Call them PTAs or ISDs, these clauses are critical to international trade treaties. As such, academic criticism and political protests about these mechanisms strike at the core of the current paradigm of international trade relations.
As much as I generally respect Prof. Bhagwati, his criticisms of these arbitration clauses seem a bit half-cocked – and I dare say from a somewhat Indian perspective.
There is some solid logic about weaker trading partner concerns, but he fails to provide practical alternatives. He advocates ““garbage-free” PTAs – but he doesn’t offer an explanation what they may be. He simply complains that strong nations tend to dominate weak nations. Hello? (I would like to see how India structures its bilateral trade agreements with weaker economies.)
Meanwhile, as described in the second article, Lone Star (a corporation many people love to hate) is gearing itself to be the first American company to exercise the ISD clause of the recently implemented KORUS FTA. Should Lone Star prevail, which I believe they will, the Korean leftists will have a field day of screaming “we told you so” in opposing the FTA’s ISD clause.
And so the craziness is likely to continue…
R.I.P. to PTA
There is general agreement that this time it was the U.S. whose unwarranted (and unyielding) demands killed the talks.
By Jagdish Bhagwati
Korea JoongAng Daily