Inside U.S. Trade reports that part of the softwood lumber settlement requires the U.S. and Canada to suspend the application of NAFTA Chapter 11 (the investment chapter, giving private rights to investors). Apparently the idea is that two parties (the U.S. and Canada) can suspend this part of their treaty, given that the conditions of Art. 58 of the Vienna Convention on the Law of Treaties are satisfied:
(b) the suspension in question is not prohibited by the treaty and:
(i) does not affect the enjoyment by the other parties of their rights under
the treaty or the performance of their obligations;
(ii) is not incompatible with the object and purpose of the treaty.
This reminds us of the interesting overlap between trade and investment. Foreign investors deprived of rights to trade may argue that their investment has been impaired in a way cognizable under Chapter 11. There is also some important uncertainty as to whether the conditions for an effective suspension are met.
The possibility of suspension may actually impair the utility to Mexico, or other capital importing countries, of agreements such as NAFTA Chapter 11 or BITs. That is, the value of entering into these treaties is that they are commitments upon which private persons can rely. If they can be suspended bilaterally, they may serve less well to induce investment.
