Big Business Groups Affirm Support for Nafta Arbitration Panels

By Bob Davis Features Dow Jones Newswires

Three of the nation's most prominent trade associations warned that any efforts to weaken arbitration panels at the heart of the North American Free Trade Agreement "will serve to undermine business community support" for Nafta renegotiations.

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The letter to the Trump administration from the U.S. Chamber of Commerce, National Association of Manufacturers and Business Roundtable comes in response to a proposal by the U.S. trade representative to make U.S. participation in the panels voluntary. The panels are called the Investor-State Dispute Settlement system.

ISDS is a form of international arbitration in which corporations can sue governments for damages if they believe governmental decisions improperly diminish the value of their foreign investments. The arbitration panels, which operate as alternatives to domestic court systems, have been criticized by labor and environmental groups as giving corporations -- and only corporations -- a way to circumvent domestic laws and regulations.

The USTR plan, as reported by The Wall Street Journal earlier this week, would essentially make the ISDS system voluntary in the future, meaning the three Nafta countries would need to "opt in."

Representatives of the U.S., Canada and Mexico kicked off talks to renegotiate Nafta last week in Washington, and the talks will pick up again in Mexico City Sept. 1.

"For decades, U.S. trade and investment agreements have provided for neutral arbitration to resolve investment disputes," the group said in the letter. "These ISDS procedures ensure that other countries treat U.S. investors fairly, do not seize their property without compensation and do not impose 'forced localization' requirements that compel jobs to be shipped overseas."

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Critics of ISDS have long argued that the arbitration panels infringe on U.S. sovereignty. In Senate testimony in June, U.S. Trade Representative Robert Lighthizer said he was "always troubled by the fact that nonelected non-Americans can make the final decision that the United States law is invalid."

The business groups disagree that it infringes on sovereignty, saying the system "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."

ISDS can't overturn U.S. laws or regulations, the groups said, and they noted that few cases have been filed against the U.S. and that the U.S. government has never lost an ISDS dispute.

Write to Bob Davis at bob.davis@wsj.com

(END) Dow Jones Newswires

August 24, 2017 12:33 ET (16:33 GMT)