Consider the question of Investor-State Dispute Settlement, one of the most heatedly contested chapters of both deals. Business associations are pushing to include an arrangement by which a foreign investor (such as a U.S. company operating abroad) can sue the host government if the company alleges that government actions are unjustly harming the firm's profitability. The mechanism creates an ad hoc three-member arbitration panel to decide the claim, outside of the legal system of the host country.
Defenders of the mechanism, including the administration, argue that it has been in place in investment treaties for decades without ill effects. Yet this argument misses the basic fact that multinational companies are increasingly and dangerously using the Investor-State Dispute Settlement mechanism to challenge the ability of governments to regulate businesses. What was once just a relatively little used procedure is now becoming a serious problem for governments that are attempting to implement health, education and other regulations that may have an effect on how businesses operate.
Philip Morris, for example, has recently used this process to resist tobacco-control measures in Australia and Uruguay, and Bilcon, a U.S. mining company, has successfully sued Canada over a regulatory action that had blocked one of its mining projects on environmental grounds. Some argue that the Canada precedent might tempt TransCanada to sue the U.S. government if it tries to block the Keystone XL pipeline.