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NAFTA: VI Calls on Administration to Protect ISDS

Mar 2018

Business and industry leaders are growing increasingly concerned by some of the positions the Trump Administration has taken as they seek to renegotiate NAFTA with Mexico and Canada.  More specifically, the Vinyl Institute has joined a chorus of business and industry groups, including the National Association of Manufacturers (NAM) and the American Chemistry Council (ACC), calling on the administration to protect the current investor-state dispute settlement (ISDS) provision in NAFTA which helps ensure that American investors, businesses, and their workers are treated fairly overseas.

ISDS was created for three key reasons:

  1. To resolve investment conflicts without creating state-to-state conflict
  2. To protect citizens abroad
  3. To signal to potential investors that the rule of law will be respected

NAM Vice President for International Economic Affairs Linda Dempsey is quoted saying, “Investment rules, enforced through ISDS, are a vital recourse against unfair treatment against manufacturers in America and must continue to be a priority in the ongoing NAFTA negotiations as well as in future agreements.” Dempsey adds, “Manufacturers and other businesses in the United States have successfully used ISDS to address discrimination, the theft of US investment property and forced localization measures designed to shift jobs outside the United States.

U.S. Trade Representative Robert Lighthizer appears to oppose the ISDS provision arguing that it encourages companies to outsource and invest overseas as opposed to within the United States.  In a recent meeting with Lighthizer, ACC president and CEO, Cal Dooley argued that such reasoning doesn’t apply to the chemical industry which is often unable to ship products long distances and must build operations near their consumers abroad.  Dooley argued that Lighthizer has, "really not focused in terms of how do they ensure they don't disadvantage or undermine the global competitiveness of industries such as the chemical manufacturing sector, which has a significant trade surplus."

The meeting with Lighthizer follows a recent report from ACC that warns the administration that withdrawing from NAFTA could erode the competitiveness of U.S. manufacturers and jeopardize billions of dollars in chemical industry investment.   

According to the report, “Since 2010, domestic and foreign chemical producers have announced 317 new projects, valued at a combined $185 billion, in new shale-related investment in the U.S. Those projects are expected to yield $310 billion in new economic output per year and create 465,000 direct and indirect jobs.”

However, the report also warns that, “more than half of the $185 billion of announced shale-related investments are planned future investments, and the uncertainty created by withdrawing from NAFTA could make the projects vulnerable to delay or derailment.”

Please join VI in calling on Congress and the Trump Administration to maintain strong support for ISDS in any updated NAFTA agreement. 

Act Now to Protect ISDS!