Three Facts Apologists for Foreign Mistreatment of U.S. Manufacturers Should at Least Acknowledge

By February 27, 2015Trade

There are lots of different views on trade and investment within Washington and across the country but opponents of investor-state dispute settlement (ISDS) continue to ignore and blatantly misstate objective and basic facts. This anti-ISDS campaign seeks to deny job creators in the United States with the basic enforcement tools needed to ensure fair treatment and a more level playing field overseas.

Those who want to ignore foreign mistreatment of our nation’s manufacturers – mistreatment that harms our industries’ ability to sustain and grow U.S. jobs – should at least acknowledge three incontrovertible facts.

1.) Most investors who bring ISDS cases are individuals and small and medium businesses.

  • “In the 105 disputes filed at ISCID by American investor, two-thirds of the participants in the arbitrations where individuals or SMEs” as found by research of the Center for Strategic and International Studies (CSIS).
  • “Extremely large multinationals – those appearing in UNCTAD‘s list of top 100 multinational enterprises account for 8% of the total claimants in the ICSID and UNCITRAL samples,” according to research by the Organization for Economic Cooperation and Development (OECD). The OECD further found that “22% of claims in both ICSID and UNCITRAL cases are either individuals or very small corporations with limited foreign operations.


2.) ISDS never has and never will overturn any law or regulation.

  • The text of the model U.S. investment language (that has been included in every U.S. investment treaty and free trade agreement investment chapter) states clearly that the only remedy available to investors is “monetary damages and applicable interest.”  (The foreign government has the choice of providing “restitution of property” or “monetary damages.”)
  • The remedies under ISDS are fewer than those available in many domestic court proceedings, giving an incentive for investors to choose a domestic course of action if one if available.
  • These types of remedies and dispute settlement bodies are similar to what are used in many types of international dispute venues, including by groups such as Nature Conservancy in “debt-for-nature” contracts they enter into with foreign governments.
  • ISDS creates no more regulatory chill, and indeed likely to create far less, than the existence of domestic judicial remedies. Academic research shows that claims of any regulatory chill to date are misguided.


3.) You can’t allege that ISDS overrides legitimate government regulation by referring to cases that have not been decided.

  • It doesn’t take a law professor to know that the mere fact of filing a case does not mean the claimants’ views will be adopted.  Opponents like to bring up lots of undecided cases in ways that overstate the reasons for the claims, but all should be able to agree that until the cases are decided no one can objectively analyze the outcome.
  • Looking at the actual data of wins and losses is also instructive.  As CSIS found, 33 percent of claims are actually settled by the parties and of the remaining cases, over two-thirds (67 percent) are won by governments.  Again, the mere fact that a claim is brought does not predetermine the outcome.
  • If ISDS opponents want to place disciplines on cases going forward, then they should be supporting U.S. negotiators in the Trans-Pacific Partnership (TPP) and other negotiations that, like all recent investment negotiations since 2004, are seeking to include a frivolous claim provision that would stop frivolous cases from going forward early in the process.


U.S. manufacturers and other businesses investing overseas face many instances in developed and developed countries of discriminatory, protectionist and other unfair foreign government actions that harm U.S. businesses and their workers alike. ISDS is part of a robust, pro-manufacturing trade policy that ultimately will level the playing field and provide fairer treatment so that our industries and workers in the United States have better access to the 95 percent of consumers outside our borders.  Fair access overseas, both through exports and investment (that is magnet for about 50 percent of all U.S. exports), is vital to ensure that manufacturers and other job creators in the United States can continue to support and grow millions of U.S. jobs.

Linda Dempsey

Linda Dempsey

Linda Dempsey is the vice president of international economic affairs at the National Association of Manufacturers (NAM). In this capacity, Ms. Dempsey leads the NAM’s efforts to improve the global competitiveness of manufacturers in the United States by advocating intellectual property protection, increased export financing and the elimination of trade barriers as well as pushing for agreements and treaties to open up new export markets to create jobs. Ms. Dempsey is noted for her experience on a wide range of international trade and investment policy issues.
Linda Dempsey

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