Democrats and liberal activists have added a new argument to their litany of complaints against the Trans-Pacific Partnership, an international trade deal being negotiated by the White House: It would hurt states’ rights.
It’s ironic given that states’ rights is usually associated with conservatives and libertarians, but international trade has a way of scrambling the usual partisan and ideological lines. And it’s one way for the Left to reach out to trade-skeptical conservatives.
The concerns were stoked by attempts by tobacco companies to challenge regulations by using international deals, including a case by a Canadian company that invoked NAFTA’s arbitration provisions to challenge U.S. state regulations.
Little came of those efforts — an arbitration panel rejected the NAFTA challenge in 2011 — but they nevertheless prompted fears among state officials that TPP, which involves 12 countries bordering the Pacific Ocean, could give the companies even more leverage. Tobacco is heavily regulated in the U.S., and the 1998 deal that settled a multi-state lawsuit against the cigarette makers gives states broad power over advertising, product placement and related matters.
“States’ rights? Yes. The right to regulate things like tobacco,” Maine Attorney General Janet Mills told the Washington Examiner. “The [TPP’s] investor settlement provisions could put at risk state and federal health safety regulations and laws that we’ve worked hard for many decades to enact and enforce in the public interest.”
The trade deal would lower tariffs as well as create common standards for intellectual property, labor and state-owned enterprises for the countries, which cover a region comprising 40 percent of the global GDP.
It also would offer legal protections for people investing in TPP countries, creating common standards for applying an individual nation’s trade rules. That’s the section that has critics like Mills worried.
She believes corporations could try to use the investor provisions — the exact wording of which is still being negotiated — to override state-level laws.
Mills’ case was warmly received at a recent anti-TPP forum on Capitol Hill hosted by Rep. Rosa DeLauro, D-Conn., and attended by other Democratic congressmen and representatives of liberal think tanks, activists groups and organized labor.
The argument is making some inroads on the Right, too. A total of 42 state attorneys general, including 18 Republicans, signed a letter to the U.S. Trade Representative earlier this year expressing their concerns over whether TPP “could jeopardize the states’ ability to enforce their laws and regulations relating to tobacco products.”
Proponents of the trade deal call those concerns red herrings, but concede the argument is having an effect.
“I have noticed among some of our members a reticence to enter into trade agreements because they do fear that they will supersede U.S. law,” said Karla Jones, director of the American Legislative Exchange Council’s international relations task force. ALEC is nonprofit group that advocates for free-market regulations at the state level. Its members include state officials.
That happened even after ALEC’s members adopted a model resolution supporting the trade deal. Jones said their more “libertarian-conservative members” still sometimes express concerns.
However, Congress must ratify TPP, and even among conservative trade skeptics, few appear worried about that aspect of the deal.
“We have problems with TPP not properly opening access to Asian markets for U.S. rice and other goods, but I haven’t heard this argument,” said Donny Ferguson, spokesman for Rep. Steve Stockman, R-Texas.
TPP proponents argue the trade laws don’t reach as far as critics claim they do. They note that the NAFTA challenge was rejected by an arbitration panel and that a legal challenge to tobacco packaging regulations in Australia also failed.
“No free-trade agreement has the ability to overturn state or federal law,” ALEC’s Jones said.
In Australia, tobacco companies objected to the country stripping all trademarks and identifiable packaging from cigarette packs. Packs were instead required to be sold in bland solid colors in effort to deter sales by eliminating brand recognition.
The industry challenged that, arguing that trademarks are the company’s property and therefore cannot legally be removed.
The mere fact that the disputes had to be hashed out in court was a problem for free-trade critics. They lobbied the White House to include a carve out in TPP explicitly stating that tobacco lacks the legal protections of other products. The White House angered many last year when it said it wouldn’t go that far.
What precisely the language will be won’t be known until the negotiations are finished. “This deal has been mostly negotiated behind closed doors,” DeLauro said.
This is not the first time the issue of states’ authority has come up. In 2004, the World Trade Organization caused a stir when it said Utah could not block Internet gambling after challenges from the island nations of Antigua and Barbuda.
President Obama is pushing hard for TPP, which he sees as way to counterbalance China’s influence in the Pacific Rim. He said in July he wants the deal completed this year, and earlier this month the administration announced there had been substantial progress in the talks.
Administration officials have been candid that they want the deal in Congress well before the 2016 elections so it doesn’t become an issue then — a sign of how troublesome trade deals can be with the party rank and file.
TPP would include the U.S. and Australia, New Zealand, Canada, Japan, Vietnam, Mexico, Chile, Brunei, Malaysia, Singapore and Peru.
