Senator Elizabeth Warren (D-Mas.) has come under heat from Republicans this past week for what many believe to be an act of hypocrisy relating to her role as an expert witness back in 2000. In recent months, Senator Warren has opposed the “Investor-State Dispute Settlement” (ISDS), which allows multinational corporations to challenge laws passed by the U.S. government and collect on damages paid by American taxpayers. This ISDS settlement system has been a part of President Obama’s international trade agenda, including the Asia-Pacific Partnership trade deal that is being negotiated currently.
In February, Senator Warren published an op-ed in the Washington Post titled, “The Trans-Pacific Partnership clause everyone should oppose”. In this op-ed she explained her opposition to the use of ISDS’s in the partnership: “ISDS would allow foreign companies to challenge U.S. laws — and potentially to pick up huge payouts from taxpayers — without ever stepping foot in a U.S. court. Here’s how it would work. Imagine that the United States bans a toxic chemical that is often added to gasoline because of its health and environmental consequences. If a foreign company that makes the toxic chemical opposes the law, it would normally have to challenge it in a U.S. court. But with ISDS, the company could skip the U.S. courts and go before an international panel of arbitrators. If the company won, the ruling couldn’t be challenged in U.S. courts, and the arbitration panel could require American taxpayers to cough up millions — and even billions — of dollars in damages.”
The accusations of hypocrisy stem from the fact that while Warren is currently lobbying against President Obama’s desire to include an ISDS settlement system in the Pacific deal, in the year 2000, Warren served as an expert witness on behalf of the U.S. government in an ISDS case involving a Canadian funeral home. In that case, the Canadian funeral home, Loewen, sought $725 million in damages from the United States through the ISDS mechanism provided by the North American Free Trade Agreement (NAFTA). After being sued in a Mississippi court over a contract dispute, Loewen argued that the large jury verdict against it, and consequent Mississippi court’s refusal to waive or reduce the bond requirement in order to appeal, were unjust and discriminatory, and were therefore a violation of NAFTA. Federal records have indicated that Warren was paid $90,000 by the Department of Justice for her participation as an expert witness defending the U.S. government in this case. As an expert witness, Warren served as an expert in U.S. bankruptcy law, arguing that Loewen could have used the bankruptcy process to avoid the judgment that was granted against it.
Republicans are using Warren’s involvement in that case to show that when she was paid to do so, she had no problem participating in an ISDS case. Those in support of Warren have countered these accusations of hypocrisy by saying that Warren was simply working within the system, and by defending the government was demonstrating her disapproval of the ability of multinational corporations to circumvent the American legal system in order to receive damages. As her spokeswoman Lacey Rose put it, “Senator Warren opposes ISDS in trade treaties for the same reasons that were so clearly demonstrated in that case — because it tilts the playing field toward big companies, and undermines the American justice system and the rule of law.”