More than 300 State Legislators Urge Removing Corporate-Friendly ISDS Provisions from NAFTA

Maine State House

Maine State House. Photo courtesy Wikimedia user Albany NY

Earlier this week, U.S. state legislators released a letter signed by 312 lawmakers from all 50 states urging an end to the controversial investor-state dispute settlement (ISDS) system in the renegotiated North American Free Trade Agreement (NAFTA). With negotiators racing around the clock to finalize a three-country agreement on the NAFTA reboot before the end of September, the legislators’ bipartisan action is significant.  At a time of deep political divisions across the country, it is remarkable and heartening that so many state legislators from every part of the nation—representing diverse political stripes including Republicans and Democrats, members of Minnesota’s Democratic-Farmer-Labor Party and a Maine Green—acted together to advance this reform. Their letter reiterates the longstanding position of the National Conference of State Legislatures (NCSL), the bipartisan body that represents the nation’s state legislative bodies, in opposing trade pacts that include ISDS and other anti-democratic provisions, and follows years of activism at the state and local level in support of fair trade.

As IATP stated when the renegotiation commenced in January 2017, NAFTA has consolidated corporate control over many aspects of agriculture in ways that are unfair to farmers, farmworkers and consumers. It was the first trade deal signed by the U.S. to include the ISDS mechanism, which allows foreign companies to sue governments for damages over laws, rules or actions that allegedly undermine their profits. ISDS disputes in NAFTA have already been used to challenge rules on softwood lumber, high fructose corn syrup and pesticides. While the NAFTA 2.0 text has not been completely finalized—and the details of the agreement could change by the time it is signed—it has been widely reported that the preliminary agreement with Mexico would limit the scope of ISDS, although retaining key elements for the oil and gas, infrastructure, energy generation and telecommunications sectors. While reforming ISDS is a goal strongly supported by labor, environmental, faith and family farm groups, these reforms are equally strongly opposed by business groups that continue to lobby the United States Trade Representative and Congress to maintain the status quo. The state legislators’ letter, thus, comes at a critical juncture and may help influence the debate, particularly in Congress, where members often have strong relationships with state lawmakers. 

Washington state Senator Maralyn Chase, a Democrat who chairs the Senate Economic Development and International Trade Committee, was one of the legislators who initiated the letter, and she has also been active with NCSL in passing and updating its ISDS policy. In a conference call with reporters, she spoke about the bullying tactics of Cook Aquaculture, a Canadian company that explicitly threatened to file an ISDS challenge under NAFTA if the Washington Legislature enacted new restrictions on the farming of Atlantic Salmon—an invasive, non-native species—in Puget Sound. Senator Chase stated, “In the increasingly globalized economy, it is imperative that international trade agreements protect and promote national sovereignty. By removing investor-state dispute settlements from trade deals, we encourage adherence to domestic laws and regulations implemented for public good, while curbing broad corporate power.” While the Washington Legislature was undeterred by Cook Aquaculture’s threat and this year adopted broad new limits on the farming of non-native salmon, as long as ISDS remains in NAFTA, the company could make good on its threat to file a claim for damages of $76 million.

Maine Rep. Stacey Guerin is the House Republican lead on the legislature’s Judiciary Committee and member of Maine’s Citizen Trade Policy Commission (CTPC). A signer of the letter, Guerin also participated in the reporters’ briefing this week. She stated, “The renegotiation of NAFTA is an opportunity to fix a flawed agreement,” and pointed out that ISDS has “been used to challenge legitimate state laws from tobacco policy to funeral home regulation to drinking water protections.” Rep. Guerin talked about her experiences campaigning door-to-door in her district, where constituents shared her concern that a panel of three corporate lawyers should not make binding decisions undermining state laws, avoiding the court system and effectively interfering with both the legislative process and Maine’s sovereignty. Perhaps we shouldn’t be surprised that Rep. Guerin’s constituents are weighing in on a policy as wonky as ISDS. As IATP has reported, Maine has been a leader in advancing fair trade policies through the Maine Fair Trade Campaign and the CTPC , whose members in March of this year unanimously voted to send a letter to USTR Robert Lighthizer urging the removal of ISDS from NAFTA. Indeed, of the 312 legislators signing the national letter released this week, 38 are from Maine.

Other legislators on the briefing call made similar points. “NAFTA’s ISDS provisions are a shocking attack on U.S. sovereignty,” said Texas state Rep. James White, a Republican lawmaker who signed the letter, adding, “ISDS is also a threat to our system of federalism—as  even state and local laws can be subject to ISDS suits.” Ohio state Senator Kenny Yuko, who serves as the leader of the Ohio state Senate Democratic Caucus, focused on the job losses associated with NAFTA and other trade deals, and called ISDS “one of the worst provisions of NAFTA.”

Farm state legislators understand the link between promoting sustainability and getting rid of trade agreement provisions, such as ISDS, that promote intensive corporate agriculture and undermine environmental protections. Iowa state Rep. Chuck Isenhart was one of the initiators of the letter. He says that over the past eight years, he has been working to help Iowa develop agricultural systems “to reliably produce more healthy food sustainably, in ways that protect our soil and water, while giving more young and beginning farmers opportunities to get onto that land, increasing the vitality of our rural communities. We need the state policy flexibility to incentivize and support such developments without fear that we will end up in a trade court for doing so.” Nine state legislators from Iowa signed the letter; as Rep. Isenhart put it, “Iowa legislators are joining with others to defend our Constitutional right to establish public policies that advance the collective interests of our citizens in these and other areas, free from the threat of supranational corporations and foreign governments suing us for doing our jobs, in courts outside of democratic control.”

The state lawmakers “join a formidably diverse consensus against ISDS that spans the political spectrum,” as Public Citizen detailed in its media release on the legislators’ letter. This includes GOP and Democratic members of Congress, professors of law and economics, faith, environmental and labor groups, and even U.S. Supreme Court Chief Justice John Roberts and the pro-free trade Cato Institute. Significant corporate power is lined up opposing these reforms, however, and with NAFTA text and ongoing negotiations still cloaked in secrecy, there is limited opportunity for advocates for positive change to be heard. We’ll know more on October 1, when the text of renegotiated NAFTA 2.0 is due to be made public. Until then it’s anyone’s guess whether NAFTA’s investor-state arbitration provisions are in or out—or something in between

Link to letter and full list of signers.