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Thursday, March 22, 2018

Isakson Calls on Administration to Protect American Companies in North American Free Trade Agreement

Warns dropping key provision would harm American competitiveness, aid foreign competitors

WASHINGTON – As negotiations continue on the modernization of the North American Free Trade Agreement, or NAFTA, U.S. Senator Johnny Isakson, R-Ga., this week called on the administration to maintain a key provision of the trade agreement that helps American companies create U.S. jobs as they sell goods and services abroad, warning that rolling back this provision would risk losing Congressional support for the final agreement.

Isakson joined 103 of his colleagues in Congress in a letter sent yesterday warning U.S. Trade Representative Robert Lighthizer against harming American companies by weakening a key trade enforcement tool. The tool – called “investor-state dispute settlement” – is a legal mechanism that allows U.S. companies to challenge foreign laws or regulations that violate our trading partners’ commitments and that put Americans at an unfair disadvantage.

In the letter the members explained, “[A]bandoning or weakening this important enforcement tool would harm the ability of U.S. companies to export and locally provide goods and services to Canada and Mexico. In addition, such action would advantage our global competitors – including China – which continue to benefit from [investor-state dispute settlement] and/or direct government ownership and support.”

“Congress expects that both the substantive protections and the enforcement mechanisms for investment commitments will be more or equally robust in an updated NAFTA relative to the existing agreement,” the letter continued. “Our position on the importance of these protections has not changed and is as strong as ever: …Excluding [investor-state dispute settlement] altogether or making it optional in a modernized NAFTA similarly will jeopardize Republican support, even among members who consistently have voted for trade agreements.”

Isakson was joined by several of his colleagues from Georgia, including U.S. Reps. Drew Ferguson, R-Ga.-03, Tom Graves, R-Ga.-14, Karen Handel, R-Ga.-06, and Jody Hice, R-Ga.-10.

The letter was led by U.S. Senators Orrin Hatch, R-Utah, chairman of the Senate Committee on Finance, and John Cornyn, R-Texas, chairman of the trade subcommittee, as well as U.S. Reps. Kevin Brady, R-Texas-08, chairman of the House Ways and Means Committee.

Isakson has consistently urged U.S. engagement in the negotiation process, outlining possible improvements to the agreement, urging good faith by all parties during negotiations and reminding negotiators that when the United States is engaged in trade agreements, it is beneficial to our long-term economic success.

In 2016, Georgia exported $3.5 billion in goods and services to Mexico and $5.8 billion to Canada. According to Business Roundtable, in 2014 nearly 400,000 Georgia jobs were supported by U.S. trade, both exports and imports, with Canada and Mexico.

The full letter may be found below.

March 20, 2018 

Dear Ambassador Lighthizer:

We write to reiterate our strong support for the continuation of robust investor protections, including investor-state dispute settlement (ISDS), in NAFTA and to insist that ISDS provisions at least as strong as those contained in the existing NAFTA must be included in a modernized agreement to win Congressional support. 

These protections are crucial for U.S. companies that invest abroad to serve foreign markets, whether through exports from the United States or through the provision of local goods or services. These protections provide certainty for U.S. companies in all sectors, including U.S. energy companies that drill or operate pipelines or service stations in Mexico; U.S. railroads that operate on both sides of the U.S.-Mexican border; agriculture entities that maintain feedlots or processing or storage facilities; and U.S. services companies that maintain capital in Mexico to meet regulatory requirements or establish facilities. 

The overwhelming majority of Republicans in both the House and the Senate supported Trade Promotion Authority (TPA), which directed the Administration to include robust investor protections in trade agreements. In particular, TPA directs the Administration “to secure for investors important rights comparable to those that would be available under United States legal principles and practices,” including by “providing meaningful procedures for resolving investment disputes.” Congress expects that both the substantive protections and the enforcement mechanisms for investment commitments will be more or equally robust in an updated NAFTA relative to the existing agreement. Our position on the importance of these protections has not changed and is as strong as ever: ISDS is an essential enforcement mechanism for investor protections and must be maintained rather than weakened or abandoned. 

As you may know, the prior Administration disregarded advice from Congressional Republicans and excluded a single sector from ISDS in the Trans-Pacific Partnership (TPP). This policy choice significantly diminished Republican support for that agreement. Excluding ISDS altogether or making it optional in a modernized NAFTA similarly will jeopardize Republican support, even among Members who consistently have voted for trade agreements.  

We are open to continuing to discuss ways to enhance the fairness, transparency, and efficiency of NAFTA’s ISDS mechanism. But abandoning or weakening this important enforcement tool would harm the ability of U.S. companies to export and locally provide goods and services to Canada and Mexico.  In addition, such action would advantage our global competitors – including China – which continue to benefit from ISDS and/or direct government ownership and support.

As NAFTA negotiations progress, we look forward to continuing to work with you to achieve the negotiating objectives, including those concerning ISDS, that Congress established through statute, which is necessary to successful consideration of a modernized NAFTA by Congress.

Sincerely,

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