Note: This version of a model resolution is both broad and detailed. It can be used as a tool in
educating public officials about the threat of these agreements on local government. Parts or all
of it can also be used as resolution language for your local city/town council or state legislature.
A one-page model resolution is also available on this website.--Ruth Caplan, Alliance for
Democracy
LOCAL RESOLUTION on SERVICES, INVESTMENT and PROCUREMENT
GENERAL CONSIDERATIONS
Whereas, trade agreements pertaining to services, investment and government procurement
constrain the exercise of local government authority to protect the health and welfare of its
citizens. And
Whereas, the United States government through the Office of the U.S. Trade Representative
(USTR) is presently negotiating multilateral, regional and bilateral trade agreements covering
all these areas, including the Free Trade Agreement of the Americas (FTAA) extending NAFTA to
34 countries in the Western Hemisphere and the WTO General Agreement on Trade in Services
(GATS). And
Whereas, the WTO's 3rd Ministerial Declaration establishes June 30, 2002 as the start of
specific negotiations to expand GATS coverage and further deregulate additional service sectors.
And
Whereas, formal WTO negotiations on investment and procurement could be launched after the
4th WTO Ministerial in 2003. And
Whereas, requirements for local governments to publish proposed regulations and consider
comments from around the world which are being proposed by the USTR for both GATS and the
FTAA are an unfunded mandate for local jurisdictions and could lead to undue influence by
foreign interest on matters of local governance. And
Whereas, the USTR has repeatedly declined to hold local hearings to inform the public about
the local implications of these negotiations. And
Whereas, the National League of Cities has resolved that "the Administration and Congress
should consult with state and local officials prior to negotiating any provisions of the FTAA to
ensure that trade negotiators do not undermine the scope of local governmental authority under
the Constitution..." And
INVESTMENT
Whereas, the proposal for the FTAA investment agreement is based on current provisions of
NAFTA Chapter 11 on investment which
* empowers foreign investors to sue nation-states for compensation before closed-door
arbitration panels that follow NAFTA and international law, not domestic constitutional law.
* creates foreign investor rights that exceed the constitutional protections for domestic
investors. And
Whereas, in such NAFTA claims against the United States, foreign investors have challenged
core functions of state and local government, including regulatory power to protect groundwater
(California), the power of civil juries to use punitive damages to deter corporate fraud
(Mississippi), the right of states to regulate in the public interest and to claim sovereign
immunity (Massachusetts), and state compliance with "buy-America" requirements for
spending federal highway funds (Virginia). And
Whereas, foreign investor claims may create fiscal pressure on the United States to preempt
or push for changes in state or local law as illustrated by the $970 million claim challenging
California's decision to phase out a gasoline additive (MTBE) and the fact that the first four
claims based on state action exceed $1,800,000. And
Whereas, the National Conference of State Legislatures and the National Association of
Attorneys General have publicly communicated their opposition to any new trade agreement that
would include private claims against nation-states, similar to NAFTA Chapter 11. And
SERVICES
Whereas, under GATS, WTO member countries will be making requests of other countries to
modify their local and/or state and/or federal regulations as they relate to specific types of
services in order to open up their domestic markets to competition by foreign corporations. And
Whereas, unless the USTR makes these requests public, state and local governments will not
be able to voice concerns regarding any potential impacts on their authority and local services.
And
Whereas, GATS and proposed FTAA rules modeled on GATS change the traditional scope of
government authority under the U.S. Constitution. For example:
1. The standard of non-discriminatory treatment in the U.S. Constitution is violated by the
GATS standard of "National treatment" which says foreign corporations must be treated at least
as favorably as domestic companies. Further, GATS allows a U.S. law to be challenged by other
countries even when the Constitutional standard of non-discrimination has been met.
2. The GATS "market access" rules forbid many traditional strategies for protecting the public
interest, such as exclusive supplier contracts, certificates of need for hospitals and schools, or
limits on the corporate form of ownership of assets used to deliver public services. Even the
location of pipelines, the size of landfills, and certain zoning regulations can be challenged.
3. The GATS rule on "domestic regulation" would limit government regulation of services to the
least "burdensome" approach, as opposed to the traditional standard that regulation must
merely have a rational basis for protecting the public interest. And
Whereas, the risk of conflict between GATS, FTAA or bilateral trade rules pertaining to
services and state or local law is relatively high because over 75 percent of the economy is now
in the service sector and many services are regulated or provided by state and local government.
For example: water treatment and distribution, waste disposal, zoning and other land use
controls, health insurance, health facilities, schools, construction, alcoholic beverage sales,
municipal and state energy authorities, procurement preferences. And
Whereas, the GATS rules apply to virtually all government services given that such services
are exempted only if they are provided "neither on a commercial basis nor in competition with
one or more service suppliers." And
PROCUREMENT
Whereas, the proposal for the FTAA procurement agreement incorporates most provisions of
the WTO Government Procurement Agreement (GPA) that affect state and local government. And
Whereas, the GPA and proposed FTAA rules limit procurement to considerations of price and
performance. These international limits would conflict with numerous purchasing preferences
used by state and local governments to promote environmental resource conservation, small
business development, and labor and human rights. And
Whereas, the risk of conflict between the GPA or FTAA procurement rules and state or local
law is relatively high because over two-thirds of public procurement in the United States
occurs at the state and local level. And
Whereas, the European Union has repeatedly cited state and local procurement policies as
violations of the GPA.
Now therefore be it resolved that the City Council of_________
Calls on the USTR to hold a hearing in to address potential local implications of
bilateral and multilateral trade agreements being negotiated.-
or alternative language-
Calls for broad consultation with local jurisdictions and civil society
Resolves that the U.S. Trade Representative should conduct a formal, written assessment of
the impact of a proposed agreement on state and local laws and future law-making authority
before negotiating services, investment, procurement provisions in the FTAA and the WTO
agreements.
Calls on the [State] Legislature and the Attorney General to actively oversee trade policy as it
affects local sovereignty by the carrying out the following functions:
a. assessing the potential impact of trade and investment agreements on local sovereignty;
b. monitoring the status of implementation and negotiations to expand international
agreements; and
c. advising federal trade negotiators with respect to preserving local sovereignty.
Joins with the National Conference of State Legislatures which has communicated to the USTR
its opposition to any new trade agreement that would include private claims against
nation-states, similar to NAFTA Chapter 11.
Resolves that Congress should bar the United States government, if it loses or settles a trade or
investment dispute, from recovering economic losses from state or local government, either
directly or indirectly by reducing federal funding based on compliance with trade or
investment agreements.
Resolves that the U.S. government should shoulder the fiscal burden of compliance, disclosure,
and economic adjustment costs that trade or investment agreements impose on state and local
governments.
Calls on the U.S. Trade Representative to assure the exclusion of local jurisdictions from
requirements of bilateral and multilateral trade agreements covering services, investment,
procurement.
--or, can use the following more specific resolve language as a substitute for "Calls on..."--
Resolves that the U.S. Trade Representative should protect state and local authority within any
investment, procurement or services agreement through the following measures:
(1) providing general exceptions or presumptions that a nondiscriminatory subnational
measure complies with the agreement if the measure serves traditional public purposes
such as public morals, public health, consumer protection, economic development,
capacity to collect taxes, and conservation of natural resources; and
(2) to the extent that local jurisdictions have not been entirely excluded from the
agreement, declaring country-specific exceptions or "carve-outs" for local government
measures.
Resolves that the U.S. Trade Representative should protect state and local authority within any
investment agreement through the following additional measures:
(1) defining investor rights in terms that are clear and no greater than investor protection
under the U.S. Constitution;
(2) providing for national government approval of investor-to-state complaints by
companies within their borders against foreign governments;
(3) preserving the right of local and state government to regulate in the public interest
without requiring compensation.
Resolves that the U.S. Trade Representative should protect state and local authority within any
procurement or services agreement through the following additional measures:
(1) excluding the U.S. proposed unfunded mandate to extend transparency to include the
publication of proposed local regulations in order to receive and consider comments from
around the world;
(2) making available to local jurisdictions all proposals to deregulate additional services in
the GATS negotiations which could have potential impact on local jurisdictions.
Resolves that the U.S. Trade Representative should protect state and local authority within any
services agreement through the following additional measures:
(1) opposing any further expansion of GATS rules constraining Domestic Regulation,
including by distinguishing between necessary and unnecessary regulations, and any
similar provisions in the FTAA services chapter or in bilateral agreements;
(2) excluding water from the classification of environmental services and from other
classifications.
