March 28,2002

Grassley Seeks Strong Investment Protections in Trade Deals

WASHINGTON – Sen. Chuck Grassley, ranking member of the Committee on Finance, todaysent the following letter.

March 28, 2002
The Honorable Robert B. Zoellick
United States Trade Representative
600 17th Street, N.W.
Washington, D.C. 20508

Dear Ambassador Zoellick:

I am writing to express my serious concern over reports that the Administration may weakenimportant investment protections as it pursues future international trade negotiations. As you know,U.S. investment abroad is critical to support a more dynamic and flexible U.S. economy, greaterexport flows and higher paying jobs for American workers.

For the last 25 years, each successive Administration has recognized that it is critical tonegotiate strong, objective and fair investment protections in our international agreements to continueto promote such investment. These traditional investment protections are largely based on U.S. lawand policy and established international law rules of which the U.S. has been the chief architect andadvocate.

The Senate Finance Committee gave very careful consideration to investment issues and someconcerns expressed about NAFTA Chapter 11 when we discussed H.R. 3005, the Bipartisan TradePromotion Authority Act. Both Republican and Democratic members of the Committee agreed toseveral improvements to the U.S. negotiating position on investment which address these concerns,such as providing a mechanism for the early dismissal of frivolous claims, injecting greatertransparency into arbitration proceedings and establishing a review mechanism. The bill andaccompanying report also provide the Committee’s views on ensuring that U.S. investors abroadenjoy protections comparable to those available to foreign investors in the United States underexisting U.S. law, while at the same time not making our own regulations unduly subject to treatychallenge on grounds that have no foundation in U.S. law and practice. The degree of support forthe final product is demonstrated by a strong bipartisan Committee vote of 18 to 3 in favor of the bill.

These provisions represent a very careful balance between the political concerns raised byparticular cases under the NAFTA Chapter 11 process and the need to continue to provide U.S.citizens with strong investment protections overseas. I appreciate the seriousness with which youhave approached the guidelines set forth in H.R. 3005 and accompanying report. Your consultationswith Congress on this issue have been exemplary. However, in implementing these guidelines I urgeyou not to go beyond the careful balance established by the Congress.

Congress clearly intended for this Administration to continue to pursue strong investmentprotections and investor-state dispute settlement provisions in future trade agreements. At the sametime we ask that you address legitimate concerns about protecting the ability of the U.S. governmentto regulate health, safety and the environment in the public interest. There is no magic formula thatachieves this balance and many approaches are possible. However, I understand there may beseveral proposals under consideration which I believe undermine the fundamental core of theinvestor-state dispute settlement process, dilute protections for U.S. investment abroad, and thereforego beyond the intent of the Committee. Such provisions include establishing a government screeningmechanism which would have to be utilized before a complaint is allowed to proceed, requiringinvestors to exhaust judicial remedies before seeking arbitration, or interpreting the expropriationstandard more narrowly than international and U.S. law. In formulating our negotiating position oninvestment, I strongly urge that you not press for changes that, in the view of many members of theSenate Finance Committee, would weaken an investment policy and approach that has so benefittedU.S. companies and their workers and the U.S. economy as a whole.

I appreciate your personal efforts to consult with members of Congress and bridge differences,where possible. I look forward to continuing our work on this and many other important issues.


Chuck Grassley