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New Jerseyans Bite Into Federal Trade Agreements


Corporate & Finance Alert

October 6, 2009

By: Robert F. CoynePamela Lopata

Earlier this year, the New Jersey Assembly approved legislation, sponsored by Assemblyman Joseph Egan (D-Middlesex), chairman of the Assembly labor panel, which addresses international trade agreements and their impact on the state economy. The bill (A-2754), entitled “Jobs, Trade and Democracy Act”, was approved 61-13-3, and is currently awaiting Senate vote (S-1802). Specifically, the bill:

    • Requires the Legislature’s consent to bind New Jersey to any provision of a trade agreement; and requires the designation of four members of the Legislature to serve as official liaisons with the Governor’s office and the federal government on trade policy (the “Legislative Liaisons”);
    • Establishes a Citizens’ Commission on Jobs, Trade and Democracy, composed of twenty (20) members, to monitor trade negotiations and disputes, assess the social, environmental, legal and economic impacts of trade agreements and proposed trade agreements, and hold hearings and make recommendations regarding trade policy and related legislation; and
  • Requires the Commission to provide for annual reports to the Governor and Legislature on the impacts of trade on the state, and requires the Governor and Legislature to respond to policy recommendations for handling trade’s impacts on the state.

The bill is touted as promoting citizen involvement in trade issues, as well as promoting state sovereignty in regard to international trade. According to the New Jersey State AFL-CIO, as set forth in a letter to the Members of the Senate Labor Committee dated January 26, 2009, “[t]he impetus for this legislation was a desire, on the part of state legislators and local residents and community organizations, to become more involved in international trade deliberations and how states could become active on this issue.” The federal-state consultation system presently in place dates back to the 1970s, when international trade agreements covered traditional matters, such as tariffs and quotes, over which states have no authority. However, today’s international trade agreements – dating back mainly to the 1990s – have expanded outside of traditional matters and often directly impact matters under state jurisdiction, such as health care programs and environmental concerns.1  The key to state involvement in international trade agreements and issues lies with state individuals, namely, in the form of a commission that has the ability to interact with the state government and the public, on the one hand, and the federal government, on the other.

Several other states have passed laws similar to the bill currently pending in New Jersey, including Maryland, Hawaii, Rhode Island and Minnesota. Similar laws are currently pending in California, New York, Iowa and Nevada. Additionally, Maine, Vermont, New Hampshire, Washington and Utah have citizen commissions to monitor how trade policy affects their states, with particular focus on how pending trade deals can affect state law. Maine’s citizen commission, discussed in greater detail below, has been hailed by The Forum on Democracy & Trade2 (the “Forum”) as a model for state oversight and communication on international trade and investment issues. Clearly, states are taking action to create a formal process to ensure they have a say in international trade agreements. But is the action being taken, and the bill pending in New Jersey, enough to implement real change?

New Jersey Senator Loretta Weinberg (D-Teaneck), one of the Senators who introduced the bill to the New Jersey Senate on May 8, 2008, acknowledged that the bill is mainly advisory in nature, stating that it is “making a statement more than it will have, I guess, real teeth,” as reported in “Legislature Divided on Trade ‘Liaison’ Bill,” The Star-Ledger, May 28, 2009. In fact, critics contend that such a law, if ultimately passed, would only saddle the state with red tape and have no impact on forming trade policies, which are negotiated at the federal level. State involvement in international trade agreements remains a murky issue, and balancing the state vs. federal issue has proven to be a sensitive topic as states, understandably, prefer to have some level of control over agreements that may directly impact their individual economies. To do so, however, requires an effective law and efficient interaction between players at both the state and federal levels.

In 2007, the Forum evaluated the activities of the Maine Citizen Trade Policy Commission (“Maine CTPC”). The Forum found a number of items that are of particular importance to the success of the Maine CTPC. First, there have been high levels of inter-branch communication between Maine and the Office of the United States Trade Representative (USTR). Maine has been particularly adept in communicating the state’s concerns to the USTR and clarifying areas where federal-state consultation on trade policy could be improved. Second, Congressional staff in Washington have reported that they are very aware of the Maine CTPC and that information about the Maine CTPC’s public hearings have provided Congressional staff with a better understanding of the issues facing Maine. Lastly, the Forum found that Maine has “played an outstanding role” in directly linking Maine citizens and federal representatives in Washington and that Maine is the only state that has “taken its ‘show on the road’ through public hearings.” On the downside, the Forum found, at the time of the evaluation, that the Maine CTPC did not have a significant presence in the media and that it did not have a strong constituency within the business community. The Forum concluded that, although the foregoing items may not be part of the Maine CTPC’s mandate, the composition/membership of the Maine CTPC may need to be adjusted so as to include representatives from key Maine industries.

As stated above, the pending New Jersey bill establishes a Citizens’ Commission on Jobs, Trade and Democracy, appointed by the Governor and the Legislature, composed of twenty (20) members,3 to monitor trade negotiations and disputes, assess the social, environmental, legal and economic impacts of trade agreements and proposed trade agreements, hold hearings and make recommendations regarding trade policy and related legislation; and the bill requires the commission to provide for annual reports to the Governor and Legislature on the impacts of trade on the state, and require the Governor and Legislature to respond to policy recommendations for handling trade’s impacts on the state. The bill states that one (of various) duties of the New Jersey Commission is to maintain active communications with the USTR (or any other entity determined to be appropriate regarding ongoing developments in trade agreements and policy). The Legislative Liaisons will serve as New Jersey’s official liaisons with the federal government and are charged with communicating the interests and concerns of the New Jersey Commission and the State Legislature to the USTR regarding ongoing and proposed trade negotiations. The bill also provides that New Jersey cannot consent in any way to the terms of any trade agreement unless, among other things, its has held, with adequate public notice, public hearings in each of not less than three (3) regions of New Jersey regarding potential social, environmental, economic and legal impacts of the trade agreement, and made the proceedings of the hearings available to the Legislature and the public.

By comparing the substance of the New Jersey bill to the Maine CTPC, the legislation that created the Maine CTPC and the Forum’s finding relating to the Maine CTPC, there are certain points that New Jersey should consider in the event the pending bill becomes law. First, the Legislative Liaisons must commit to regular and substantive communications with the USTR. Therefore, it is critical that the Legislative Liaisons stay apprised of issues facing the New Jersey Commission, and particularly issues raised at the public hearings, so they can accurately report New Jersey’s concerns to the USTR. Second, the Legislative Liaisons must maintain close ties with Congressional staff in Washington and keep these staffers apprised of issues important to New Jersey. Lastly, the New Jersey Commission must take seriously the public hearings required by the bill and should consider regular expansion of public hearings beyond three (3) regions of New Jersey. Although not a big state, New Jersey is considerably diverse in its business industries and communities, and certain divisions are geographically drawn. The New Jersey Commission should strive to maintain an effective media presence and the Governor responsible for appointing members to the New Jersey Commission should make sure New Jersey’s key industries – such as retail trade and manufacturing (i.e., chemicals and pharmaceuticals) – are represented. Additionally, New Jersey should consider working closely with neighboring states when interests are aligned to form a strong multi-state platform from which the states can voice their concerns on particular trade agreements to the USTR.

As Senator Weinberg stated, the pending bill on its face may “make a statement” more than it has “real teeth.” However, the New Jersey Commission, and more particularly the Legislative Liaisons, can give the bill some teeth. As Maine has demonstrated, the USTR and Hill staffers have responded well to the Maine CTPC and the citizens of Maine now have a direct link to their federal representatives in Washington. There is no reason why New Jersey cannot follow suit.

1 See, e.g., States’ Rights and International Trade: A Legislator’s Guide to Reinvigorating Federalism in the Era of Globalization, Feb. 2007, Public Citizen’s Global Trade Watch.
2 The Forum on Democracy & Trade is a network of U.S. public officials from state and local governments, who work to ensure that trade agreements support local decision-making and economic innovation. For more information, visit www.forumdemocracy.net.
3 The members of the New Jersey Commission will include the Legislative Liaisons (who will act as the Legislature’s Representatives), the Attorney General, the State Treasurer, the Commissioners of the Department of Labor and Workforce Development, and the Department of Environmental Protection, the Secretary of Agriculture, the Chief of the Office of Economic Growth, ten (10) public members appointed by the Governor, including two representatives of private sector labor organizations impacted by international trade, two representatives of public-sector labor organizations impacted by outsourcing or off-shoring, one representative of a business engaged in international trade, two representatives of business impacted by international trade, including at least one manufacturer, one farmer impacted by international trade, one individual with recognized expertise on the impact of international trade on human rights and the rights of conditions of workers, and one individual with recognized expertise on the impact of international trade on environmental and consumer protection.