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Lessons for the Trans-Pacific Partnership

There are many lessons from the North American Free Trade Agreement (NAFTA) that are relevant to the current debate over the Trans-Pacific Partnership (TPP). First, like the TPP, NAFTA was never mostly about trade and even less about free trade. In 1994, the U.S. already had low tariff barriers to Mexican goods. The agreement was much more about creating and expanding new rights and privileges for investors, mostly multinational corporations. For example, the Investor to State Dispute Settlement (ISDS) provision of NAFTA allowed corporations to sue governments directly for laws or judicial decisions that infringed upon their profits. This became a threat to environmental, food safety, public health, and other regulation. The main concern is that the sovereign laws and judicial systems of the signatories of treaties such as NAFTA could be subordinated to a tribunal established by the agreement, without the guarantees and extent of due process of, for example, the U.S. legal system, and judges who were generally more sympathetic to corporations than to the public interest.   

The ISDS is one of the most important provisions of the TPP that has evoked opposition from environmental and other public interest groups. Proponents of the treaty argue that we now have ISDS in dozens of international agreements, and there have been only 13 judgments against the U.S. But, as economist Jeffrey Sachs has pointed out, corporations are just getting started with using this advantage: “In 1995, only a handful of ISDS cases had been filed; as of the end of 2014, there had been more than 600 known claims (because most arbitration can be conducted in secrecy, there may have been many more claims).”

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