Modernizing NAFTA Should Improve Protections for American Businesses

Ahead of the North American Free Trade Agreement (NAFTA) renegotiations that are slated to begin this week, the NC Chamber joined more than 100 organizations in calling on the Trump Administration to preserve and improve investment protections as part of the investor-state dispute settlement (ISDS). In a letter sent to U.S. Trade Representative Robert Lighthizer, Secretary Tillerson, Secretary Ross, Secretary Mnuchin, National Economic Council Director Gary Chon and key contacts on Capitol Hill, the coalition of associations makes the case for why the ISDS has been necessary, while also outlining provisions that can be added to provide full coverage and enforcement for all sectors. Modernizing the NAFTA yields a critical opportunity to improve the trade agreement and better protect the United States against the theft, discrimination and unfair treatment of U.S. property overseas.

As written in the letter, “the existing NAFTA framework protects American individual, non-profit and business investors by extending several of the private property protections already found in the U.S. Constitution and U.S. law, including due process, non-discrimination, fair treatment by the government and compensation for the seizure of property.” The ISDS, a neutral arbitration system, enforces these protections and has greatly benefitted the United States. Our country has only faced 18 cases, all of which the U.S. won, while U.S. investors have filed 40 cases with Canada and Mexico, winning several. Linda Dempsey, vice president of the National Association of Manufacturers (NAM), describes one such case in a recent blog post, where American company Metalclad was awarded compensation for part of an investment it made in Mexico after the Mexican government blocked its opening. While the ISDS has provided baseline protections for businesses, significant gaps remain, which is why our letter called for full protections for intellectual property, guaranteeing protections and enforcement for all sectors, improving U.S. investment access in Canada and Mexico on a non-discriminatory basis, adding stronger disciplines against forced technology transfers and localization, expanding access to ISDS enforcement for breaches of major investment contracts and extending the enforcement period to at least ten years after any potential termination of the agreement.

Strengthening the enforcement of fair treatment for U.S. individual, non-profit and business investors is an integral provision of the NAFTA and should remain a top priority throughout modernization efforts. Last year alone, Canada and Mexico purchased one-third of all U.S. manufactured goods – that’s more than the next ten U.S. trading partners combined. The NAFTA’s impact on our competitive economy is clear, which is why improved trade policies must establish more open and fair trade. As these negotiations wage on, the NC Chamber will continue to actively advocate for policies that benefit North Carolina business. In fact, the NC Chamber has already agreed to join the U.S. Chamber in sending a letter to the President and Congress in support of NAFTA modernization. I look forward to sharing that letter and future developments with you soon.

Gary J. Salamido
Vice President, Government Affairs
North Carolina Chamber

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