Democratic U.S. legislators on Wednesday urged the U.S. Trade Representative and State Department to remove investor-state dispute resolution clauses from current and future trade accords and to defend Honduras against a roughly $11 billion claim by a U.S. corporation.
Thirty-three congressmen wrote to Secretary of State Antony Blinken and Trade Representative Katherine Tai, seen by Reuters, claiming investor-state dispute resolution (ISDS) systems in trade accords are a “problematic corporate handout” that breaches sovereignty and democracy rights.
The Democrats signing the letter argued the lawsuit might force poor Honduras to pay billions of government dollars to a firm that “weaponized” dispute settlement procedures.
“We request that you intervene – through a statement of support, amicus brief, and any other means at your disposal – in support of Honduras’ defense in the Prospera ISDS case and to ensure such egregious cases can no longer disrupt democratic policy making by working to eliminate ISDS liability in pre-existing agreements in our hemisphere,” the lawmakers wrote to Tai and Blinken.
Arbitration protected U.S. companies from sudden changes in trading partners’ government policy.
In 2020’s U.S.-Mexico-Canada Agreement, much of the ISDS system was eliminated because legal protections were seen as a subsidy for U.S. firms investing in Mexico.
The letter referenced Georgetown University research estimating $27.8 billion in ISDS settlement decisions against Latin American nations, with Argentina, Venezuela, Peru, Mexico, and Ecuador most damaged.
“The broken ISDS system has time and again worked in favor of big business interests while infringing on the rights and sovereignty of our trading partners and their people,” legislators stated.
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