Implications for transatlantic trade relations: Policy recommendations from the study

Those actors negotiating the Transatlantic Trade and Investment Partnership (TTIP), namely the U.S. government and the European Commission, might argue that the process of including various stakeholders in the negotiations is already sufficient. But the widespread notion among all other populations interviewed was that this is not the case. There are remedies to address some of the issues with the current trade policy-making process.

Transparency and participation

Trade negotiations, like many other international negotiations, have long been kept secret, so as to ensure that each side is as forthcoming about their demands and offers as possible. Many state officials seem to be fine with this status quo. But some civil society organizations and politicians, including some experts interviewed, have called for complete openness regarding the texts of the negotiations.
Lifting the veil of secrecy would allow state officials to gauge the potential impact of the TTIP immediately from official sources, instead of having to rely on leaked documents or intermittent briefings from the USTR that might be incomplete at times. States could argue that they need to see the texts of modern trade agreements because unlike the rather technical tariff-related documents of past decades, agreements such as the TTIP include provisions with direct effect on the states. The information from the negotiation texts is the basis on which states can participate in the negotiation process, as they are unable to develop their own positions without having full information.
A compromise between the current system and full disclosure of the negotiation texts could be more frequent and substantial briefings by the USTR within the IGPAC. It is hard for state officials to gain security clearance to see the texts and even if they do become cleared advisors on the IGPAC, access to the text is often delayed and with short notice for comments. State officials do understand that updates on every topic after every round is not feasible and might not be necessary. But a system could be devised in which states provide a list of priority issues that the IGPAC needs to be immediately advised on by the federal government whenever there are changes in the negotiations. This runs the danger of some state-related policy issues falling through the cracks, yet would guarantee state input on the most crucial issues.
This proposed compromise shows how the topic of transparency is linked with the question of participation: If states had better access to the negotiation and its documents, they would be put in a better situation to gauge if and how they can represent their interests. With this combined knowledge, there could be more formal and institutionalized ways for states to voice their opinions. As of now, the IGPAC report is the only official forum for states to speak out, but other forms of commentary could be envisioned: For example, there could be multiple IGPAC reports at various times of the negotiations to reflect the dynamic nature of the trade talks. Another option would be to set up a dedicated state-federal body that is in place specifically for a certain trade agreement under negotiation instead of or in addition to having the permanent, yet fluctuating, IGPAC. Lastly, a further opening would be to include states in the actual negotiations.
Again, it is unlikely that any of these participatory options will be implemented. States will, by the nature of international trade agreements, not be of equal standing with the federal government. Furthermore, with Congress already foregoing its regular legislative powers to amend trade agreements due to fast track authority, states would be hard-pressed to argue for their allowance to modify the negotiation talks. Yet, to find a middle ground from these potential solutions would not only benefit the states but also the federal government. As was visible by some states openly supporting the TTIP, state officials might be willing to abdicate some state responsibilities if they view it as beneficial to their state. These individual states’ decisions could gain a firmer standing among other states, federal actors and international partners if they were the product of a deliberative consultation process.

Training and education

In order for international trade negotiations to be understood, particularly if more substantial access to negotiation texts is granted, state officials need to be better informed about the negotiation process and the potential impacts on their states. So far, learning about international trade policy depends largely on the personal motivation of the state officials involved. State organizations like the CSG or the National Association of State Procurement Officials, along with the ALEC or NCEL and the various state trade policy commissions, are vital in educating legislators about international trade policy. Building on their ideas and offers to create a more systematic nation-wide effort would be beneficial. For example, education and training could include webinars or in-state briefings on trade policy making, newsletters on pending trade legislation, web portals on specific policy issues (one is already offered on procurement by the corresponding state association, the National Association of State Procurement Officials1National Association of State Procurement Officials. (2016a). Guide to International Trade
Agreements. Retrieved June 29, 2016, from http://www.naspo.org/ita/index.html.
) or regular briefings with federal officials outside of the immediate negotiation issues discussed in the IGPAC.

The Forum on Democracy and Trade somewhat fulfilled this role in the early 2000s as a permanent institutionalized information exchange solely focused on trade policy. Having a similar consultative body again has been suggested by state leaders in the 2004 IGPAC memo and again in a 2009 testimony before the U.S. House of Representatives Committee on Ways and Means, Subcommittee on Trade. It would be helpful for state officials to understand the magnitude of trade policy for their states. Every state already has a dedicated single point of contact on trade issues, yet these officials’ expertise lies mostly in trade promotional efforts. It would therefore be necessary to stress trade policy over trade promotion, since state officials already have a great deal of expertise in the latter field. The IGPAC has already suggested a commission to conduct research and also facilitate state-federal dialogue on trade policy.2Wilkie, Kay Alison. (2004, August 5). Recommendations for Improving Federal-State Trade Policy Coordination. Retrieved September 4, 2016, from http://www.naspo.org/ita/2/6_IGPACrecommendationsFed-StateCoord_8-4-2005.pdf. Here:pp. 7-8.

Financing any institution or any offerings that educate state officials on the TTIP and similar agreements would be the biggest hurdle. The Forum on Democracy and Trade is an example of how a lack of funding can upend an otherwise functioning system: It was made possible only by private endowments, yet, when those ended, the forum had no other funds available. Neither the states nor the federal level wanted to jump in at the time, but a joint state-federal financing scheme would be ideal to guarantee long-term funding independent of private donors.

IGPAC membership

If the IGPAC (see the post on this body) is to be kept as the major state-federal consultation mechanism, not only does the information dissemination have to change for it to be more effective but also the membership. A 2008 survey by Public Citizen showed that some state legislators favored a consultation body with one representative from each state, while other state legislators deemed this unrealistic.3Bottari, Mary & Lori Wallach. (2009). States’ Rights and International Trade. A Legislator’s Guide to Reinvigorating Federalism and Preserving Policy Space in the Era of Globalization. Public Citizen’s Global Trade Watch. Retrieved December 22, 2015, from https://www.citizen.org/documents/States_Rights_and_Trade.pdf. Here: pp. 51-52. It does seem impractical to have the committee be wholly representative of all the states: Working with 50 or more state officials would hinder decision making within the body and the goal is to focus on broader state issues anyways. To aggregate and articulate these issues, though, IGPAC membership has to become more representative. States of all sizes, regions, economic backgrounds and political color have to be represented as well as the biggest state organizations. Furthermore, vacancies must be filled promptly to ensure continuous dialogue.

More important than the make-up of the IGPAC is the level of engagement of its members. It is not enough to have various state interests represented on the committee, but it is crucial that those officials involved are knowledgeable and have the resources available to participate in the IGPAC’s consultation. A compensation for committee members could be an incentive because unlike the professional lawyers and industry lobbyists working on most of the other USTR advisory committees, the committee work is not state officials’ primary task. It could also be instituted that every negotiation text has to be commented on by at least half or three quarters of the IGPAC instead of relying on a handful of active members. This, in turn, refers back to the previous point of well-educated state officials who are capable and willing to submit their comments and ideas.
From a logistical, financial and environmental point of view, it is understandable that the IGPAC does not always meet in person because its members are spread all over the U.S. Yet, infrequent conference calls, combined with the heterogeneous membership, might not serve the body well. In order to develop a better rapport between the members and foster cooperation and dialogue, an annual IGPAC meeting could be established. This would be a place to discuss overarching trade policy issues apart from a singular negotiation, identify commonalities and divergences between the IGPAC members and then relay these insights to the federal government. Financing and scheduling issues would have to be resolved between the states and the federal government, so that IGPAC members would not have to pay for their participation.

Intergovernmental dispute resolution mechanism and Federalism Council

For those instances when state and federal interests diverge, there is no mechanism to solve potential conflicts. States and the administration rely on the IGPAC to dissolve disputes, but this body is designed solely as a consultative body and has been criticized as not fostering dialogue. Using Congress as an intermediary is a working method employed by state officials when the administration is hard to reach or unresponsive. A more direct line of communication between the USTR and state officials would be valuable, however.

Based on the IGPAC’s work, a rather simple method of direct communication would be to establish a state-federal working group for every issue that has appeared in, say, three IGPAC reports in a row. This would guarantee that a topic such as the ISDS mechanism or procurement would be discussed in depth between the USTR and state officials. Respondents were sure that the USTR knows of the most important state positions already, but corporate interests still dominate the USTR’s work. In order to balance out private actors’ access, a special state-federal working group could deal with potential areas of conflict, as also suggested by the IGPAC with the above-mentioned commission to improve state-federal dialogue on trade policy. Apart from appeasing those critics who lament too big a role for businesses at the USTR, it would help prevent all-out conflict.

Besides such mechanisms for specific topics, the key expertise that the IGPAC can provide should be taken advantage of more. The IGPAC members, as state legislators or officials, as representatives of attorneys general or executive agencies, are primed to offer insights on the overall framework of U.S. federalism. Contrary to industry or other single-issue organizations, states neither are able to nor want to push specific offensive or defensive trade interests in their consultations with the USTR. Instead, they are heavily invested in ensuring their regulatory authority within the intergovernmental system in the U.S. is respected.
States’ perspectives and expertise could be channeled more systematically in a body that researches and advises on states’ roles in U.S. federalism. This would add to state associations, which tend to be rather policy-focused (such as the NGA or NCSL) or have a partisan view towards federalism (such as the ALEC or NCEL), to the judicial system, which is always available to dissolve federalism disputes in highly conflictual circumstances, and to the Office of Intergovernmental Affairs in the White House, which is both policy-focused and under partisan control of the president. It would also be different from the Forum on Democracy and Trade, which was entirely focused on trade policy, and from a proposed National Laboratory on Federalism and Competitiveness, which was suggested to tackle only economic questions.4Katz, Bruce. (2012, February 16). Remaking Federalism to Remake the American Economy. Brookings Institution. Retrieved June 21, 2017, from https://www.brookings.edu/wpcontent/uploads/2016/06/0216_federalism_katz.pdf. Here: p. 12. States can offer perspectives on federalism going beyond a single issue.

An institution with such a broad focus was in existence for a period of time: The U.S. Advisory Commission on Intergovernmental Relations between 1959 and 1996 served to “strengthen the American federal system and improve the ability of federal, state, and local governments to work together cooperatively, efficiently, and effectively.”5U.S. Congress. (1959). H.R. 6904: An Act to establish an Advisory Commission on Intergovernmental Relations (Public Law 86-380). U.S. Government Publishing Office. Retrieved December 2, 2016, from https://www.gpo.gov/fdsys/pkg/STATUTE-73/pdf/STATUTE-73-Pg703.pdf. Individual state advisory commissions on intergovernmental relations used to be in place as well, but their number has declined6Cole, Richard L. (2011). The Current Status and Roles of State Advisory Commissions on Intergovernmental Relations in the U.S. Federal System. Public Administration Review, 71(2), 190-195., contributing to a “demise of intergovernmental institutions.”7Kincaid, John. (2011a). State-Federal Relations: Civil War Redux? In T. C. o. S. Governments (Ed.), The Book of the States 2011 (pp. 21-28). Lexington: The Council of State Governments. Here: p. 26. The Advisory Commission on Intergovernmental Relations did, overall, serve as an institutionalized forum to research and consult on federalism issues. It was defunded in the late 1990s and while some authors have brought it up, they conclude a resurrection in its old or even narrower forms seems unlikely because of today’s high party polarization. Therefore, the basic idea of having a council or advisory body that could bring together state, federal and even international actors to cooperate and solve potential conflicts in U.S. federalism is politically not feasible at the moment but could be pursued at a later point.

Transatlantic ties

Even without challenging the administration’s responsibility to shape foreign policy and negotiate trade deals, states can benefit from establishing deeper and more permanent linkages with European governmental actors. This includes members of regional and national parliaments, members of the European Parliament and executive officials at all governmental levels. Exchanging perspectives on the TTIP informs each side of their most important issues and of the strategies for interest representation. Building alliances across the Atlantic can also help in underlining state associations’ positions: Connections based on common party political preferences, for example linking Republicans with the European People’s Party in the European Parliament, or based on common interests, for instance environmental issues, would foster a transatlantic dialogue and understanding that goes beyond trade and investment.

Got questions or feedback?

If you have comments or questions, please feel free to get in touch via e-mail at research@transatlanticties.com (PGP-Key).

In essence, a combination of existing sister state relationships and trade missions is required that somewhat resembles the federal-level Transatlantic Legislators Dialogue. Sister state relationships focus on people-to-people exchanges, whereas trade missions follow the gubernatorial aim for more exports and investment. A government-to-government exchange is needed in trade policy that allows state officials to engage in regular discussions with their counterparts in Europe. Various state associations have taken a lead on organizing similar exchanges, an educational offer that should be expanded. Again, financing such transatlantic ties would likely prove difficult.