5
While the Trump Administration has called into question the terms of its
international trade agreements, including investor-state dispute settlement (ISDS)
provisions, ISDS looks set to remain a feature of such agreements in 2018 and
beyond, albeit in amended form.
At the beginning of 2017, we questioned the future of
ISDS under a Trump Presidency. The Administration
had campaigned on a protectionist agenda and
promised to renegotiate and/or withdraw from
multilateral trade agreements, which inevitably
would prompt reconsideration of the ISDS
mechanisms in those treaties.
Over the last year, campaign promises against
multilateralism were transmuted into various forms
of government action and policy:
• in January 2017, the US withdrew from the
Trans-Pacific Partnership (TPP), but the remaining
11 signatories agreed to a revised version of the
treaty exactly one year later in January 2018,
known as the Comprehensive and Progressive
Agreement for Trans-Pacific Partnership (CPATPP).
While the text of the CPATPP had not been
released as of the publication of this briefing, it
reportedly includes only minor amendments to
certain ISDS provisions that had been agreed in
the TPP, including the suspension of ISDS to
investment agreements and authorisations;
• the Trump Administration gave some insight on
its views on ISDS in the US Trade Representative's
2017 Trade Policy Agenda, published in March
2017. The agenda bemoaned the country's
'deference to international dispute settlement
mechanisms' and called for a new policy 'that
defends American sovereignty';
• in May 2017, the US announced that it intended
to renegotiate the North American Free Trade
Agreement (NAFTA) and, since then, the US,
Canada and Mexico have held several rounds
of negotiations. ISDS has reportedly been a
point of contention, in particular; and
• negotiation of the Transatlantic Trade and
Investment Partnership (TTIP) between the US
and the EU was put on hold in 2017. The Trump
Administration cited a preference for pursuing
bilateral agreements (for instance, with Germany)
instead of a multilateral approach, but has since
suggested that it may recommence negotiations on
TTIP. Despite years of prior negotiation on TTIP,
the form of ISDS remains an open issue. In
particular, the EU has proposed a permanent
investment court, with first instance and appellate
tribunals. The Trump Administration is yet to
express a view in this proposal.
Caroline Richard
Partner
T +1 202 777 4561
E caroline.richard@freshfields.com
Noiana Marigo
Partner
T +1 212 284 4969
E noiana.marigo@freshfields.com
Investor-state dispute settlement
in the age of Trump
1