Successes and failures of state interest representation in the NAFTA negotiations
With the renegotiation of the North American Free Trade Agreement (NAFTA), at the urging of U.S. President Donald Trump, the agreement between Canada, Mexico and the U.S. has come under intense scrutiny more than 24 years after it went into effect. Among all the speculation on whether the president intends to withdraw from the deal or whether he is bluffing, the effects of any revised deal will be felt heavily at the state level. That’s why many governors and state politicians have been speaking out on the talks. But what can state governments achieve, when they’re not even officially involved in the talks?
In the relaunch of the NAFTA negotiations, governors quickly emerged as key actors, especially as potential pro-NAFTA allies for the Canadian and Mexican national governments.1Cassella, Megan. (2017, July 15). U.S. governors are wooed on NAFTA – by Canada and
Mexico. Politico. Retrieved September 8, 2017, from
http://www.politico.com/story/2017/07/15/governors-wooed-on-nafta-240582; Robichaud, Jesse. (2017, August 27). Atlantic premiers, eastern U.S. governors take centre
stage in NAFTA talks. The Hill Times. Retrieved September 8, 2017, from
https://www.hilltimes.com/2017/08/27/atlantic-premiers-eastern-u-s-governors-takecentre-stage-nafta-talks/117245 This was underlined by Canada’s Prime Minister Justin Trudeau becoming the first national leader to address a meeting of U.S. governors (Patton, 2017). Looking back at the original NAFTA talks, governors are continuing their engagement on the North American trade deal.
Governors and state legislators: Noncentral voices in the NAFTA negotiations
The controversies and emotional debates surrounding the NAFTA renegotiations are nothing new: The trade deal was controversial even back when it was originally being drawn up. Controversy swirled around the NAFTA in all three member countries but especially in the U.S. The agreement was negotiated for the U.S. by the administration of President George H. W. Bush but ratified under President Bill Clinton, who faced tough opposition from some members of Congress and particularly labor and environmental activists. The latter groups staged a high-level lobbying effort against the NAFTA, which made ratification doubtful at some point. In the end, though, the proposed agreement passed both chambers of the U.S. Congress and it went into effect on January 1, 1994.
Several governors’ associations, including the National Governors Associations (NGA), spoke out on the NAFTA, 20 state legislatures passed resolutions on the NAFTA, Minnesota released a study on the proposed agreement’s effects, North Carolina and Washington installed commissions to scrutinize the NAFTA and the National Conference of State Legislatures (NCSL) also published a statement on the trade deal.9Kaiser, Robert. (1998). Regionale Integration in Europa und Nordamerika: Vergleich von Europäischer Gemeinschaft (EG) und Nordamerikanischer Freihandelszone (NAFTA) unter besonderer Berücksichtigung bundesstaatlicher Organisationsreformen in Deutschland und den USA. Baden-Baden: Nomos. Here: p. 207-208. The majority of states were for the NAFTA, but no matter the opinion on the agreement, it is evident that state executives, legislatures and other state bodies were involved in interest representation on the NAFTA.
Questions on state sovereignty add a different dimension to the NAFTA debates
Just like during the renegotiations, many of the 1990s resolutions and statements (as well as most of the general political and media debate) dealt with the NAFTA’s expected economic effects, such as job losses and gains. But with international trade agreements, questions of state sovereignty are another crucial aspect for state governments to address. After an international agreement is signed, its rules are not automatically superior to state laws.10Aceves, William J. (1995). Lost Sovereignty? The Implications of the Uruguay Round Agreements. Fordham International Law Journal, 19(2). Here: p. 461. Trade agreements such as the NAFTA or the TTIP first have to become U.S. federal law to take effect. Since federal law supersedes state laws, the international trade rules are only superior to state regulations once enacted at the federal level.
Two side agreements, which President Clinton negotiated after the actual NAFTA text had already been finalized, offered a chance for the states to secure promises from the federal level that their own laws could not be preempted under the NAFTA.13Paarlberg, Robert L. (1995). Leadership abroad begins at home: U.S. foreign economic policy after the Cold War. Washington, D.C.: Brookings Institution. Here: p. 77. However, some members of the IGPAC at the time offered individual comments, which were added to the official report, that stated the need for considering even stronger labor and environmental laws. Overall, the 1992 IGPAC report on the NAFTA was favorable towards the proposed agreement, but it also criticized the lack of access to the text and the limited time frame for states to comment on the proposed agreement. The IGPAC demanded a stronger say in the implementation of the agreement: “IGPAC calls upon the federal government to establish a formal mechanism for consultation and coordination with state and local governments regarding the implementation of pertinent aspects of trade agreements, including NAFTA.”14Thompson, Tommy. (1992). Report of the Intergovernmental Policy Advisory Committee for Trade on the North American Free Trade Agreement. Here: p. iv.
That the NAFTA binds states is by itself not a menacing circumstance for the states, were it not also for the fact that states had so few formal ways to help develop the NAFTA rules. As described above, negotiations were dominated by the federal level and state interest representation was relegated to studies, proclamations and gubernatorial contacts in Congress. Even these rather weak, disjointed and informal ways of interest representation did lead to some successes for the states, however:
What concessions did the states achieve in the NAFTA talks?
- Grandfathering of laws: U.S. states were allowed to keep already existing state laws that conflict with the NAFTA regulations, a process known as grandfathering. This meant that some discriminations to be eliminated by the NAFTA were kept in place. For example, U.S. states were explicitly excluded from the public procurement rules in the NAFTA, so they could continue favoring state-based businesses in their procurement processes.
- Guaranteed cooperation between the USTR and the states on law conformities: The federal government pledged to help states in conforming their laws to NAFTA standards and to involve the states in developing positions on NAFTA issues.
- Establishment of the NAFTA Coordinator for State Matters: Acting as a liaison between states and the federal government, this position is a guaranteed way for states to be involved in trade matters, but it is nevertheless a weaker option than involving states directly in the NAFTA dispute resolution mechanism. The mechanism for resolving trade conflicts between the three member countries is not open to the states immediately but only to the federal level. States can defend their laws in dispute settlements only with federal permission, so ultimately, the central government remains the dominating power in dispute settlement.
- Establishment of the State Single Point of Contact (SPOC) system: A further mechanism for states to exchange information with the federal level is the State Single Point of Contact. Every state must designate an official responsible for relaying information regarding trade policy matters to the USTR and for disseminating information from the USTR to state agencies.
- Participation in NAFTA committees and institutions: The federal government’s general reluctance to include the states in the negotiations carried over to the establishment of NAFTA institutions. States are not completely shut out, but their participation in the commissions created by the NAFTA is limited. For example, while the Border Environment Cooperation Commission has members from the public and private sectors representing the states, there is only one state member allowed on the Joint Public Advisory Council, which advises the North American Commission on Environmental Cooperation.
In constitutional and formal terms, the federal level asserted its primacy in U.S. commercial and trade policy with the NAFTA negotiations. In political terms, however, it became clear that federal actors could not ignore states’ interests.17Smith, Michael & Stephen Woolcock. (1993). The United States and the European Community in a transformed world. London: Pinter. Here: pp. 50, 103. States achieved a certain level of influence through various structures established in the aftermath of the NAFTA ratification. By the time the negotiations for the free trade agreement were underway, states had realized how intricately and irreversibly they are connected to the international economy and how important it is to make their voices heard on trade matters that affect them.