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May 16, 2005

New Hampshire Joins Majority of States in Rejecting CAFTA’s Restrictions on State Procurement Policy

Governor’s Action Adds to State Officials’ Growing Opposition to Trade Pacts That Undermine Sovereignty and Democracy; Again Highlights Broad CAFTA Objections

WASHINGTON, D.C. – New Hampshire Gov. John Lynch’s decision to pull his state out of the procurement provisions of the Central America Free Trade Agreement (CAFTA) underscores the growing dissatisfaction with the pact, Public Citizen said today.

On May 13, Lynch rescinded his predecessor’s commitment to bind the state to the government procurement provisions of CAFTA and other proposed bilateral and regional trade agreements, bringing the total count of state governments agreeing to be bound by the pact’s restrictive rules down to 19 out of 50.

“Not only is CAFTA facing stiff opposition in Congress, but elected officials outside the beltway – Republicans and Democrats alike – are making their dissatisfaction with CAFTA known,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “More and more state governments are rejecting CAFTA’s terms because they would undermine their authority to decide democratically how taxpayer dollars are spent.”

Because government procurement is an intrinsic function of sovereign governments, states can choose whether or not to be bound by related trade agreements’ terms. While 28 states originally signed up to be bound by CAFTA, now eight governors and one state legislature have since withdrawn their states’ consent, and officials from several additional states are contemplating similar moves.

CAFTA’s chapter on government procurement places binding restrictions on the criteria that states can use when evaluating bids for contracts. These restrictions forbid giving preferences to local companies or requiring that contractors employ local workers, the thrust of “anti-offshoring” legislation introduced in more than 30 states.

In addition, CAFTA prohibits many common purchasing policies that treat foreign and domestic suppliers alike. For example, “green” purchasing requirements that require recycled content, mercury-free goods, renewable energy or green building standards are prohibited under CAFTA, as are procurement policies that place conditions on suppliers, such as requiring that suppliers pay a living or prevailing wage or provide health care for their workers. If a state policy is challenged and ruled to be out of compliance with the trade agreement, the law must be eliminated or changed, or the United States will face trade sanctions.

“In rejecting these provisions, the states are drawing a line in the sand between private sector trade and government procurement,” said Sara Johnson, state and local outreach coordinator for Public Citizen’s Global Trade Watch. “Governments have historically used their purchasing power to advance social, environmental and economic development goals. Restrictions on how governments spend their own tax revenue have nothing to do with traditional trade matters of tariffs and quotas and simply don’t belong in so-called ‘free trade’ agreements.”

The same provisions that apply to state purchasing policy also apply to the vast majority of federal government procurement policy under CAFTA.

Other states that have rescinded their commitments to CAFTA’s procurement rules are Iowa, Kansas, Maine, Maryland, Minnesota, Missouri, Oregon and Pennsylvania.

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