NAFTA’s Investor Protections Are Essential for U.S. Businesses. Don’t Negotiate Them Away.

COMMENTARY Trade

NAFTA’s Investor Protections Are Essential for U.S. Businesses. Don’t Negotiate Them Away.

May 9, 2018 1 min read

Commentary By

Anthony B. Kim @akfreedom

Research Fellow and Editor of the Index of Economic Freedom

Patrick Tyrrell

Former Research Coordinator

U.S. officials have reached a critical stretch in NAFTA negotiations. doranjclark/Getty Images

With NAFTA 2.0 negotiations possibly wrapping up as soon as this week or next, it’s vital that the United States not bargain away a key protection for U.S. businesses. Investor-state dispute settlement should be off the negotiating table.

The investor-state dispute settlement system provides a neutral arbitration process that ensures Americans with business interests in foreign jurisdictions are not unfairly dealt with or taken advantage of.

The provisions protecting this process are a vital means to extend the legal rights enjoyed at home to U.S. investors doing business in other countries.

As The Heritage Foundation has pointed out:

[Investor-state dispute settlement] protects Americans by enshrining the principles of U.S. rule of law in each  investor dispute, extending to those investors essential private property protections under U.S. law that include fairness and due process, compensation for foreign  government seizure of property, and non-discrimination.

In fact, investor-state dispute settlement lawsuits filed in Canada and Mexico have resulted in more than $100 million in compensation for Americans. President Donald Trump should continue to stand firm against Sen. Elizabeth Warren, D-Mass., and others who would take the protections enshrined in this process away from U.S. businesses, big and small.

Four leading business groups agree. In a May 2 letter to Trump, Commerce Secretary Wilbur Ross, Secretary of State Mike Pompeo, Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer, and National Economic Council Director Larry Kudlow, the business groups urged the administration not to cave on investor-state dispute settlement. They wrote:

We urge you to retain strong investment protections and Investor-state dispute settlement in NAFTA.

NAFTA’s current investment protections and [investor-state dispute settlement] support American jobs at home and protect U.S. businesses from discrimination abroad. [Investor-state dispute settlement] upholds the same fundamental due process and private property guarantees protected by our Constitution, and it obligates other countries to uphold these precepts as well.

When the U.S. protects and promotes our companies’ investments in Canada and Mexico, we support and generate jobs at home.

Moving forward with a revised NAFTA that does not include such protections for U.S. businesses would threaten our economy and endanger the prospects for NAFTA 2.0 to be approved in Congress.

It is crucial that the American government stands up for the interests of American businessmen and businesswomen. Investor-state dispute settlement is one of the most positive ways in which we extend basic rights to U.S. businesses operating in lands where the rule of law is less certain.

This piece originally appeared in The Daily Signal