TPP Investment Leak Lays Out Detailed Process for ISDS Tribunals
Trans-Pacific Partnership investment provisions aim to hit back against expropriation and discriminatory treatment of foreign investment, but the investment chapter leaves the door open for challenges to government policies that violate investor “expectations,” according what's said to be text of the chapter released by WikiLeaks on March 25 (here). The chapter is dated Jan. 20, and marked “confidential.” The text focuses largely on investor-state dispute settlement (ISDS), the investor tribunal U.S. trade opponents, as well as some legal scholars, widely and aggressively criticize (see 1503120011).
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A spokesman with the Office of the U.S. Trade Representative declined to comment on the authenticity of the document. “In international investment agreements, the United States seeks to protect Americans doing business abroad from discrimination while ensuring our ability to regulate in the public interest at home,” said the spokesman. “We are pursuing that approach in TPP. The current text of every TPP chapter is available to all members of Congress." Many lawmakers continue to criticize restrictions on viewing the text, despite recent USTR steps to improve transparency (see 1503190001).
TPP parties will have to follow a strict timeline to take up arbitration through ISDS, the leaked text shows. The investor claimants will first have to consult with governments over investment disputes for a six-month period. The World Trade Organization has a similarly mandatory consultation period in its dispute mechanism. If the two sides fail to reach a resolution, companies will have to notify the tribunal 90 days before submitting a claim. Three-and-a-half years after “the claimant first acquired, or should have first acquired knowledge of the breach alleged,” the tribunal will no longer accept claims, the text says.
All other TPP chapters, such as those on labor and the environment, will supersede the investment chapter if there are inconsistencies, said the document. Nonetheless, the investment text aims to preserve non-discriminatory treatment by banning domestic content requirements, “buy local” policies and a range of other “protectionist” measures. No TPP governments have so far released negotiating texts, but past leaks illustrated massive gaps between the U.S. and other countries (see 14011722). Many trade supporters and opponents say TPP parties are nearing completion of the talks (see 1503110066).
The leak spurred an outcry among fierce trade critics. The Sierra Club railed against ongoing secrecy in TPP negotiations, and said ISDS is a threat to regulatory functions. “If the Trans-Pacific Partnership locks in this flawed text, the trade deal would expand a system of investor privileges provided in NAFTA that threatens new safeguards on our air, water, and climate – from fracking moratoriums to carbon-pollution reductions to anything in between,” said the group in an emailed statement. Rep. Rosa DeLauro, D-Conn., also said in a statement the leak shows the need to defeat Trade Promotion Authority, legislation widely seen as necessary to secure a final TPP deal.