The New NAFTA: Scaled-Back Arbitration in the USMCA

Abstract

In December 2018, the United States, Mexico, and Canada entered into the United States- Mexico-Canada Agreement (USMCA), a new multilateral investment agreement to replace the 1994 North America Free Trade Agreement (NAFTA). This article summarizes the differences between the investor-state dispute settlement (ISDS) provisions provided in Chapter 11 of NAFTA and those covered in Chapter 14 of the USMCA from the perspective of the United States, Mexico and Canada. This article covers when an investor can assert claims under the USMCA (including NAFTA claims for legacy investments), what kind of claims can be brought, and what rules govern in USMCA arbitrations. The authors of this article conclude that the USMCA provides diluted ISDS provisions compared to NAFTA’s Chapter 11.