Back during Joe Biden's presidency, there were some hints that the Biden administration might be willing to push for the removal of ISDS from existing trade agreements and investment treaties. Members of Congress pressed then-U.S. Trade Rep. Katherine Tai on this issue on a couple occasions, including a Congressional letter to the Biden administration in May 2023 and an April 2024 exchange between Senator Whitehouse (D-RI) and Tai at a hearing. Some FOIA materials on this issue provide additional details. But obviously these efforts did not get very far, as ISDS was not removed from existing agreements/treaties under Biden.
So where do things stand on this issue with Trump now in office? As part of the questions for the record for U.S. Trade Rep. Jamieson Greer after he testified before the Senate Finance Committee on April 8, Senator Warren (D-MA) asked this question:
You were part of an important improvement in sovereignty and protection of rule of law by getting rid of Investor-State Dispute Settlement with Canada and reducing it with Mexico [as part of the NAFTA renegotiation]. Will you commit to revisiting ISDS in existing trade agreements and BITs?
Greer responded as follows:
I agree that the United States should not support mechanisms that support offshoring of manufacturing to other countries. I look forward to working with you, this Committee, and Congress on ISDS and other investment-related issues in USMCA and other agreements, as appropriate.
That didn't strike me as a ringing endorsement of the idea of revisiting ISDS in existing agreements and BITs. What I wonder here going forward is the following: How hard will progressives in Congress push the Trump administration on this? And would the Trump administration take any action?
I can see reasons why the Trump administration would want to do this. On economic policy, they worry about things that encourage U.S. investment abroad rather than at home (not that there is good evidence that ISDS actually does this, but it is perceived that way). And on politics, pulling out of existing international agreements fits with their general worldview; also it would be something they could do to generate a bit of praise from progressives, which could be helpful.
But at the same time, they will also have reasons not to do it: They would get pushback from various investor interests; some members of the administration and close allies could be users of ISDS themselves; and putting policy aside, they may be stretched a bit thin right now in terms of their resources.
Overall, I'm skeptical that they will take this up. But it will be interesting to see how they respond if progressive members of Congress continue to push the issue.
