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How does trade affect North Carolina's manufacturer's and courts?

How do international trade agreements impact small and medium sized manufacturers, such as North Carolina's wooden bedroom furniture producers?  

Small and medium sized manufacturers and their employees face tough and sometimes unfair competition from Chinese and other foreign manufacturers.  But often they have a hard time getting a respectful hearing of their concerns from the Office of the U.S. Trade Representative or the U.S. Department of Commerce.

North Carolina furniture manufacturers have been forced to close local plants and outsource manufacturing to Chinese and other low-labor-cost foreign manufacturers.  Major North Carolina manufacturers of wooden bedroom furniture operated 125 woodworking plants in 1997.  By 2007, 80 percent of these plants were closed.  The surviving bedroom furniture manufacturers complain that the U.S. Department of Commerce is not effectively enforcing a U.S. anti-dumping order applied to Chinese producers.

The Economic Policy Institute estimates that from 2001 to 2006 North Carolina suffered a net loss of 77,200 jobs (amounting to a 2 percent share of total state employment in 2001) due to growing trade deficits with China .  As a share of total employment, North Carolina's job losses resulting from the trade deficit with China were the second highest in the U.S.A.  Many of those jobs were lost when the furniture woodworking plants closed.

North Carolina wood furniture workers could not compete because China directly subsidizes export industries, pegs its currency artificially low (an effective subsidy of 40 percent according to EPI), and denies basic labor rights to its industrial workers, resulting according to EPI in a 47 percent to 85 percent suppression of Chinese wage levels.

North Carolina officials and the Governor of North Carolina, in particular, share the concerns expressed by the wooden bedroom furniture industry and other North Carolina manufacturers. And, they have urged the U.S. Department of Commerce and the Congress to more effectively enforce U.S. anti-dumping laws and generally to address the unfair China trade deficit.  The problem is that the current system for state/federal consultation on trade policy is inadequate

How do international trade agreements impact state courts?

International investment agreements are controversial because they allow foreign investors to file claims for money damages in compensation for federal, state, or local court decisions that are alleged to be in violation of international law. For example, in Loewen v. United States, a NAFTA investment tribunal explicitly found that judicial decisions are "measures" covered by NAFTA's chapter 11 on investment, which may be reviewed by an international tribunal, and which may be the basis for a claim of money damages.  Thus, questions are raised about the finality of U.S. and North Carolina court decisions, about the independence of U.S. courts from political and economic pressure, and about what might happen in the future if a U.S. Supreme Court decision comes under review by an international investment tribunal.

What are the options for addressing these problems ?


Advocacy by governors to protect state sovereignty and the integrity of the state court system and to ensure that the concerns of home-state industries are heard in Washington could be far more effective if 2009 trade promotion authority (TPA) legislation or some similar act of Congress mandated more extensive state-federal consultation on trade policy issues.  

As noted above, governors may also want to urge Congress to reform international investment agreements to ensure that such agreements do not give foreign companies new substantive and procedural rights, beyond what is provided in the U.S. Constitution, to challenge laws and regulations that have been passed in a democratic way and to insure that the legitimacy and finality of state court decisions are respected.

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