November 02, 2023

Warren, Whitehouse, Cohen, Lawmakers Urge Biden Administration to Eliminate Investor-State Dispute Settlement from Existing U.S. Trade and Investment Agreements

“We urge you to pursue any and all options at your disposal—including new regional frameworks like the Americans Partnership for Economic Prosperity (APEP), which your agencies are spearheading —to remove ISDS from existing U.S. trade deals.” 

Text of Letter (PDF)

Washington, D.C. — Today, U.S. Senators Elizabeth Warren (D-Mass.) and Sheldon Whitehouse (D-R.I.) and Representative Steve Cohen (D-Tenn.) led over 35 lawmakers in sending a letter to U.S. Trade Representative (USTR) Katherine Tai and Secretary of State Antony Blinken urging them to use any and all tools at their disposal, including the Americas Partnership for Economic Prosperity (APEP), a framework for regional cooperation with participating countries in the Americas that they are leading, to remove investor-state dispute settlement (ISDS) from the U.S.’s existing trade and investment agreements. 

ISDS is a secretive, extrajudicial arbitration system that gives corporations special privileges far beyond those of ordinary citizens, or even sovereign governments. When an investor sues a foreign government under ISDS, complaints bypass domestic court systems and instead are handled by private arbitration tribunals made up of corporate lawyers, giving these multinational corporations a disproportionate advantage. Arbitrators can require governments to shell out billions of dollars in damages, forcing them to divert critical funds needed for domestic programs, with no option to appeal the ruling. ISDS inherently presents conflicts of interest: arbitrators can adjudicate a case one day, then turn around and argue a case based on their own business-friendly ruling the next. Workers and consumers have no such special avenue to pursue complaints and enforce labor and environmental trade commitments.

“We are glad that the Biden administration opposes ISDS and remains committed not to include ISDS provisions in future trade deals. Yet many of the United States’ existing free trade agreements still contain ISDS provisions that foreign corporations… continue to exploit,” wrote the lawmakers. “As your agencies move to negotiate the Americas Partnership for Economic Prosperity, you have an unprecedented opportunity to remove ISDS from existing U.S. trade agreements in the Western Hemisphere, and we urge you to pursue this and any other opportunity to do so.”

U.S. policy remains vulnerable to corporate attacks under old trade deals that include ISDS. Until recently, foreign corporations could sue the U.S. government using the now-defunct North American Free Trade Agreement’s (NAFTA) ISDS mechanism. NAFTA’s successor, the United States-Mexico-Canada Agreement (USMCA), set that provision to sunset on July 1, 2023, three years after USMCA entered into force. While this was a significant and historic improvement over traditional investment treaties, it still left enough time for companies to exploit NAFTA’s ISDS provision. One giant foreign energy company – TC Energy – is doing just that, suing the U.S. government for billions of dollars for canceling the disastrous Keystone XL pipeline.  

The Keystone XL case demonstrates the devastating risks to the environment and to tribal sovereignty if companies can use ISDS cases to barter with governments to roll back regulatory or legislative actions, or to extort taxpayers for billions of dollars.

“It is critical that any decisions about what happens in our communities are made at home, in America. That means corporations cannot be allowed to push the concerns of environmentalists, Indigenous communities, and the U.S. government itself to the side through the use of the deeply flawed and imbalanced ISDS process,” the lawmakers continued. 

“The ISDS system allows large corporations to hold the U.S. government and our trading partners hostage, demanding billions of dollars unless they are allowed to move forward with projects like the Keystone XL pipeline that would undermine tribal sovereignty, harm Native communities, and devastate the environment. Your agencies must take advantage of every opportunity to pursue the removal of ISDS provisions from the United States’ existing trade and investment agreements, including through APEP,” the lawmakers concluded.

Senator Warren has been a leading voice in the fight against  ISDS and remains committed to removing it from the U.S.’s trade and investment agreements: 

  • In May 2023, Senator Warren and Representative Lloyd Doggett (D-Texas) led more than 30 of their colleagues in sending a letter to U.S. Trade Representative Katherine Tai and Secretary of State Tony Blinken, urging them to intervene on behalf of the government and people of Honduras in a case brought against it by U.S. company Honduras Próspera under the ISDS system.
  • In September 2017, Senator Warren sent a letter to then-U.S. Trade Representative Ambassador Robert Lighthizer, urging him to push for the removal of  ISDS provisions as he renegotiates the terms for the North American Free Trade Agreement (NAFTA).
  • In February 2015, Senator Warren published an Op-Ed in the Washington Post expressing opposition to ISDS as part of the Trans-Pacific Partnership.