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What are the consequences of being sued for violating bilateral investment treaties? The conventional wisdom is that investor–state disputes (ISDS) tarnish countries' compliance records, and harm foreign direct investment in the process. This article re-examines this belief in light of recent trends in ISDS. The regime has witnessed a proliferation of claims, a growing proportion of which allege breaches of provisions like fair and equitable treatment and indirect expropriation. Combined with a decrease in the rate of success of such claims, the authors argue that the average ISDS claim now contains less information than it once did. If this is the case, investors should be less likely to update their expectations and reduce investments. This study examines 812 investor–state disputes from 1987 to the present day, and finds consistent evidence for this across two different datasets relating to firms' risk perceptions. Consequences of investor–state claims on foreign direct investment are only apparent in cases that allege direct expropriation. Even among these, the effects are smaller today than they were in the past. In sum, the reputational effects of ISDS claims appear to have been eroded by the developments of the last two decades. ISDS just isn't what it used to be. [ABSTRACT FROM AUTHOR]

The United States' Trade Adjustment Assistance (TAA) program seeks to help workers transition away from jobs lost to import competition. By contrast, trade remedies like antidumping seek to directly reduce the effect of competition at the border. Though they have very different economic effects, we show that trade adjustment and protectionism act as substitutes. Using the first geo-coded measure of US trade protectionist demands, we show that controlling for trade shocks, counties with a history of successful TAA petitions see fewer calls for trade protection. This effect holds when we confine our analysis to the steel industry, a heavy user of antidumping duties. And though they are both means of addressing import exposure, the two policy options have distinct political effects: in particular, successful TAA petitions carry a significant electoral benefit for Democratic candidates. Greater recognition of the substitutability of trade compensation and protectionism would improve governments' response to import exposure. [ABSTRACT FROM AUTHOR]

Dealing with the distributional consequences of trade liberalization has become one of the key challenges facing developed democracies. Governments have created compensation programs to ease labor market adjustment, but these resources tend to be distributed highly unevenly. What accounts for the variation? Looking at the largest trade adjustment program in existence, the US' Trade Adjustment Assistance (TAA), we argue that petitions for compensation are largely driven by legislative attitudes. When legislators express negative views of TAA, individuals in their districts become less likely to petition for, and receive, compensation. This effect is especially pronounced in Republican districts. An underprovision of TAA, in turn, renders individuals more likely to demand other forms of government support, like in-kind medical benefits. We use roll-call votes, bill sponsorships, and floor speeches to measure elite attitudes, and we proxy for the demand for trade adjustment using economic shocks from Chinese import competition. In sum, we show how the individual beliefs of political elites can be self-fulfilling. [ABSTRACT FROM AUTHOR]