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Power in international trade politics: is ISDS a solution in search of a problem?

Published online by Cambridge University Press:  13 October 2017

Andrew Reddie
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Abstract

This article examines the controversial investor-state dispute settlement (ISDS) mechanisms in recent mega-free trade agreement. Below, I examine the origins of the ISDS concept and outline the controversy surrounding its use in the context of the Transatlantic Trade and Investment Partnership (TTIP). Then, I provide a theoretical discussion that outlines both the exogenous and endogenous factors that contribute to the inclusion of ISDS provisions in international trade agreements. Focusing on the latter endogenous factors, I then argue that not all international trade agreements are the same and that, as such, it is possible to develop a typology of international trade agreement across two variables (the number of parties and relative power) that impact the appropriateness of including an ISDS provision. I test this typology against the empirical record. Finally, I discuss potential innovations to the ISDS provisions and market-based mechanisms that address the dual challenges of discrimination and expropriation that ISDS is designed to address.1

Keywords

ISDSdispute settlementTTIPinternational trade agreements
Type
Research Article
Information
Business and Politics , Volume 19 , Special Issue 4: The Transatlantic Trade and Investment Partnership (TTIP) , December 2017 , pp. 738 - 757
Copyright
Copyright © V.K. Aggarwal 2017 and published under exclusive license to Cambridge University Press 

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Footnotes

1

I would like to thank Vinod Aggarwal and Simon Evenett along with two anonymous reviewers for comments that contributed to this manuscript. The Institute d'Etudes Européennes de l'Université Libre de Bruxelles graciously hosted me as a visiting scholar and provided research support during the writing of this article.

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