The Cato Institute is a reliable defender of free trade. But even that libertarian think tank is suspicious of one of the Obama administrations main priorities in free-trade negotiations in the Atlantic and Pacific basins. <\/p>\n
Dan Ikenson, director of Catos Herbert A. Stiefel Center for Trade Policy Studies, argues that the Obama administration should give up on trying to include a procedure that allows companies to force governments into binding arbitration when they feel that their interests have been harmed. We examined this procedure, technically known as investor-state dispute settlement, in a Bloomberg Businessweek article last month. In one egregious case,Philip Morris (PM) has brought an arbitration case in Hong Kong challenging Australias plain-packaging law for cigarettes. The tobacco company says the law prevents it from marketing its brand in violation of a treaty between Australia and Hong Kong. Heres the key paragraph from Ikensons article: <\/p>\n
As is true of most populist causes, buried beneath the enabling mythology and hyperbole are some kernels of truth. One such truth, which this paper seeks to distill from the vacuous, anti-capitalist hyperventilation surrounding the trade agenda, is that the so-called Investor-State Dispute Settlement (ISDS) mechanism, which enables foreign investors to sue host governments in third-party arbitration tribunals for treatment that allegedly fails to meet certain standards and that results in a loss of asset values, is an unnecessary, unreasonable, and unwise provision to include in trade agreements. Although detractors may not know it by name, ISDS is a significant reason why trade agreements engender so much antipathy. Yet, ISDS is not even essential to the task of freeing trade. So why burden the effort by carrying needless baggage? <\/p>\n
The U.S. Trade Representatives office argues that the accusations against the dispute resolution mechanism are unfair. <\/p>\n
Boiled down, here are Ikensons eight reasons for believing Obama should back down and leave the investor-state dispute resolution mechanism out of negotiations on the Trans-Pacific Partnership and the Transatlantic Trade & Investment Partnership: <\/p>\n
1. Its overkill. Governments will generally do the right thing to preserve their reputations as friendly places for investment. <\/p>\n
2. Countries that give in and agree to arbitration may become less willing to compromise on such other issues as market access. <\/p>\n
3. It could encourage outsourcing by making other countries as safe for investment as the U.S. is. <\/p>\n
4. It gives foreign companies operating in the U.S. an advantage over domestic companies: They can bring cases via trade arbitration, which domestic players cant do. <\/p>\n
5. U.S. laws and regulations will be exposed to arbitration challenges with increasing frequency. <\/p>\n
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See the article here:<\/p>\n
Eight Reasons to Dislike the Obama Administration's Trade Agenda<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" The Cato Institute is a reliable defender of free trade. Continue reading