The USMCA and Investment: A New North American Approach?

Abstract

The United States – Mexico – Canada Agreement (USMCA) includes a chapter devoted to investment in North America as it was the case for the North American Free Trade Agreement (NAFTA). While the new agreement marks a continuation with substantive protection afforded to foreign investors and their investment by the NAFTA, it does depart from its predecessor regarding Investor-State Dispute Settlement (ISDS). It introduces significant differentiations between the United States, Mexico and Canada regarding ISDS, including its abandonment regarding Canada. The NAFTA contributed to the creation of a uniform North American approach to investment law and policy. The USMCA begs the question whether it creates a new North American approach, and this calls for some nuances. There is still a common approach to substantive protection within and outside North America. However, there is no more common approach to ISDS within North America. Latest developments in treaty practice show that the USMCA is not isolated in abandoning ISDS. Thus, the new piecemeal North American approach to ISDS could become the global approach. Nevertheless, the abolition of ISDS does not mean the disappearance of investment disputes. Governments will not be able to avoid pressure to intervene in the problems of private investors with foreign countries, the very purpose for which ISDS was – yet imperfectly – created.