To: Sander M. Levin, Chairman
House Ways and Means Subcommittee on Trade
Thank you very much for convening a hearing on the future of the U.S. Trade Advisory Committee system, and for taking written comments from interested parties. As a group of state legislators concerned with how international trade rules affects our states, we are grateful for the opportunity to provide our perspectives.
In the last several years states have observed first-hand some of the impacts of international trade agreements, and aggressive actions by trading partners:
- *NAFTA Chapter 11 claims brought against California’s regulatory ability to protect public health and the environment. We appreciate the vigorous defense mounted by the U.S. State Department in arguing against those claims; but we would also note that despite a favorable outcome in the Methanex and Glamis cases, the California Department of Justice was not compensated for the considerable time and expense that they had to devote to defending themselves. We view this as an unfunded mandate—something states can ill afford in the present budget climate.
- *Threatening letters sent by the People’s Republic of China to state legislators in Vermont and Maryland regarding bills introduced in those states dealing with lead content in toys, and electronic waste. China claimed that the bills would violate the World Trade Organi-zation Technical Barriers to Trade agreement. We dispute the validity of the claim; but equally important, we think it’s totally inappropriate that the Department of Commerce would notify China about pending state legislation.
- *The WTO case brought by Antigua against the United States on internet gambling. The WTO found that the U.S. had made such a commitment binding gambling under the services agreement. We appreciate that the U.S. withdrew its WTO commitment, largely as a result of pressure from states that ban all forms of gambling (Utah and Hawaii), but the case has led to a messy and still-unresolved dispute with a number of countries regarding the withdrawal of the commitment that could negatively affect businesses through the U.S.
- *Threatened challenges to California’s Low Carbon Fuel Standard and to greenhouse gas reduction strategies in the 10 Regional Greenhouse Gas Initiative states in the northeast. The federal government of Canada and the Province of Alberta are trying to block the leadership of the states in grappling with these urgent climate change issues by citing WTO and NAFTA rules.
- *Retaliatory tariffs taken by Mexico as a result of a NAFTA Trucking Case that is causing severe hardship to many of our agricultural producers and manufacturers.
We support efforts made by the Office of the United States Trade Representative to open up new markets for American goods and services. We believe that this can be done in a way that safeguards U.S. federalism, and doesn’t put state laws or regulatory authority at risk, or that causes unexpected shocks to our businesses because of retaliatory actions.
To avoid such shocks, and to safeguard U.S. federalism, there needs to be better communication between U.S. trade negotiators and state leaders. There should be regular and open communi-cation between the Office of the United States Trade Representative (USTR) and ALL the states.
Right now, fewer than half the states are represented on the InterGovernmental Policy Advisory Committee (IGPAC). It is hard to feel that USTR takes IGPAC seriously when there have been so few face-to-face meetings between state leaders and our trade negotiators, and also when USTR posts on its new website a roster of IGPAC members that is several years out of date.
It cannot be expected that states will support existing trade policy when there is so little consultation. States will seek to opt out of agreements about which they are not consulted.
We urge Congress to mandate a regular schedule of face-to-face meetings between the states and USTR, and a review of transparency policies regarding trade so that the states can have a clearer idea of what trade and investment issues are on the table prior to the start of negotiations. This can be done as part of the formal trade advisory committee system, but the commitment to consultation should go beyond that.
We note that several state trade commissions, as well as IGPAC, have put forward concrete proposals for how to reform federal-state consultation on trade. We urge you to give serious consideration to these ideas.
- *State legislators supporting this letter appreciate the Trade Subcommittee’s consideration of this important issue of the formal trade advisory committee system.
- *IGPAC and state commissions have made specific recommendations for improving USTR’s consultation with states that have implications for the future of the trade advisory committee system.
- *Consultation with the states needs to go beyond the formal advisory system and include a regular schedule of meetings with state leaders and with the national associations such as NCSL that support our interests.
- *If states are to remain supportive of US trade policy, they must be consulted regarding the content of that policy.
- *States should be allowed to opt-in or out of the non-tariff provisions in trade agreements on procurement, services and investment.
Thank you very much for the opportunity to comment.
Maralyn Chase, Washington House of Representatives and Chair, Joint Oversight Committee on International Trade