Financial History Issue 119 (Fall 2016) - Page 33

war in Europe, with the European Parliament recently rejecting, across party lines, any treaty that includes ISDS. Protesters opposed to it have swamped the streets in Berlin, Paris and Brussels and have written hundreds of letters in opposition to what they see as the imposition of shadowy “corporate courts” that can be used to undermine laws and regulations and compromise national sovereignty. US trade negotiators say such rhetoric is overblown. They point out that the US is already a signatory to 50 agreements that include ISDS, and that foreign corporations have only ever used it to challenge Washington 18 times. The United States hasn’t yet lost a case. But experts on both sides of the debate argue that those stats undersell the importance of ISDS. Including the mechanism in the TPP and TTIP would forever alter the global legal landscape for investors. The United States’ 50 existing treaties are relatively tiny, representing just 10% of the nation’s foreign direct investment; including ISDS in the TPP would increase that ratio significantly. If ISDS is included in both of those trade deals, it would mean that any corporation headquartered in any of the nations that are signatories to either treaty — that includes the vast majority of companies listed under the Global Fortune 500 — could use the mechanism to challenge US laws and regulations outside of US courts, in the same way that TransCanada is today. “I don’t think the question is whether US laws will get challenged by foreign corporations under the TPP,” Simon Lester, a trade expert at the libertarian Cato Institute, recently said. “It’s pretty clear the US will be challenged, and it will lose some of those challenges and the US taxpayers will have to pay.”  Haley Sweetland Edwards is a correspondent for Time and a former editor at the Washington Monthly. She is the author of Shadow Courts: The Tribunals That R