It isn’t very often that free traders at the Cato Institute and the anti-corporate left agree on matters of trade policy. We free traders oppose barriers and subsidies and seek straightforward, nonintrusive rules to ensure an equality of opportunity for businesses, workers, investors, and consumers. The left tends to see those rules as asymmetrically beneficial to business and seeks to leverage trade barriers and subsidies to achieve what it defines as a greater equality of outcome. Those fundamental differences explain why you would see very little overlap in a Venn diagram depicting the policy objectives of Cato’s trade center and, say, Joseph Stiglitz or Public Citizen’s Global Trade Watch.
But a shaded intersection does exist. It exists because free traders are not “pro-business” to the left’s “anti-business.” We are “pro-market.” Accordingly, we are skeptical of rules or policies that tip the scales in favor of one interest group over another. That’s called protectionism.
Investor-State Dispute Settlement (ISDS) is one such example. ISDS provisions are intended to ensure that foreign investors—usually companies that have acquired or established operations abroad—are protected from actions or policies of the home government that fail to meet certain standards of treatment and that cause the investor economic harm. ISDS confers special legal privileges on foreign-invested companies, including the right to sue host governments in third-party arbitration tribunals and win damages for failing to meet those standards.
One might immediately understand why the left would take issue with special provisions that enable multinational corporations to challenge governments’ efforts to regulate them, but there are many problems with ISDS from a free-market perspective, as well.
Join us tomorrow on the Hill for a discussion. Panelists include:
- Joseph Stiglitz, Nobel Prize-winning economist and professor at Columbia University
- Dan Ikenson, director of Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies
- Bruce Fein, Fein & DelValle, PLLC constitutional law expert and associate deputy attorney general under President Ronald Reagan
- Lori Wallach, director of Public Citizen’s Global Trade Watch
- Moderator: Adam Behsudi, trade reporter for Politico