ISDS and sovereignty : The use of investor-state dispute settlement mechanisms in trade agreements and their impact on national sovereignty

17 September 2015

A report to ExportNZ.

ExportNZ asked NZIER to look at the use of investor-state dispute settlement (ISDS) provisions in Free Trade Agreements and to consider whether they constrain governments in developing regulations in the public interest. We found that common concerns over ISDS are over-stated. The New Zealand government's sovereign right to legislate in the public interest is highly unlikely to be affected, and modern ISDS provisions are explicitly designed to be transparent and pragmatic. As such, the ISDS aspects of the Trans-Pacific Partnership currently being negotiated pose very little threat to the New Zealand economy.