Rep. Chuck Isenhart: Do trade deals hide threats to state laws?


For the past two years, along with other state legislators, I have been waving yellow flags about the Pacific and European trade deals being negotiated by the Obama administration.

[Reposted from The Des Moines Register  |  Rep. Chuck Isenhart  |  May 14, 2015]

As Congress moves to give the president authority to "fast-track" trade treaties with other nations — meaning Congress would give up its ability to change the agreements — those flags are turning red.

Why do state legislators care? Proposed language in the Trans Pacific Partnership agreement developed out of the public eye could threaten our ability to enforce state laws. This basically undermines the 10th Amendment of the U.S. Constitution: "Powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States." Congress may give the president the ability to negotiate this amendment away.

The contested provision relates to "investor-state dispute settlement," where "state" refers generically to governments and "investor" refers generally to private corporations.

Foreign corporations could use such language to seek millions of dollars in damages challenging state laws that supposedly "restrain trade," "discriminate" against them or otherwise create burdens that affect their sales and profits. Cases would come before special arbitration tribunals involving corporate trade lawyers rather than independent judges accountable to voters or appointed by people we elect.

A recent decision under the North American Free Trade Agreement illustrates the dangers of this system. In Bilcon vs. Canada, a panel ruled that Nova Scotia violated NAFTA when the province denied Bilcon a permit to develop a marina and a quarry based on environmental and community impacts. The firm could have appealed to the Canadian courts but instead is taking a second bite at the apple by seeking $300 million in damages under NAFTA, a remedy not available under domestic law.

Sen. Virginia Lyons of Vermont and I recently renewed our concern in a letter to congressional leaders signed by 110 legislators from 41 states, including eight others from Iowa (Rep. Jerry Kearns, Sen. Bill Dotzler, Rep. Charlie McConkey, Rep. Art Staed, Rep. Bruce Hunter, Rep. Marti Anderson, Rep. Dan Kelley and Rep. John Forbes).

Last year, we wrote to the attorneys general of our states to ask them for their opinions, since it would presumably be their jobs to defend state laws. Iowa Attorney General Tom Miller is vice-chair of the Federalism/Preemption Committee of the National Association of Attorneys General. While he has yet to formally respond to our inquiry, he has reportedly joined in a separate letter from the association to the U.S. trade representative.

Iowa's consumer protection laws and Attorney General Tom Miller's own storied tobacco settlement eventually could be unraveled through investor-state proceedings that apply vague standards such as "regulatory coherence" and "minimum standard of treatment."

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