President Donald Trump is thankfully implementing his America First perspective on…everything.
If something is good for the US – the Administration does it. Or does it more.
If something is bad for the US – the Administration stops doing it. Or works to make it better – so it becomes good for US.
This is what is happening on the global trade front. We are enmeshed in all sorts of very awful trade relationships – all over the planet.
Trump is working to improve…all of them. All at once. Which is a mite disruptive. But when the global marketplace is this universally anti-America – disruptive is good.
But even the worst trade deals – can have aspects contained within that are good. These are, after all, complex and intricate relationships – with many layers and provisions.
As Trump works to rid us of the bad aspects – he absolutely should keep the good.
To wit: The North American Free Trade Agreement (NAFTA) – and the Investor-State Dispute Settlement (ISDS).
NAFTA is, of course, our trade deal with Canada and Mexico. And as we work to rid NAFTA of its bad aspects – we absolutely should keep ISDS. In fact – we should strengthen it.
What is ISDS? Glad you asked:
“If President Trump truly wants to protect American business through better trade relations, one little-known provision called the Investor-State Dispute Settlement (ISDS) mechanism must be strengthened in NAFTA.
“There are few provisions that serve more purpose and provide greater peace of mind for business certainty than the ISDS mechanism. From the American point of view, ISDS protects U.S.-based business from political decisions by governments, especially decisions made by rogue governments.
“Foreign investors deserve to know that governments will keep their word, and ISDS helps provide a fair legal venue in cases where they don’t.”
I bet we wish we had an ISDS mechanism with Kuwait and Dubai.
“(US-based) KGL Investment Company made much of its money in Kuwait – and now wants to return much of it to the US. Enter Middle East cronyism.
“The Kuwaiti and Dubai governments – have frozen KGLs coin for no reason whatsoever. Well, no legitimate reason.
“Behold Agility Logistics. A Kuwaiti company – with close ties to the Kuwaiti government. Agility’s CEO, Essa Anwar Al-Saleh – is a former Chairman of Kuwait’s Gulf Bank. So he exercised significant power over Kuwaiti commerce and finance.
“And it appears Al-Saleh still does. Agility is a KGL competitor – with the home court advantage. The Kuwaiti government appears to be freezing KGLs coin – to benefit Agility.”
We appear to have no entrenched way to deal with rogue Kuwaiti and Dubai governments – who are in the process of harming a US company. ISDS – would be nice.
Unfortunately, Mexico looks to be on the verge of reverting to its long-standing form – and electing as president de facto Communist Andrés Manuel López Obrador. Which raises concerns – of the Mexican government nationalizing industries. Because that’s what Communists do.
Because Venezuela is such a roaring success.
US companies have invested in Mexican industries – in many instances for decades. Because that ’s what NAFTA was supposed to foster. If Obrador attempts to emulate Chavez – ISDS gives us a mechanism to stop him.
Speaking of oil: Obrador’s looming election raises even greater concerns – around industries in which US companies could only recently invest:
“Obrador has indicated his support for reversing course as it pertains to U.S. oil exports to Mexico. With Mexico only beginning to allow foreign nations to invest in its energy sector in 2014, many fear that López Obrador could pull the rug from under American investments….”
Aha – Obrador is looking to emulate Chavez. Thank goodness we have ISDS as a backstop protection. Except…enter US Trade Representative (USTR) Robert Lighthizer.
“USTR (Lighthizer) put forward a proposal in the talks that would allow each party to choose whether it wants to opt in or out of ISDS, with the Trump administration choosing to opt out.”
Wait a second. You can not write new rules – without grandfathering in businesses that made investment decisions…predicated upon the protections ensconced in the old rules.
Obrador is already considering “pull(ing) the rug from under American (oil) investments.” Think removing ISDS protections from the new NAFTA – won’t further entice him to do so? He is a Communist after all.
Most of the US business community opposes ISDS’ disappearance. So do many in Congress:
“Sen. Orrin Hatch (R-UT) and Rep. Kevin Brady (R-TX)…’insist’ that (a renegotiated NAFTA contain) investor-state dispute settlement provisions ‘at least as strong as those contained in the existing NAFTA must be included in a modernized agreement to win Congressional support.’
“‘Our position on the importance of these protections has not changed and is as strong as ever: ISDS is an essential enforcement mechanism for investor protections and must be maintained rather than weakened or abandoned,’ the letter states.”
They are all correct.
The Roman Empire’s citizenry enjoyed for many, many years the global protection of Civis Romanus. Aptly described – as so many things were – by TVs “West Wing”:
“Did you know that a thousand years ago a Roman citizen could walk across the face of the known world free of the fear of molestation? He could walk across the Earth unharmed. Cloaked only in the words ‘Civis Romanus’ – ‘I am a Roman citizen.’
“So great was the retribution of Rome – universally understood as certain – should any harm befall even one of its citizens.”
Civis Romanus – was a key component of Pax Romana (“Roman Peace”):
“The Pax Romana…was a long period of relative peace and stability experienced by the Roman Empire….
“Roman trade in the Mediterranean increased during the Pax Romana. Romans sailed East to acquire silks, gems, onyx and spices. Romans benefited from large profits and incomes in the Roman empire were raised due to trade in the Mediterranean.
“As the Pax Romana of the western world by Rome was largely contemporaneous to the Pax Sinica of the eastern world by Han China, long-distance travel and trade in Eurasian history was significantly stimulated during these eras.”
Pax Romana – inspired similar provisions from other nations. Further expanding the free trade zones – for everyone.
ISDS – is today’s Pax Romana.
It is the trade equivalent – of Ronald Reagan’s “Trust…but verify.”
ISDS should be bolstered in NAFTA.
And incorporated in trade deals the world over.
Many, many benefits will redound.