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Federal Trade Negotiators Poised to Expand WTO Powers at the Expense of State Sovereignty


Dear Fair Trade Activist,

This month, in lieu of GTW's regular monthly e-newsletter, we thought you would be interested in our work at the state and local level. State of Global Trade is a new quarterly newsletter sent to thousands of state and local officials. Read what we just sent below, then contact your governor. You can also read more about GTW's state and local program on our website.

Did you know that at the December 2005 World Trade Organization (WTO) Ministerial Conference in Hong Kong, federal trade negotiators agreed to push for an expansion of WTO powers, which would put an alarming array of existing and future U.S. state and local laws at risk of challenge in closed-door WTO tribunals?

"A growing number of federal, state and local officials around the world have come to recognize that GATS, as it currently exists, contains several provisions that conflict with our ability to effectively and appropriately regulate in the public interest."

  — Oregon Gov. Ted Kulongoski

Under this proposal, foreign countries would be empowered to use the WTO dispute resolution system to challenge a range of commonplace U.S. state and local policies that multinational service sector firms argue are WTO-illegal "barriers" to their plans for global expansion.

Last week, Governor Kulongoski of Oregon acted to safeguard his state's sovereignty by demanding that Oregon be excluded from the U.S. Trade Representative's (USTR) WTO expansion plan.

Read Governor Kulongoski's letter to Ambassador Portman, USTR.

The WTO agreement in question – the General Agreement on Trade in Services (GATS) – went into effect in 1995 as one of the original 17 Uruguay Round agreements enforced by the WTO. The GATS goes far beyond our traditional concept of trade rules, such as tariffs and quotas on goods. Instead, the GATS sets international rules to which every signatory government must conform theirdomestic policies regarding control and ownership of public services and regulation of private-sector service providers. The current GATS rules can be used to second-guess state and local decision-making in many areas of traditional state and local authority under the U.S. system of federalism, such as zoning and land use, health care,gambling, library services and more.

At issue in these new WTO expansion talks is both what service sectors will be covered by GATS rules and what the rules will require. Federal trade negotiators are currently working to expand the GATS by signing up more sectors of our service economy to the agreement's restrictive rules.

Already GATS rules promote privatization and deregulation of services by prohibiting governments from limiting the number of foreign service-providers and discouraging the creation of new public services or exclusive service contracts. GATS rules also prohibit certain domestic policies that have the unintended effect of disadvantaging foreign firms, even if those policies were applied equally to domestic and foreign firms. New services now at risk arehigher education, energy, and more.

Browse Public Citizen's NEW GATS Directory to see what the USTR has put on the negotiating table.

You can make sure that your hands are not tied by federal trade negotiators by working to ensure that GATS expansion does not apply to your state, and by requesting that your state be "carved out" of sensitive service sectors.

The GATS, when applied to areas of traditional state and local authority, treads on the delicate balance between the federal government and the states established by the U.S. Constitution. Unfortunately, over the decade-long track record of the WTO, tribunals have revealed repeatedly their judgment that the U.S. system of federalism is in itself a trade barrier because it segments markets.

You can make sure that your hands are not tied by federal trade negotiators by working to ensure that GATS expansion does not apply to your state. When state officials have raised concerns about GATS, U.S. trade officials have responded that GATS covers only those aspects of the U.S. service economy we choose to submit. Federal trade officials have said that they are seeking state-level input. By requesting that your state be "carved out" of GATS expansion as well as previously committed sensitive service sectors, you can preserve your continued policy space and that of future legislatures.

But, time is of the essence. This week, federal trade negotiators are in Geneva for GATS talks. The EU is demanding that countries show their cards with regards to the services negotiations in a stocktaking exercise by April 30, 2006. State officials interested in safeguarding their authority need to submit their requests to USTR now, before malleable negotiating documents become binding commitments under international and U.S. federal law.

To learn more about what you can do to stop this backdoor form of international preemption, please contact Saerom Park at 202-454-5127.

Thanks for all that you do.

The Global Trade Watch Team

Trade Action in State Capitols

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