It’s time to replace a foreign trade/investment model that has not worked, as Thea Mai Lee, AFL-CIO policy director, has repeatedly emphasized in Congressional testimony and talks at conferences dealing with the current economic crisis.
In Congressional testimony on May 14, she singled out a critical but often ignored element that belongs in a new trade/investment model: a “balanced” treatment of foreign investment.
“While we understand and support the importance of protecting the rights of investors,” she said, “we believe that existing investment provisions in U.S. investment and trade agreements are imbalanced in two crucial aspects:
“First, they significantly enhance the rights of investors vis-à-vis governments, but they fail to establish commensurate responsibilities for investors, particularly with respect to workers’ rights and the environment.As now written, she said, the pro-investor language “facilitates and accelerates the offshoring of American jobs – precisely because for the most part there has been no commensurate set of investor obligations.”
“Second, they give substantive rights and procedural advantages to foreign investors that are not available to domestic investors. This raises the possibility that investment tribunals can be used to circumvent the democratic process and to achieve regulatory outcomes in a secretive and inaccessible forum. Certainly the experience with the investment chapter of the North American Free Trade Agreement (NAFTA) and current BITs [bilateral investment treaties] reinforces these concerns.”
Lee is co-chairing a subcommittee of the State Department’s advisory committee on international economic policy to review and critique the draft model BIT.
The United States has 40 BITs in force and 10 Free Trade Agreements with provisions protecting investment, plus a separate multilateral agreement under the World Trade Organization for the same purpose.