Investor-State Dispute Settlement is Critical to NAFTA

From today’s Wall Street Journal “Energy, a Bright Spot in Nafta Talks, Bogged Down by Dispute Over Rule Change.”:

“The Trump administration is at odds with American companies over a proposed rule change to the North American Free Trade Agreement that is endangering a bright spot — energy — in contentious treaty talks….

“At issue is a proposed change to a part of Nafta called the Investor-State Dispute Settlement, which allows a U.S. business to take legal action if a foreign government harms the company’s investment in that country. For example, if the Mexican government nationalized, say, a U.S-owned oilrig in Mexico, the measure would give the American company the right to appeal to adjudicating panels set up under Nafta…”

The Investor-State Dispute Settlement (ISDS) is a critical component of NAFTA that must be preserved to protect over the border investments. There needs to be a binding and credible mechanism with which any dispute can be handled. NAFTA was the first big trade agreement between two wealthy countries and one developing country, and it was also the first free trade agreement that contained an ISDS provision.

Of course, Mexico has come a long way, both politically and economically, since the inception of the agreement. But there could be significant changes in Mexico after its upcoming elections. NAFTA’s strong rules guarantee the rights of investors, and therefore it protects jobs across all three countries. Changes to NAFTA could set the precedent for the future trade negotiations and weaken the overall dispute system, which would have a negative impact on investment flows between member countries.

Read more in my October 25th op-ed in The Hill.


Dr. Pinar Cebi Wilber

Pınar Cebi Wilber’s research interests are diversified and include energy policy, tax policy, international trade and finance, and general government policy. Recently, Pınar has researched issues related to climate change legislation including the impact of such legislation on the U.S. economy. She has also done extensive research on the effect of government policies on retirement saving as well as the use of annuities in retirement.

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