On the rocky road to globalization

James Surowiecki targets the problems with the Trade Agreement, which in part arise from lack of transparency, and the failure of anyone to stand up and explain the deal.  Surowiecki targets the Investor State Dispute Settlement created to resolve issues when a foreign company does business in a local country.  Disputes are currently settled not in the country where business is being conducted, but rather by a panel of three international lawyers.  This has become such a popular way to resolve matters that law schools now teach courses on the subject.

Lise Johnson, the head of inbestment law and policy at the Columbia Center on Sustainable Investment said, “ISDS was originally meant to protect investors against seizure of their assets by foreign governments.  Now ISDS lawsuits go after things like cancelled licenses, unapproved permits, and unwelcome regulations.”

Practically speaking, the ISDS style provisions may have made sense at one time.  Now they are outdated and unnecssary.  Including them in trade agreements undermines the broader case for free trade by “making it look like exctly what people fear–a system desgined to put corporate interests above public ones.”

Gunboats used to achieve what ISDS may have achieved for a time.  Neither are necessary today.