war in Europe, with the European Parliament recently rejecting, across party lines,
any treaty that includes ISDS. Protesters
opposed to it have swamped the streets in
Berlin, Paris and Brussels and have written hundreds of letters in opposition to
what they see as the imposition of shadowy “corporate courts” that can be used
to undermine laws and regulations and
compromise national sovereignty.
US trade negotiators say such rhetoric
is overblown. They point out that the US is
already a signatory to 50 agreements that
include ISDS, and that foreign corporations have only ever used it to challenge
Washington 18 times. The United States
hasn’t yet lost a case. But experts on both
sides of the debate argue that those stats
undersell the importance of ISDS. Including the mechanism in the TPP and TTIP
would forever alter the global legal landscape for investors.
The United States’ 50 existing treaties
are relatively tiny, representing just 10%
of the nation’s foreign direct investment;
including ISDS in the TPP would increase
that ratio significantly. If ISDS is included
in both of those trade deals, it would mean
that any corporation headquartered in any
of the nations that are signatories to either
treaty — that includes the vast majority of
companies listed under the Global Fortune 500 — could use the mechanism to
challenge US laws and regulations outside
of US courts, in the same way that TransCanada is today.
“I don’t think the question is whether
US laws will get challenged by foreign corporations under the TPP,” Simon Lester, a
trade expert at the libertarian Cato Institute, recently said. “It’s pretty clear the US
will be challenged, and it will lose some of
those challenges and the US taxpayers will
have to pay.”
Haley Sweetland Edwards is a correspondent for Time and a former editor at the
Washington Monthly. She is the author
of Shadow Courts: The Tribunals That
R