"Memo to US: only fools rush in" on foreign trade treaty. Arbitration over SCOTUS

[jody]

Memo to US: only fools rush in
Bilateral Investment Treaty (BIT).

It was President Bush who launched the US-China BIT negotiations. Then last November, Presidents Barack Obama and Hu Jintao announced they would "expedite" them. According to Inside US Trade, undersecretary of state Robert Hormats said on 10 March that the administration is very close to having model treaty text.

Similar to the investment chapters in US trade agreements, BITs give foreign investors the right to bypass domestic courts and sue governments in international arbitration tribunals.

The United States has been at limited risk of being the target of such "investor-state" lawsuits because its 40 current treaty partners are nearly all developing economies with little investment in the US market. This lopsidedness has created a one-way street in favour of US corporations operating abroad.

* * * * * * * * * * * *

If the ambiguity isn't fixed, investors could file their claims before a tribunal and let the commercial arbitrators decide. If the government lost, they'd have two choices: repeal the reform or pay off the foreign investors. Neither option would be a winner with the American public.

Under NAFTA and to be CAFTA arbitration panels have final jurisdiction over disputes e.g. a firm from Mexico with a suit in Louisiana will have the dispute settled in an international arbitration panel rather than federal courts.