When it became clear there would be a tobacco carveout from TPP ISDS, I rushed out this critique:
I'd be happy to carve ISDS out of trade agreements (or just apply the tobacco carveout proposal to all measures!), but I can't understand why tobacco would be carved out of ISDS. Carving tobacco out looks like an acknowledgement that ISDS undermines domestic regulation, but then the solution is to mostly ignore the problem, while trying to address it for just one part (tobacco control) of one category of regulation (public health). There are only two ISDS cases out there on tobacco measures. The bulk of any problem with ISDS lies elsewhere. Tobacco companies are minor users of the system, and are not abusing it. They are using it exactly as it was designed, and their use of the system is just like that of the hundreds of other companies that are using it. Any issue with the tobacco related ISDS cases is not about the behavior of the tobacco companies. It's about the design of the system. (And that design could be improved in a number of ways, including a carefully drafted general exceptions provision, which would effectively mean that all of the tobacco company claims would fail).
With more time to reflect, James Surowiecki says the same thing more eloquently in the New Yorker:
... creating a carve-out only for tobacco underscores the basic problem with I.S.D.S.
The tobacco carve-out is an acknowledgement, after all, that companies don’t just use I.S.D.S. lawsuits to fight unjust expropriation; they use these lawsuits to fight reasonable state regulation. If that weren’t the case, then no exception for tobacco would have to be made. The carve-out says, in effect, that this is a problem—but it’s only a problem with tobacco. That’s hardly the case. Cigarettes may be a distinctly bad consumer product, and tobacco companies have been aggressive in pursuing litigation under I.S.D.S. provisions in other trade treaties. But tobacco is hardly the only industry that raises serious public-health and environmental concerns, and hardly the only industry that’s the object of meaningful state regulations. And it’s far from obvious why we should trust other companies to use these provisions wisely, when they were apparently too risky to trust tobacco with.
My only quibble is with his reference to "reasonable state regulation." It's more complicated than that, which he probably knows, but in fairness he didn't have space to explore the nuances of what measures can be challenged.
