This is President Obama talking about ISDS:
"This is the notion that corporate America will be able to use this provision to eliminate our financial regulations and our food safety regulations and our consumer regulations. That’s just bunk. It’s not true.
“ISDS is a form of dispute resolution. It’s not new. There are over 3,000 different ISDS agreements among countries across the globe. And this neutral arbitration system has existed since the 1950s. The United States has investment agreements with 54 different countries over the last 30 years. Under these various ISDS provisions, the U.S. has been sued a total of 17 times. Thirteen of those cases have been decided so far. We’ve won them all. They have no ability to undo U.S. laws. They don’t have the ability to result in punitive damages.
“ISDS has come under some legitimate criticism, when they’re poorly written, because they’ve been used in particular by some tobacco countries in some countries to challenge anti-tobacco regulation. That’s why we have made sure that some of the legitimate criticisms around past ISDS provisions are tightened, are strengthened, so that there is no possibility of smaller countries or weaker countries getting clobbered by the legal departments of somebody like R.J. Reynolds so that they can’t pass anti-smoking regulations.
And this is from ISDS specialist Todd Weiler, writing about the Keystone pipeline:
... TransCanada may decide that it has no choice but to serve notice of its intent to launch a multibillion-dollar NAFTA claim against the United States for seeing its project frustrated without a fair hearing. The Alberta-based company has already invested more than $2.3-billion in the project. Costs have also skyrocketed since it first made what should have been treated as a routine application to build the portion of its pipeline slated to cross the Canada-U.S. border.
TransCanada has been carrying the costs of this massive investment for a number of years now. A time may come when the project is no longer feasible, in spite of the fact that it could have been a valuable, productive asset had it been built on schedule. Indeed, even if Keystone XL were eventually completed, TransCanada would still have a case for some compensation arising from the shoddy treatment it has received.
Is this all just bitter Canadian bluster? The U.S. government apparently doesn’t think so. In 2012, the administration transferred a State Department lawyer from the Office of the Legal Adviser, where he had been defending the government against claims under the North American free trade agreement for more than three years, to the unit responsible for the Keystone XL application, the Bureau of Oceans and International Environmental and Scientific Affairs.
Under NAFTA, the U.S. government is not allowed to treat Canadian investors less favourably than its own investors or investors from another country. Washington has approved numerous pipeline projects over the years, many of which involved circumstances similar to those of Keystone XL. It typically takes 500 to 600 days to obtain project approval. Keystone XL will have passed the 2,500-day mark before year’s end. Filing a NAFTA claim permits TransCanada to force the government to either provide a cogent explanation for this manifest difference in treatment to an independent, impartial tribunal, or pay compensation for the harm it has caused.
NAFTA also requires the U.S. government to provide Canadian investors with “fair and equitable treatment,” which includes a prohibition against exercising legitimate regulatory authority for an improper purpose. For example, a government official cannot use her authority to reject or approve a pipeline proposal to curry favour with campaign donors. Pipeline construction and maintenance is governed by comprehensive standards with which an applicant like TransCanada must comply. Under NAFTA, TransCanada is entitled to have its application judged on its merits, based on those standards – rather than on the basis of partisan political exigency.
The President now faces an interesting tension between the decision not to approve Keystone and his desire to promote TPP/ISDS. Failure to approve Keystone increases the chances of an ISDS lawsuit, which would hurt the case he is making for TPP/ISDS.
