New NAFTA agreement should keep critical investment protections

New NAFTA agreement should keep critical investment protections
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This Thursday marks a year since NAFTA renegotiations began between the U.S., Canada, and Mexico.

After an often tedious twelve months of stop and go negotiations and incremental progress, there continues to be intense speculation about whether key provisions will survive in the new version of the agreement, such as the highly effective Investor State Dispute Settlement (ISDS) mechanism.


With hundreds of thousands of American companies depending on open trade with Canada and Mexico, now is the time for the Trump administration to recognize the agreement’s importance and — not just get a new NAFTA deal accomplished — but keep key provisions in place that help protect American investments and jobs.


There can be no doubt that NAFTA has brought winning results to American businesses over its 24 years. In the four years directly following NAFTA’s passage, the U.S. added around 800,000 new manufacturing jobs, triggering the agreement’s role as a major American job creator. Today, 14 million American jobs are supported by NAFTA, with Canada and Mexico constituting around $500 billion in American imports each year. From auto manufacturing to agriculture to aerospace, NAFTA has opened the door to U.S. businesses of all sizes. In fact, 98 percent of the 300,000 American companies that export are small and medium-sized businesses. 

While 125,000 small and medium-sized American businesses now do business with NAFTA nations, the agreement has been especially important to Hispanic businesses because of the enhanced trade it has facilitated throughout Mexico, Central America, and the Caribbean Basin. Demand for American products in these markets has meant new business opportunities for Hispanic-owned firms, especially in states such as California, Texas, and Florida, which each have more than a half-million Hispanic-owned businesses. In Florida, for example, more than $4 billion in goods are shipped north to Canada annually and more than $2 billion are sent to Mexico. Clearly, NAFTA is vital to the Hispanic community in Florida and elsewhere. 

But it is not just enhanced trade that makes NAFTA so significant to American businesses. It is also the important protections brought by This vital mechanism within NAFTA has been used by the U.S. since 1959 to arbitrate disputes over foreign investments. American businesses certainly have found justice against foreign governments gone bad. U.S.-based Occidental Petroleum Corporation, for example, recovered $1 billion in damages after Ecuador’s government passed prejudicial tax policies that wronged the company. 

And no foreign company has ever brought a successful claim against the U.S. under ISDS.

Should a new NAFTA weaken or remove the ISDS mechanism, all U.S. businesses, including the nation’s three million plus Hispanic-owned firms, would lose vital protections for their overseas investments. Anyone who doubts the importance of ISDS need to look no further than socialist Venezuela’s attempts to seize American energy projects, an attempt ultimately thwarted because ISDS was in place. If the president truly wants an “America First” trade policy, he would do well to support the inclusion of ISDS in a new NAFTA.

All U.S. companies investing abroad need the assurance that recourse exists should nations go rogue. This is an idea supported not just by the Hispanic Leadership Fund, but by the business community at large, more than a hundred key members of Congress, and business-minded advocacy groups.

Today, the economic outlook for Hispanic-owned businesses and workers is positive. According the Bureau of Labor Statistics, Hispanic unemployment hit a record low in July, dropping to just 4.5 percent. This is a credit to Republican tax cuts and other pro-growth policies put forward by both the administration and Congress. Many of these businesses and workers are in trade-intensive sectors in politically important states such as Florida, Pennsylvania, and Ohio.

If the president wants to continue this economic momentum, and if he truly wants to put “America First,” nothing is more important than modernizing and renegotiating NAFTA and including strong, common sense ISDS protections for all American businesses. Doing so would signal a real victory for the 41 million American workers who depend on American exports and for Hispanic-owned businesses and workers nationwide for whom NAFTA is a critical platform for future growth.

Mario H. Lopez is president of the Hispanic Leadership Fund, a public policy advocacy organization that promotes liberty, opportunity, and prosperity for all Americans.