Nafta and the Changing Role of State Government in a Global Economy: Will the Nafta Federal-state Consultation Process Preserve State Sovereignty?

• Publication year: 1996

UNIVERSITY OF PUGET SOUND LAW REVIEWVolume 20, No. 1FALL 1996

NAFTA and the Changing Role of State Government in a Global Economy: Will the NAFTA Federal-State Consultation Process Preserve State Sovereignty?

A]. Tangeman

I. Introduction

Over the last several years, state and federal officials have become increasingly concerned about the security of state sovereignty in the face of the United States government's aggressive trade policy.(fn1) As barriers among countries diminish and the domestic and foreign spheres of government become more integrated, a state's ability to regulate and protect its interests and citizens appears to have become secondary to the federal government's objective of promoting free trade.(fn2) This conflict between free trade and state sovereignty has made it more difficult to define the role of individual American state governments in international trade policy(fn3) and has added to states' fears that the federal government will impermissibly compromise their interests.(fn4)

The rapid rate of globalization(fn5) is cited as one factor which aggravates this conflict.(fn6) International trade agreements(fn7) are an impetus for globalization and add to state sovereignty concerns because the agreements limit a state's ability to autonomously conduct trade and regulate its interests.(fn8) On the other hand, the federal government is obligated under trade agreements to institute uniform standards to facilitate the freer movement of goods, services, and people.(fn9) Thus, there is a growing imbalance within our current federalist system of government because the federal government's obligation to establish uniform standards under free trade agreements conflicts with state governments' interests in protecting citizens and industries.

NAFTA has brought the state sovereignty issue to the political forefront because it illustrates this conflict between the promotion of free trade and the preservation of state autonomy.(fn10) Under NAFTA, states are to be informed of and included in trade negotiations that directly affect their interests.(fn11) However, while the U.S. government may not want to imperil its relationship with state governments, its primary objective remains to negotiate a politically satisfying settlement that will not ultimately hinder the progress of free trade. Therefore, what remains to be seen is whether states are indeed allowed to play a role in international trade negotiations that affect their interests. To appreciate the American states' predicament under NAFTA, this Comment will examine a hypothetical dispute to illustrate the conflict between free trade and state autonomy. This hypothetical dispute introduces the situation that would arise if Mexico, a NAFTA member, imposed a heightened agricultural import requirement for health and safety reasons under NAFTA Sanitary and Phytosanitary (S and P) Measures.(fn12)Suppose that Mexico introduces a new requirement that U.S. sweet cherries be fumigated to eliminate agricultural pests, severely affecting three American states. However, the U.S. believes that the fumigation requirement is unnecessary because Mexico does not have a developed sweet cherry industry that requires such a protective measure, and an inspection and certification procedure, similar to the one already in place, would be sufficient to eliminate the risk of pests. Moreover, the U.S. also has reason to believe that Mexico has instituted the requirement to pressure the U.S. into lowering its standards for the import of certain Mexican agricultural products.

Under NAFTA guidelines, the affected states should be informed and included in negotiations because the new requirements could pose serious economic consequences for the states,(fn13) but the states' interests may hinder the U.S. government's ability to solve the issue in a politically expedient way. What happens then if the U.S. government does not uphold its obligations to states under NAFTA? Is there a negative impact on state sovereignty? If so, do states have a constitutional right, as well as a method, to safeguard against such an intrusion on their sovereignty?

Both state and federal leaders will need to work together to preserve state sovereignty in the face of challenges posed by trade agreements. The U.S. government has no constitutional obligation to consult with individual states when negotiating trade agreements.(fn14) It does, however, have an obligation under NAFTA to "consult with the States for the purpose of achieving conformity of State laws and practices with the Agreement."(fn15) Greater federal-state communication will balance the struggle between the federal government's goal in promoting free trade and individual state governments' interests in protecting their sovereignty.

Part II of this Comment examines the federalist principles that influence the existing federal-state framework of authority. Part II also discusses the federal government's constitutional authority over state compliance with U.S. trade obligations and whether states have any constitutional or legal authority to demand more autonomy in conducting their trade and commerce.

Part III introduces NAFTA and discusses the U.S. government's obligation to individual states under NAFTA to consult with states in trade matters that will affect state interests. Part IV then examines how the NAFTA federal-state consultation process can serve as a safeguard against the federal government's infringement on state sovereignty.

This Comment concludes that NAFTA, by requiring increased communication between federal and state government leaders, can have a positive impact on state sovereignty. Because the federal government is obligated under the NAFTA federal-state consultation process to include states in on-going NAFTA trade policy decisions and negotiations,(fn16) a balance between free trade and state sovereignty is attainable. Using the NAFTA consultation framework as a model, the federal government and the states now have the opportunity to promote free trade and preserve state sovereignty.

II. American Federalism and the Price for Free Trade

The principle that individual states' power be properly balanced against the federal government's power in order to protect the rights of American citizens dates back to our country's foundation.(fn17) Although our federal system of government is structured such that a healthy balance between state and national governments is struck, the pendulum of economic, political and social change often swings far and throws off balance the equilibrium established between the two powers. Thus, when international trade policy conflicts with a state's traditional role of regulating and protecting its interests, the balance in our federal system of government is upset. This Comment next explores the U.S. government's foundation in federalism and how that foundation requires that a balance be maintained between federal and state government.

A. The Origins of American Federalism

The United States has a federalist system of government under its Constitution.(fn18) This system, whereby the national government and the government of each of the fifty states coexist, developed out of the tumultuous relationship that existed between the original thirteen states and the national government under the Articles of Confederation.(fn19) Under the Articles, the national government was paralyzed because it had no means with which to exercise power over the people directly, had no authority to make and enforce binding law, and had to rely on the states' voluntary cooperation.(fn20)

The effect of this disunity upon the nation's economy and its role in world politics was the main concern of the politicians who gathered at Philadelphia in 1787 for the drafting of the Constitution.(fn21) The Antifederalists advocated against ratification of the Constitution because it took too much power from the state governments.(fn22) They saw the states, rather than a central government, as the best guardians of the citizens.(fn23) On the other hand, the framers of the Constitution saw a central government representing one unified view as being more effective in pursuing national interests.(fn24) Consequently, an important debate evolved around the role and function of the two systems of government.(fn25)

The compromise reached by the convention was to adopt a "federal" system of government in which the maintenance of the states and their governments would be as important to the preservation of the Constitution and the Union as the safekeeping of the national government.(fn26) To ensure the institution of a strong central government that was properly balanced against independent state governments, the framers drafted a Constitution that "established a more perfect union by substituting a national government, acting, with ample power, directly upon the citizens, instead of the Confederate government, which acted with powers, greatly restricted, only upon the States."(fn27) The Constitution gives Congress the power to regulate individuals, not states,(fn28) by founding the federal system of government on two principal premises:[t]he first was structural: it involved "engrafting" the system of national government onto the existing system of states by giving the states as such a direct representation in Congress and by leaving with the states major powers in controlling the...