t get.
The TPP creates a special dispute resolution process that allows corporations to challenge any domestic laws that could adversely impact their “expected future profits.” These challenges would be heard before UN and World Bank tribunals which could require taxpayer compensation to corporations. This process undermines our sovereignty and subverts democratically passed laws including those dealing with labor, health, and the environment.
As president, I will not approve any trade agreement that gives foreign corporations the right to undermine American democracy through the disastrous Investor State Dispute Settlement system.
Both candidates were given the opportunity to circle the options “support” or “oppose.” Clinton did neither, while Sanders wrote “oppose.” Neither answer specifically addresses ISDS in TTIP with Europe, where countries are working feverishly to come up with alternative dispute settlement arrangements.
The candidates’ responses cover views on a number of dimensions of trade policy, and Clinton circled back around to ISDS later in the questionnaire. For example,the PFTC asked: “Would you support or oppose future trade agreements, including the TPP and TIIP, if they fail to mention the term “climate change” and fail to include clear carve-outs protecting future climate policies from attack under the agreement?” Clinton’s response echoed her previous answer:
As president I will ensure that our trade policy supports, rather than undermines, our policies to reduce emissions at home and encourage climate action abroad. I know there is concern among environmental groups that the ISDS provisions in the TPP could be used to undermine U.S. efforts to cut carbon pollution and take action on climate change. With respect to the flawed ISDS provisions in TPP – which I even wrote about in my book-I think we need to have a new paradigm for trade agreements that doesn’t give special rights to corporations that workers and NGOs don’t get.
In sum, it seems that Sanders is unequivocally against any investor state dispute settlement, seeing it by its nature as subverting democracy. In contrast, Clinton seems more concerned by the perceived double standard: investors get access to procedural and substantive protections not available to a wider set of interests.
Sanders’ unequivocal responses on trade will probably play well in import-sensitive states like Pennsylvania.
But if the folks at FiveThirtyEight are to be believed, unless Sanders can pull off double digit margins of victory there and in remaining states like California, Clinton is on track to win the Democratic nomination.
If she does, might we see investor-state dispute settlement morph into everybody-state dispute settlement? In other words, will human rights groups and non-investing individuals get new transnational legal forums to advance their interests? This could turn ISDS into something more resembling a cross-regional European Court of Human Rights, which allows suits by investors and non-investors over violations of property rights and broader human rights. There would be a lot of specifics to iron out, including what rights of non-investors get protected, and how exactly they can go about launching cases.
Idealistic international lawyers, get ready for lots of fun drafting problems!