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  August 1st, 2017 | Written by

Small Business Leaders Have Advice for Trump Renegotiating NAFTA

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  • SMEs: NAFTA currently privileges multinationals over US small business.
  • Small businesses have problem with NAFTA's Investor-State Dispute Settlement process.
  • ISDS incentivizes the offshoring of jobs, say US small businesses.

Over 100 small business leaders sent a letter to President Donald Trump urging him to ensure that the renegotiation of the North American Free Trade Agreement (NAFTA) and other global trade pacts does not allow foreign multinational corporations to attack US laws that protect US communities and the environment.

As things stand now, foreign-owned companies are allowed to challenge such laws before tribunals of three private lawyers, according the American Sustainable Business Council and Green America. That, they say, is bad for communities and the environment and also puts US-based small firms at a competitive disadvantage.

In May, Trump notified Congress of his administration’s plans to renegotiate NAFTA, setting in motion a 90-day period before negotiations with Canada and Mexico can begin in August. According to trade legislation, the administration must make public its more detailed plans for the negotiations 30 days before negotiations begin.

Of particular concern to small business is Investor-State Dispute Settlement (ISDS) – a provision in NAFTA and other trade deals that enables multinational corporations to sue the US government over laws at the local, state, and federal levels that they claim violate their broad investor rights. These laws, which US small businesses must abide by, are intended to protect the health, environmental, and financial well-being of our nation. As the business leaders’ letter to the president notes, in addition to threatening US laws, the special treatment for foreign investors that the ISDS system allows also incentivizes the offshoring of jobs by removing many of the costs and risks associated with re-locating to low-wage countries.

Corporations do not need these special privileges, according to Jerry Greenfield, co-founder of Ben and Jerry’s Ice Cream. “We started with one store in Vermont, and now Ben & Jerry’s ice cream is sold around the world,” he said. “This success required a good product and hard work from lots of folks, but not special rights to attack other countries’ laws.”

“Trade that enriches and privileges foreign multinational corporations at the expense of US businesses, communities, labor, and the environment is a bad deal,” said Fran Teplitz, director of Green America’s Green Business Network. “The Investor-State Dispute Settlement that allows multinationals to attack US protections for people and the planet should not be part of any trade agreement our nation joins.”

“While there’s no doubt that trade agreements between nations are important to economic development,” added Richard Eidlin, vice president of the American Sustainable Business Council, “the key question is whether the rules are fair to small and mid-sized businesses and to local communities. We’re concerned that the Investor State Dispute Settlement mechanism embedded in current NAFTA and other trade negotiations, tilts the playing field against smaller companies and communities.”

As a presidential candidate, Trump repeatedly denounced NAFTA, calling it “the worst trade deal maybe ever signed anywhere.” There is indeed much that economic, labor, environmental, and other civil society organizations seek to change about NAFTA, say the small business organizations. “Trump is now back-peddling on his earlier pronouncements about eliminating NAFTA,” they said, in a statement, “and we are entering a period where the voice of sectors not at the negotiating table must be heeded if a reformed-NAFTA is to be an improvement.”