Linda M. Dempsey is the Vice President for International Economic Affairs at the National Association of Manufacturers.  An advocate for expanding trade through both the TPP and T-TIP negotiations, Ms. Dempsey believes those agreements should include provisions for investor-state dispute settlement.

Today's quote is from a note she sent us last week.  In part, her note was a reaction to the TTALK Quote of a few weeks back, the one in which Daniel Ikenson of the Cato Institute suggested dropping the ISDS provisions from both the TPP (Pacific) and T-TIP (Transatlantic) negotiations.  Since then, Mr. Ikenson has put pen to paper and published an article expanding that argument.

"Purging both TPP and the TTIP of ISDS," he writes, "makes sense economically and politically and would assuage legitimate concerns about those negotiations, splinter the opposition, and pave the way for free trade."

Ms. Dempsey strongly disagrees, and her comments, printed below, explain why, and they provide some of the history in the ISDS debate. 

From LINDA DEMPSEY:

As usual, we have a few observations, but first some technical notes.

To begin, Ms. Dempsey's comments above are not a rebuttal to the article Mr. Ikenson published on March 4.  They were written a week before that article came out.  They are a reaction only to his comments on January 29.

Second, we highlighted Ms. Dempsey's reference to debt-for-nature agreements because we thought they were interesting.  It is also true that a number of environmental groups have argued against including ISDS provisions in trade agreements.  On December 16, 2013, for example, some 177 unions and other NGOs wrote to Ambassador Froman and Commissioner De Gucht urging that ISDS be dropped from TPP and T-TIP, and many of those were environmental groups.  Interestingly, though, The Nature Conservancy was not among them.

As for debt-for-nature swaps, it is a label that covers more than one type of arrangement.  In some instances, an NGO will buy a portion of the outstanding debt of a developing country - usually at a discount.  It will then forgive the debt it has purchased on condition that the debtor government fund specific environmental/conservation projects.  The Wikipedia article below provides some useful details.

We offered some thoughts in response to Mr. Ikenson's original suggestions, and we will not repeat them here, but we will add to them.  First, we have heard speaker after speaker in the last few months say that investment - not trade - investment is the jewel in the crown of global commerce.  If that is the case, then dropping ISDS from TPP and T-TIP may well be ceding far too much.

Everyone who comments on these issues feels obliged to reference Philip Morris's challenge to Australia's plain packaging laws under the 1993 Agreement between the Government of Australia and the Government of Hong Kong for the Promotion and the Protection of Investments.   Usually, this comes up as speakers and writers discuss the question: Is tobacco different?  Should there be a carve-out for the treatment of tobacco products in TPP and other agreements?  But there is another issue.  The simple fact that the most prominent dispute these days is between a company and a developed country is at least as strong an argument for including ISDS in agreements like T-TIP as are any of those for leaving it out.

In the final analysis, though, none of the ideas in any potential trade agreement will have any real effect unless they are championed by the political leaders of the negotiating countries.  So the question of the value of ISDS per se is secondary.   The first question is, will the Obama Administration be its champion?  Will they argue for it with America's trading partners, on Capitol Hill, and, most importantly, in talking to the American public?

The T-TIP JOURNEY - An Assessment.  John Cridland, the Director General of the Confederation of British Industry, will lead off at next week's GBD colloquium on this topic.  Cosponsored by McDermott Will & Emery, this event will be held at the McDermott Will & Emery building at 500 North Capitol Street, Washington, DC. 

Peter Allgeier of the Coalition of Service Industries and Linda Dempsey from the National Association of Manufacturers will also speak at this T-TIP session.  Click the link above for registration and other details.