Next steps in Congress
What are the federal legislative options for reforming international investor-to-state dispute resolution?
State and local governments are concerned about investor-to-state provisions that give foreign companies new substantive and procedural rights, beyond what is provided in the U.S. Constitution, to challenge laws that have been passed in a democratic way.
National associations and state-level trade oversight committees have called for an end to the use of investor-to-state arbitration. But even if the option of ending it outright is not considered politically possible, many reform options exist. Congress should proceed with a freestanding bill or an amendment to substantive trade legislation--or incorporate those reforms into a new legislative framework for trade promotion authority for a new President in 2009.
Among the reform options:
- Ensure that foreign investors enjoy no greater substantive or procedural rights against the United States than those that citizens of the United States enjoy under the U.S. Constitution.
- Establish general exceptions and/or define measures covered by the investment provision, investment agreement, or investment treaty to protect key areas of domestic policy from international investment litigation.
- Limit provisions on “expropriation” and “minimum treatment under international law” so as to clarify that the adoption or application of any bona fide and non-discriminatory law or regulation intended to serve a public purpose shall not constitute a violation of an investment agreement or treaty (i.e. codify and expand the coverage of the Methanex rule –an option that could implemented by an official interpretation of NAFTA Free Trade Commission and similar administrative bodies charged with interpreting international investment agreements).
- Provide for diplomatic review of all claims prior to the onset of international litigation and for domestic court review of any tribunal award to ensure that the investor claim is not contrary to the public policy or constitution of the United States.