30 Hours Clashing with Corporate Lobbyists on a White House Committee Showed Me How Hard "Change" Really Is
Continued from previous page
But the page numbers alone reflect the high degree of polarization. The main body of the report is dwarfed by the annexes, where committee members were allowed to express their views unedited.
I worked with eight others to submit a joint set of recommendations for a dramatic overhaul of the rules that govern international investment. While it was a shame that we weren't able to find much common ground with the corporate representatives, this annex demonstrates how much was learned.
We made four major recommendations: dispute settlement should be consistent with the public interest; foreign investors should not have greater rights than U.S. investors; our investment agreements should protect health, safety, and the environment as well as promote good jobs; and such agreements should help mitigate and prevent financial crises.
More specifically, we argued that the current "investor-state" process should be replaced with a "state-state" process. Since these cases often concern matters of broad social impact, they should be handled by governments representing the public interest. This is the position supported by the more than 125 members of the House of Representatives who have endorsed a pending bill in Congress called the TRADE Act (HR 3012). The U.S.-Australia free trade agreement also uses a state-state process.
We also made several recommendations to fix the fuzzy language that some tribunals have interpreted in ways that go beyond the investor rights under U.S. law (and most likely the laws in other countries). For example, these rules give investors the right to so-called "fair and equitable" treatment. These are subjective terms with no clear legal meaning.
Similarly fuzzy language applies to the treaty's impact on the environment and workers' rights. For example, the U.S. model bilateral investment treaty says governments shall "strive to ensure" to protect the environment and worker rights. I might strive to be seven feet tall or to never eat another potato chip, but neither of those aspirations is very serious.
Finally, current rules restrict governments from placing even temporary controls on capital flows, despite the fact that many countries have used this policy tool effectively in crisis situations. We also recommended fixes for vague language that could open the door to investor-state cases over other financial regulatory reforms.
Our report will be part of an internal, interagency process coordinated by the State Department to produce a new model bilateral investment treaty. Then the Obama administration will need to figure out what to do about BIT negotiations begun by the Bush administration with China and India. The corporate lobby is pushing hard for new deals based on the current model, particularly with China.
Of course, those of us who devoted much of our summer vacations to the advisory committee are hopeful that our work will have broader repercussions as well. Candidate Obama promised to revisit some existing trade pacts, and the BIT advisory report should inform any review of the investment chapters of U.S. trade agreements. Moreover, several governments that already have a BIT with the United States would be eager to renegotiate those pacts. Particularly in South America, policymakers are increasingly challenging these rules as a threat to sovereignty.
The Institute for Policy Studies has partnered with the Bolivia-based Democracy Center to help better link the U.S. debate with those in other countries. We have just launched a bilingual (English-Spanish) website as a tool for activists, policymakers, and academics working to build a more just and democratic system for governing global investment.
The fact that the Obama administration, early in its term, launched a process to gather civil society input into our bilateral investment treaties was a huge positive step toward the broad-based debate we need about our whole approach to international economic policy. Let's hope it's just a first step and not the last step in the process.