The TPP’s Investment Chapter: Entrenching, Rather Than Reforming, a Flawed System

During the negotiations of the Trans-Pacific Partnership (TPP) agreement, many stakeholders raised strong concerns about the Investment Chapter of the TPP, and in particular, the investor-state dispute settlement mechanism (ISDS).  The US Trade Representative (USTR) and other representatives of the negotiating partners assured the stakeholders that the TPP’s investment chapter would respond to the legitimate concerns about expansive investor protections and ISDS. The actual text, however, when made public, showed the opposite: a further evisceration of the role of domestic policy, institutions, and constituents. In their current form, the TPP’s substantive investment protections and ISDS pose significant potential costs to the domestic legal frameworks of the US and the other TPP parties without providing corresponding benefits.

In this Policy Paper, CCSI’s Lise Johnson and Lisa Sachs respond to the USTR’s claims that the “TPP upgrades and improves ISDS” and “closes loopholes and raises standards higher than any past agreements.” Indeed, as the memo discusses, there are a number of problems from previous trade agreements that have been carried over into the TPP, and new provisions added to the TPP that do not appear in other US FTAs and that raise additional concerns.

This analysis follows on a Policy Paper on Investor-State Dispute Settlement, Public Interest, and US Domestic Law, in which the authors, together with Jeffrey Sachs, highlighted more systematic flaws of investment treaties and their ISDS protections, including the impact that ISDS has on the development, interpretation and application of domestic law.

More of CCSI’s research on the intersection of treaty law and domestic standards can be found here.