Scott Miller makes that case clearly and convincingly in the current issue of the CSIS publication International Business Quarterly, and he knows a lot about investment. A former Procter & Gamble executive and the founding chairman of the Commerce Department's Industry Trade Advisory Committee (ITAC) Investment Working Group, Mr. Miller has been working on investment issues for decades. Today's quote is from the opening paragraph of his new CSIS article. His down-to-earth translation of the metaphor is just as clear.
"Capital investment enhances productivity," he writes,
"and fair treatment of investment encourages the investor to act in ways that generate economic growth."The real strength of his article is that it begins to demystify the ISDS process. Because it is not a proces with which the general public is familiar, it is easy to demonize. The system is not that new, but it is not that old either. The International Centre for the Settlement of Investment Disputes (ICSID) is part of the World Bank Group, and the convention that created it entered into force in 1966.
Relying on recent analytic work by
Susan Franck of Washington and Lee University Law School, Mr. Miller nails down the fact that the system is, by and large, a fair one. It certainly isn't biased in favor of companies, which win only about 39 percent of the cases they bring and collect only about 3 cents on the dollar for damages claimed. But you will want to read the article for yourself.
For our part, we will end with one observation, one piece of advice, and one barely relevant anecdote from another time.
The observation is that one needs to keep in mind what rule of law is. It is not an algorithm driven machine that takes in facts and spews out results. It is a very human process, conducted against agreed standards and agreed commitments. The commitments part is important. All 158 signatories of the ICSID convention are bound to honor the resulting arbitration awards.
Advice to ISDS proponents: Don't be afraid to get into the weeds of the debate. Mr. Miller is right when he says that "Foreign investors are not granted 'special rights.'" But our understanding is that foreigners are treated differently as a means of ensuring that they are not penalized for being foreign. It is inherent in the system. Our suspicion is that that the pro-trade, pro-investment argument can only be won by explaining that difference, not by explaining it away.
Almost a Non-Sequitur. In one paragraph, Mr. Miller notes that "the majority of BITs in force have never had a single dispute filed." In reading that sentence as well as much that came before it, it seemed to us that Mr. Miller was trying to address a particular tactic of ISDS critics, that is, the practice of pointing to an unpopular award to prove that the whole investor-state dispute settlement system is flawed. This brought to mind something from a different era.
A few months back, a friend gave your editor
Ian Buruma's book about 1945,
Year Zero. Buruma uses a
Bill Mauldin cartoon to highlight some of the bad-press faced by returning U.S. veterans; yes even the World War II veterans. Here is Buruma:
It is not surprising that some veterans, disillusioned or unequipped for civilian life, or traumatized by battlefield brutality, would commit violent acts. This happens after all wars. But in the first year after World War II, these acts were given exaggerated attention in the press.
[For this next part, remember that during the war Mauldin's characters Willy and Joe were the two wonderful GIs who showed both U.S. troops themselves and the folks back home the human and humorous side the war.]
Willy's wife is shown reading a newspaper headlined "Veteran Kicks Aunt," while a dejected Willy sits in his armchair nursing a glass of whiskey. The caption reads: "There is a small item on page 17 about a triple ax murder. No veterans involved."
