The Fiscal Impacts of Investment Provisions in U.S. Trade Agreements
Author(s)
Gallagher, Kevin P.; Ackerman, Frank
Abstract
This study by the Global Development and Environment Institute, an economic research institute at the Fletcher School of Law and Diplomacy of Tufts University, attempts to estimate the potential fiscal costs of “investor protection” provisions in future international trade agreements. Because estimating the value of potential claims involves many inescapable uncertainties, the authors have employed a predictive methodology that is as conservative as possible. Based largely on an extrapolation from experience under NAFTA (North American Free Trade Agreement), the study estimates that “investor protection” claims under international trade agreements could expose U.S. taxpayers to claims totaling up to $32 billion on an annual basis – the equivalent of three-fourths of the annual federal block grants to state and local governments. The financial obligation created by investor-protection claims would fall directly on the federal treasury, but they could indirectly threaten federal funding of many state and local government programs. The prospect of imposing this new fiscal burden on U.S. taxpayers should be cause for grave concern during this period of national emergency and serious budget shortfalls.
