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July 10, 2007

Hawaii Becomes Third State to Enact Legislation on Trade to Safeguard State Legislative Authority and Federalism

Legislature Overrides Governor’s Veto of Trade and Procurement Bill; Heeds Public Call for New Accountability in Trade Negotiations

WASHINGTON, D.C. – The Hawaii Legislature’s adoption of a cutting-edge trade and procurement bill will ensure that future trade agreements do not undermine the premise or practice of federalism or Hawaiian state sovereignty and signals the nationwide political discontent with current U.S. trade policy, Public Citizen said today. The Legislature, which originally approved the measure in early May, overrode the governor’s veto tonight.

The legislation (HB30 HD2 SD1 CD1) gives the Hawaii House and Senate the authority to approve or reject any requests from the federal government that would bind the state to conform its state procurement policies to future trade agreements. The same policy has been enacted in Maryland and Rhode Island. The past practice of federal officials binding state procurement laws to comply with trade pact restrictions has been particularly controversial given trade pact procurement rules that ban such measures as anti-off-shoring policies, local purchasing preferences, recycled content or renewable energy requirements and other common policies.

“This is good news for Hawaiians, but it is also a win for state and local officials across the country who are demanding new accountability over federal trade negotiators,” said Lori Wallach, director of Public Citizen’s Global Trade Watch division. “State and local officials have increasingly become aware that today’s ‘trade’ agreements include many non-trade obligations directly affecting the jurisdiction of local lawmakers. How Hawaii chooses to spend its taxpayer dollars should be decided by Hawaiians through their democratically elected legislature with approval by their governor – not imposed top-down by foreign trade agreements.”

Today’s legislation is a response in part to attempts starting in late 2003 by the U.S. Trade Representative’s (USTR) office to obtain blanket sign-on rules from governors to bind their states’ laws to the procurement rules set forth in an array of trade agreements with several dozen countries – including many agreements not yet even negotiated. The USTR has rebuffed state legislators’ requests even simply to be given notice when the USTR asks governors to bind their states to trade agreement procurement provisions.

This intensified the concern shared by legislators in many states about whether governors had the constitutional authority to unilaterally bind state procurement policy to conform to trade pacts, given that almost all states’ constitutions authorize the legislative branch – not the executive branch – to set procurement policy.

The Hawaii Legislature’s action on this issue follows a fair trade election sweep in 2006 in which incumbents who had voted for the U.S. trade status quo of the North America Free Trade Agreement (NAFTA), the World Trade Organization (WTO) and Fast Track were replaced by fair traders in 37 congressional seats who rejected these failed policies and advocated improvements. In Hawaii, fair-trader Rep. Mazie Hirono replaced Rep. Ed Case who had supported various NAFTA expansion agreements.

“Hawaii’s legislators today heeded their voters’ call for a new approach to trade policy by reclaiming from overreaching ‘trade’ agreement requirements the ability to promote Hawaii’s social, environmental and economic development goals,” said Wallach. “Creating new, orderly avenues for state legislatures to have input into U.S. trade policy will help ensure we can obtain the benefits of both a healthy federalist democracy and trade.” 

The Hawaii Legislature’s veto override comes at an auspicious moment. Fast Track trade authority, which delegates to the president Congress’ constitutional trade policymaking authority, expired on June 30. Congress is not expected to grant President Bush new Fast Track authority. Debate has shifted toward what new mechanism for negotiating trade agreements could ensure better outcomes. Fast Track enabled the limited-debate, no-amendment passage of a series of trade deals that have proved damaging to American workers and the economy.

Since the passage of NAFTA and the WTO enabled by Fast Track authority, the United States has seen its trade deficit balloon from under $100 billion to $800 billion, seen three million manufacturing jobs offshored and median real wages remain flat – even as worker productivity has soared. Meanwhile, scores of domestic non-trade laws have been challenged before foreign tribunals established under the ‘trade’ pacts, including state laws on zoning, toxics and mining.

“The Hawaii Legislature has shown real leadership by enacting this policy because it provides guidance for other states that seek to extract their state procurement policies from the many constraints imposed by the WTO and other Fast-Tracked trade agreements’ procurement pacts” said Wallach. “This new law is a victory for open government, and now it’s Congress’ turn to replace Fast Track with a new system that provides state officials the right to decide whether various non-trade domestic policies should be bound to comply with ‘trade’ rules.”

To read the bill, click here.

To find out more about state and local governments’ actions regarding international trade agreements, click here.

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