By STATE REP. CHUCK ISENHART, Dubuque
For two years, along with other state legislators, I have waved yellow flags about the Pacific and European trade deals being negotiated by the Obama Administration.
As Congress moves to give the president authority to “fast-track” trade treaties with other nations — meaning Congress would give up its ability to change the agreements — those flags are turning red.
Why do state legislators care? Proposed language in the Trans-Pacific Partnership agreement could threaten our ability to enforce state laws. This undermines the 10th Amendment of the U.S. Constitution: “Powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States.” Congress may give the President the ability to effectively negotiate this amendment away.
The contested provision relates to “investor-state dispute settlement,” where “state” refers generically to governments and “investor” refers generally to private corporations.
Foreign corporations could use such language to seek millions of dollars in damages challenging state laws that supposedly “restrain trade,” “discriminate” against them or otherwise create burdens that affect their sales and profits. Cases would come before special arbitration tribunals involving corporate trade lawyers rather than independent judges accountable to voters or appointed by people we elect.
A recent decision under the North American Free Trade Agreement shows the dangers of this system. In Bilcon vs. Canada, a panel ruled that Nova Scotia violated NAFTA when the province denied Bilcon a permit to develop a marina and quarry, based on environmental and community impacts. The firm could have appealed to the Canadian courts but instead is taking a second bite at the apple by seeking $300 million in damages under NAFTA, a remedy not available under domestic law.
Senator Virginia Lyons of Vermont and I recently renewed our concern in a letter to Congress signed by 110 legislators from 41 states, including eight others from Iowa (Rep. Jerry Kearns, Senator Bill Dotzler, Rep. Charlie McConkey, Rep. Art Staed, Rep. Bruce Hunter, Rep. Marti Anderson, Rep. Dan Kelley and Rep. John Forbes).
Last year, we wrote to the attorneys general of our states to ask for their opinions. While Iowa Attorney General Tom Miller has yet to formally respond to our inquiry, he has reportedly joined in a separate letter from the association to the U.S. Trade Representative.
Iowa’s consumer protection laws and Attorney General Miller’s own storied tobacco settlement could be unraveled through investor-state proceedings that apply vague standards such as “regulatory coherence” and “minimum standard of treatment.”
State courts recognize the threat. David Boyd of Iowa is president of the national Conference of State Court Administrators. COSCA has stated that trade agreements should not create “a procedure for foreign investors to challenge state court judgments that is not available to U.S. citizens and businesses” and that these challenges should not “undermine the enforcement and finality of state court judgments.”
However, state courts are not at the bargaining table, and only two state legislators were among the 600 “cleared advisors” to the negotiations. One of those — my colleague Sharon Treat — was just term-limited out of the Maine Legislature. Meanwhile, virtually every business and industry group is represented on the panels.
The National Conference of State Legislatures has observed and documented the “chilling effect” of these deals on even non-discriminatory state laws such as electronic waste producer responsibility laws, regulation of water extraction, bans on toxic chemicals in consumer products, tax haven restrictions, tobacco labeling and taxation, pipeline safety, as well as economic development incentives and local procurement statutes.
International oil companies could use the process to attack advanced biofuel subsidies and preferences. Would a foreign corporation be able to question the denial of a state crude oil pipeline permit?
State legislators support expanded trade that benefits our employers and workers. We are not opposed to giving the president greater flexibility and authority in such negotiations. We want to protect our own power and that of our governors.
Whether or not the president gets “fast track” powers, the decision to put states’ rights at risk still hangs in the balance. Our lack of participation in the consultations combined with the lack of visibility of what is being negotiated gives us pause. We can’t see and we don’t have a say.
The next nine months will be pivotal. Iowa’s best chance to influence the trade negotiations may be by pressing President Obama’s potential successors for their views. Do the rights of foreign corporations exceed the rights of citizens when it comes to our freedom to make and enforce laws in our states?
State Rep. Chuck Isenhart (D-Dubuque) is ranking member of the House Environmental Protection Committee and a member of the National Caucus of Environmental Legislators.