III. International Trade
The (capital) importing nation that is party to an investment agreement wishes to
commit or signal to private (capital) exporters that their investments are secure against
government interference. The private right of action for compensatory damages
facilitates this government-to-firm commitment, in a way that a mere government-togovernment
commitment cannot. Trade agreements are different in an important way—
(goods and services) importing nations have no direct interest in making (goods and
services) exporters more secure or confident that market access commitments will be
respected. An importing nation, call it A, will make commitments that benefit exporters
in another nation, call it B, only to the degree that the government of B will make
reciprocal commitments that benefit A’s exporters. For this reason, trade agreements are
better structured as government-to-government commitments, and a private right of
action for damages may actually be counterproductive. Indeed, private standing
irrespective of the remedy may be counterproductive. Section A develops this argument.
Even if standing under trade agreements is best limited to governments, it remains
to consider what remedy the agreement should select. Section B offer several new
reasons why trade sanctions might be preferred to money damages, despite what some
commentators note as the apparent inefficiency of trade sanctions.