Nominee says administration wants to renegotiate ISD clause

Yoon Sang-jik, nominee for minister of knowledge economy, said yesterday the Park Geun-hye administration will push for renegotiations of the investor-state dispute settlement (ISD) clause in the free trade agreement with the United States.

Yoon made the statement during his confirmation hearing at the National Assembly.

“As soon as domestic procedures are done, the government will start talking with the U.S. government,” Yoon said. “Whether the renegotiation would require a complete amendment of the clause on paper remains to be seen.”

As former President Lee Myung-bak pledged in 2011, the renegotiation of the ISD clause should be carried out, Yoon said. The ISD issue was again in the spotlight in November after Dallas-based Lone Star filed a request for arbitration against the Korean government over the sale of Korea Exchange Bank.

The left-leaning Democratic United Party opposes the ISD clause as one of the free trade agreement’s 10 “toxic clauses.” It argues that it will harm Korea and allow foreign investors to avoid government regulations.

The ISD clause allows foreign companies and investors to file for arbitration internationally in the event of a dispute. It is seen as a form of insurance against governments that are protectionist or hostile to foreign investment.