Federalism - How Federal Trade Agreements Can Apply to State and Local Law and Policy
Rules outlined by Free Trade Agreements apply to national governments, yet state and local laws that violate Free Trade Agreements have brought challenges from our trading partners. Dispute panels do not have the authority to directly challenge state laws, yet they can penalize the federal government for the actions of states. Below are two examples of older cases - one brought before the GATT and one before the WTO - in which subfederal laws were found to be in violation of Trade Agreements.
Provisions in National and International Law
- Section 102(b)(2) of
NAFTA Implementing Legislation (Pub. L. No. 103-182, 107 Stat. 2057)
Legal challenge.--No State law, or the application thereof, may be declared invalid as to any person or circumstance on the ground that the provision or application is inconsistent with the Agreement, except in an action brought by the United States for the purpose of declaring such law or application invalid.
Agreement on Tariffs and Trade: Article XXIV:12
Each Member is fully responsible under GATT 1994 for the observance of all provisions of GATT 1994, and shall take such reasonable measures as may be available to it to ensure such observance by regional and local governments and authorities within its territory.
Dispute Resolution: India — Patent Protection for Pharmaceutical and
Agricultural Chemical Products. 1996
"In public international law, an international tribunal may treat municipal law in several ways. Municipal law may serve as evidence of facts and may provide evidence of state practice. However, municipal law may also constitute evidence of compliance or non-compliance with international obligations. " - para. 65.
Panel Report, “United States – Measures Affecting Alcohol and Malt Beverages."
"Article XXIV:12 obligated the United States to compel state adherence to the GATT... GATT was thus superior to state law." - para 3.133
- Brief Reports from the House Ways and Means Committee; House Energy and Commerce Committe, and Senate Finance Committee
- Canadian Centre for Policy Alternatives: How the GATS Undermines the Right to Regulate
- Public Citizen Report: States Rights and International Trade
- Memo from Robert Strumberg on Revised U.S. Offer of Specific Commitments Under GATs