Inside U.S. Trade: Nearly 40 Democrats 'commend' USTR efforts to address ISDS

A group of nearly 40 Democratic lawmakers is praising the Office of the U.S. Trade Representative for reportedly considering updates to free trade agreements with Canada, Mexico and Colombia that would rein in investor protections.

The U.S. Chamber of Commerce earlier this month accused the agency of “secretly renegotiating” the investment chapters of the U.S.-Mexico-Canada Agreement and the U.S.-Colombia Trade Promotion Agreement through side letters, calling on the Biden administration not to continue with the effort.

But a group of Democrats, led by House Ways & Means Committee member Lloyd Doggett (TX), House Appropriations Committee ranking member Rosa DeLauro (CT) and Senate Finance Committee member Sheldon Whitehouse (RI), argues such efforts are necessary to prevent corporations from “weaponiz[ing] undemocratic international tribunals to attack domestic policies and prioritiz[ing] narrow corporate interests at the expense of those countries’ workers, consumers, small businesses, and the environment.

“We commend your efforts to address ongoing ISDS liabilities in existing U.S. trade and investment agreements. We appreciate that throughout your tenure you have upheld the Biden administration’s commitment to exclude ISDS from all U.S. trade negotiations,” 37 lawmakers wrote in a Dec. 19 letter to USTR Katherine Tai. Investor-state dispute settlement mechanisms allow foreign investors to seek redress from a government under certain conditions if the country’s policies affect its investments.

“We strongly encourage you to act urgently to eliminate or drastically reduce the ability of multinational corporations to use ISDS tribunals as a tool to attack legitimate government actions and extract unlimited sums from countries’ taxpayers over the laws, actions, or court rulings of sovereign nations that the corporations claim conflict with their special ISDS rights and privileges,” the letter adds.

Further action to address ISDS would “build on” USMCA, which significantly pared down available ISDS, the lawmakers argued. USMCA was negotiated by the first Trump administration and, following negotiations with Democrats and subsequent tweaks, passed Congress with bipartisan support.

A USTR spokesperson confirmed to Inside U.S. Trade on Thursday that the Chamber’s allegations of “secret” negotiations were false.

In response to the Chamber’s initial claims and related requests for “decision memos,” documents and records on the issue under the Freedom of Information Act, USTR had said only that the business group had previously misrepresented the administration's trade efforts.

“We welcome the Chamber’s newfound interest in transparency in trade negotiations [and] note its history of making inaccurate claims about USTR under the Biden-Harris Administration,” the spokesperson said at the time, declining to address claims of secret talks.

The Chamber did not say what specific provisions or issues within the investment chapters the talks wee targeting, but a Wall Street Journal editorial last week -- citing “sources” -- said USTR was “seeking to erode investor-state dispute settlement (ISDS) protections.”

“It is disappointing to see the U.S. Chamber of Commerce and the Wall Street Journal editorial board recently criticize the sensible opposition to ISDS shared by Republican and Democratic U.S. administrations alike,” the lawmakers wrote this week in their letter.

The letter endorses the idea of using executive agreements to pare down or remove ISDS provisions.

“We urge you to work with any willing trade partners to end the ongoing harm caused by ISDS. This can be achieved efficiently by signing bilateral executive agreements with the respective countries to amend the relevant agreement in order to eliminate ISDS provisions,” the lawmakers said. “Alternatively, the parties could withdraw consent to investor-state arbitration from existing FTAs through an exchange of official letters between you and your counterparts in the governments of these willing partners.”

Such efforts would “cement an important legacy toward a vision of trade policy that centers public interest goals,” the letter concludes.

The lawmakers also note that “time is of essence,” likely referring to the end of the Biden administration on Jan. 20, when President-elect Trump is inaugurated. Accordingly, they wrote, “we look forward to working together in short order to address the harmful legacy of existing ISDS-enforced pacts.”

Among the signatories to the letter are a handful of additional Ways & Means and Finance Democrats, including Sen. Elizabeth Warren (MA) and Reps. Judy Chu (CA), Danny Davis (IL) and Dan Kildee (MI). Sen. Bernie Sanders (I-VT), who previously announced he would serve on Finance in the next Congress, also signed.