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National Association of State Legislators Resolution Affirming and Strengthening President Obama's Recent Order On Safeguarding Federalism In Trade Policy

NCSL thanks President Obama for his commitment to respecting state sovereignty and improving federal-state relations as evidenced by his instructions to Heads of Executive Departments and Agencies to avoid preempting states in their rule-making. This White House order is an important step towards fostering the type of vibrant federalism NCSL seeks.

The U.S. Constitution grants the federal legislative branch authority to set our nationís trade policy, and the Tenth Amendment of the U.S. Constitution empowers states to protect the public interest, including but not limited to public health, safety, and morals. With respect to our international trade commitments, additional steps to safeguard federalism are needed.

Many current international trade agreements constrain the use of particular product and food safety standards; dictate procurement policies and the scope of permitted service sector regulations, and these rules have the effect of pre-empting vital policy space that our federal system of government provides to states to protect the public interest.

Although international trade and investment tribunals cannot directly preempt state laws and policies as a matter of U.S. law, the federal government does have an obligation under these trade agreements, enforced by the threat of trade sanctions, to compel state and local compliance. Thus, trade agreement challenges and threats of challenges of state and local laws with awards of money, damages, and retaliatory tariffs and related sanctions at stake have a pre-emptive effect. As a result, state legislative regulatory authority and policy space is compromised and the rights of states in our constitutional system are reduced.

Therefore, the Presidentís executive order should apply whenever such international agreements or treaties can result in challenges to state laws and policies before international tribunalsóparticularly in light of the fact that these rules can be enforced by retaliatory trade sanctions or awards of money damages.

NCSL requests that the White House communicate to the Office of the United States Trade Representative (USTR) in the Executive Office of the President that the Presidentís instructions with respect to preemption in rule-making apply to trade agreement negotiations and implementation.

NCSL requests that the President by executive order clarify that trade and investment agreements and bi-lateral investment treaties negotiated by the USTR should avoid conflicts with state governing authority, under the same terms as the executive order on preemption.

NCSL requests that the President establish, by executive order, a more effective federal-state consultation system that includes greater involvement and notification of state legislatures. Meaningful and early involvement by state and local officials in the trade agreement policymaking and negotiating process can help avoid the effective preemption of state and local policy by trade pacts.

Original document on ncsl.org.

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