It's one thing not to have ISDS in a U.S.-UK FTA, but what about in a U.S. FTA with Kenya? Investment in developing countries is what people who worry about risks associated with foreign investment seem to worry most about. This came up recently at a confirmation hearing for a new Deputy U.S. Trade Rep., and now U.S. Trade Rep. Lighthizer has been asked about it in the written follow-up to a June hearing before the House Ways & Means Committee. Here was a question from Rep. David Schweikert:
While Kenya has taken steps to improve its business environment in recent years, it still maintains many restrictions on foreign investors, including foreign equity limitations, local content requirements, and limitations on the ownership and control of land. In addition to these issues, corruption continues to be an issue in Kenya's local courts. According to your agency's 2020 National Trade Estimate, "bribes, extortion, and political considerations continue to influence outcomes in court cases." In light of these issues, strong investor protections and a strong ISDS mechanism to enforce them are needed to address investors' concerns in Kenya. Can you commit to pursuing strong investor protections, including ISDS for all sectors, in a US-Kenya FTA?
And here was Lighthizer's response:
The Administration is seeking a high-standard and comprehensive U.S.-Kenya FTA, including a high-standard investment chapter. To this end, the Administration will seek to secure for U.S. investors in Kenya important rights consistent with U.S. legal principles and practice and the highest international standards of investment protection, such as those reflected in the U.S.-Mexico-Canada Agreement. We will also seek to reduce or eliminate barriers to U.S. investment in Kenya, such as equity and land ownership limitations and local content requirements. Furthermore, we will seek mechanisms to ensure that Kenya lives up to its commitments. The Administration is still considering its approach to specific enforcement mechanisms for the U.S.-Kenya investment chapter, including the appropriateness of investor-state dispute settlement.
We may be reaching the end of the opportunities for the Trump administration to made decisions on ISDS for the current presidential term. What choices would they make in a second term? What choices would a Biden administration make? It feels like the U.S. is at a crossroads with ISDS, although perhaps it is more like an Australia-style state of uncertainty, where the approach varies depending on the agreement and the party in power.
