New USMCA Trade Deal Similar To NAFTA, Except In Business Dispute Settlement

Published: Tuesday, October 30, 2018 - 12:31pm
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Many have said that the new NAFTA deal that the Trump administration negotiated — dubbed the US Mexico Canada Agreement (USMCA) — is not that new at all.

They say it’s pretty similar to the old NAFTA agreement, but there is one area that will be different under the new deal — how businesses settle disputes.

The USMCA allows for the Investors-State Dispute Settlement (ISDS) mechanism to be phased out.

That’s the international arbitration system that companies could use to resolve disputes without going through the local courts

The Show spoke with University of Arizona Law professor David Gantz more about it, and he told me this system was initially created in the 1970s because foreign investors could not be entirely sure of the independence of local judicial systems, especially in developing countries.

This gave them a way of arbitrating disputes internationally instead of in local courts.

But Gantz says when it came to NAFTA, that’s not exactly how the system ended up being used.

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