LWVUS Joins Letter Urging President to Remove ISDS in Trade and Investment Agreements

The League signed onto a letter to the President urging him to remove Investor-State Dispute Settlement (ISDS) in existing free trade agreements and bilateral investment treaties. ISDS allows foreign investors to allege that a government's action, such as banning a toxic chemical or rejecting a mining permit, violates their corporate rights and sue that government for compensation. This can undermine government environmental and climate protections.

Public Citizen, AFL-CIO, Sierra Club, and 200+ Organizations Urge Biden to Terminate ISDS Provisions in Existing U.S. Trade and Investment Agreements

November 1, 2023

President Joseph R. Biden

The White House

1600 Pennsylvania Avenue, N.W.

Washington, DC 20500

cc: Katherine Tai, United States Trade Representative

Dear President Biden:

The achievements of your administration toward a clean energy transition are under threat by corporations looking to take advantage of unpopular, antidemocratic – and outdated – trade rules.

Corporations have an unfair advantage over sovereign nations under many trade and investment agreements. Investor-State Dispute Settlement (ISDS), embedded in numerous trade and investment agreements, has created a global governance regime that prioritizes corporate rights over those of governments, people, and the planet. These rules give special rights to multinational corporations that are not available to domestic businesses. If a corporation alleges that a government action, such as the banning of a toxic chemical or rejection of a mining permit, violates their special corporate rights, ISDS provides the corporation the ability to sue a government for compensation outside of the countries’ domestic legal and court systems. ISDS claims are often in the millions or billions of dollars. An unaccountable three-person tribunal decides the fate of each case. The tribunal can even decide a company should be paid for the “expected future profits” it may have earned in the absence of the government policy in question. The ISDS regime has been especially detrimental to public health, climate and environmental protections, Indigenous land rights, financial regulations, and democratic sovereignty.

Your administration has overseen the largest investment in clean jobs and climate action ever. The Inflation Reduction Act, and other components of the Bidenomics agenda, are just the sort of transformative policies the world will need to face the challenges ahead. They are also just the sort of public interest policies that corporations love to attack via ISDS.

The labor, environmental, faith, consumer, and other civil society organizations signed below appreciate that you have followed through on your promise and have not pursued new trade and investment agreements with the Investor-State Dispute Settlement (ISDS) system.

The logical next step will be to address the ongoing liability of ISDS in existing agreements. The United States is party to dozens of trade and investment agreements that continue to be exploited by corporations to seek billions in taxpayer compensation over environmental, public health, land use, transportation and other public interest policies.

Congress and the White House already worked together on a bipartisan basis to significantly reduce ISDS liability in the renegotiated U.S.-Mexico-Canada Agreement (USMCA), the successor to the North American Free Trade Agreement (NAFTA). Though it left an unacceptable loophole for U.S. fossil fuel companies in Mexico, it is a promising step toward ending ISDS.

The tide is turning against ISDS outside the U.S. as well. Civil society efforts in Colombia and across the hemisphere have been demanding their governments work to end ISDS. Ten European countries have abandoned the Energy Charter Treaty over its ISDS rights for fossil fuel companies, and the European Union as a whole is considering withdrawing. Australia, New Zealand, and other countries have signed side letters to exclude themselves from ISDS in various pacts, and a number of countries including South Africa, India, and Indonesia have worked to exit investment treaties with ISDS. Continued movement away from ISDS by the United States would be a powerful signal to other governments considering taking similar action.

We are eager to work with you to finish the job and free public interest policies from the shadow of ISDS. We urge you explore all avenues at your disposal and pursue an effective path to exiting ISDS by the U.S. and our partners in existing bilateral investment treaties and free trade agreements. Bringing our existing agreements in line with current administration policy would foreclose the possibility of future attacks against the U.S. and signal to trading partners that they will not be penalized for prioritizing the public interest.

Sincerely,

See Attached Letter for Signatories