A. Communicate the threats as well as the opportunities that international agreements pose to democratic governance, the role of subnational governments as "laboratories of democracy," and the capacity of consumers to shape market behavior with humane and environmental values. While many groups work on trade policy, we have developed particular expertise regarding American constitutional law, subnational governments and consumer choice strategies. Our approach is to "constitutionalize" the debate, which transcends the boundaries of partisan politics and specific interest groups. We seek to sustain our analysis in the following three areas.

1. Sovereignty and democratic governance. Public officials in the United States and abroad are only beginning to understand how trade and investment agreements actually work to create a global constitution. This de facto constitution limits government power to promote sustainable development, preserve environmental resources and protect human rights. International agreements threaten the balance of power within complex federal systems like the United States, Canada, and even the European Union as it evolves toward an integrated federal structure. The countervailing opportunity is that environmental and labor agreements have created a framework for democratic multilateral initiatives, which if implemented, could achieve a better balance of democracy and trade. 2. Consumer choice campaigns. As regulatory power wains in a global economy, purchasing power of consumers and government grows in its capacity to influence multinational corporations. However, as soon as purchasing power is invoked to promote human rights or environmentally sustainable markets, it is attacked as a violation of various international agreements. There are opportunities to defend the use of purchasing power within the WTO system and also to strengthen the legal authority for using purchasing power under international environmental and labor agreements. 3. Human rights and free-Burma campaigns. The corporate response to crush the free-Burma campaign around the world is a dramatic example of how trade rules can be used as a shield to blunt the use of purchasing power to promote democracy and human rights. There is an urgent need to defend this particular use of purchasing power within the American legal system, and a broader opportunity to invoke the support of UN agencies, particularly the International Labor Organization, to enforce human rights in Burma through purchasing power rather than regulation.

B. Strengthen the legal capacity of consumers, human rights advocates and public officials. Our principal working relationships at this time include the Consumers Choice Council (54 national and international organizations), the free-Burma campaign in the United States, and an array of diverse state and local officials who are not yet connected to each other. Our goals are to enable these groups to:

1. Work together on strategies that cut across borders, constituency interests, and levels of government. Our specific objectives for network development include: International: We seek to link American actors with their counterparts, most immediately in Canada, E.U. countries and institutions, the Caribbean and Africa. Subnational: We seek to link public officials with each other in a leadership network that integrates city, county, and state levels of government as well as legislators, administrators, and legal officers of government. National: We seek to provide analytic support to the federal officials who are working on international agreements. In the Executive Branch, the priority is to respond to requests that we have received from attorneys on interagency task forces (such as EPA, Interior and Justice). In Congress, the priority is to respond to requests that we have received from key subcommittees and caucus leaders (such as the progressive caucus, the human rights caucus, and the Black caucus). 2. Influence the process in which national governments negotiate and implement international agreements. The negotiations of greatest concern include: Investment agreements: There are no less than five levels of negotiations, including the interpretation of NAFTA chapter 11, the investment chapter of the Free Trade Area of the Americas, the upcoming round of WTO negotiations on the Multilateral Agreement on Investment (MAI), the various bilateral investment agreements (BITs), and the insertion of investor protections into international aid programs such as the IMF and the Africa Growth and Opportunity Act. Procurement agreements: The WTO Agreement on Government Procurement is being used to challenge subnational purchasing power that promotes human rights, minority business and environmental preferences. The United States and the European Union are negotiating to expand the GPA to cover cities and the states that were not previously included. We believe the process used to do this in the past is unconstitutional because it cuts state legislatures out of the process. Subsidy agreement: Several "green light" exceptions to the WTO Agreement on Subsidies and Countervailing Measures (SCM) protect environmental and economic development programs from being challenged under the SCM. These exceptions expire at the end of 1999 and must be renegotiated and re-adopted. 3. Develop democratic multilateral initiatives that avoid conflict between human rights or consumer choice strategies and the new international trade mandates. We are developing several initiatives that link local advocacy with international standards: A global consumer right to know that authorizes, for example, precautionary ecolabels on genetically modified organisms. Wood purchasing standards that promote sustainable forestry and avoid consumption of old-growth timber. Human rights enforcement that uses consumer and government purchasing to help implement ILO core labor standards.  

A. Sovereignty & Democratic Governance

1. Shaping the Emerging Global Constitution An emerging global framework is designed to liberalize markets and empower private investors to challenge government authority. Trade scholars describe this as a "constitutional" function, which limits the traditional powers of national and subnational governments. That framework includes the GATT and the 18 trade agreements under the WTO, regional trade agreements such as NAFTA and the European Union, and investment agreements that empower private investors to directly enforce expanded investor rights. The most far-reaching model of investor protection is the proposed Multilateral Agreement on Investment (MAI), which builds upon the provisions of NAFTA chapter 11. The MAI/NAFTA model is a blueprint for future negotiations on the Free Trade Area of the Americas (FTAA), which are already underway, and the next round of WTO negotiations. We have presented our work through testimony before Congress, testimony before state and provincial legislatures, presentations to state/local government associations, briefings at the State Department and the United States Trade Representative, articles in the Cornell and Stanford journals of international law, and in publications of the Western Governors Association, the Corporation for Enterprise Development, and the Center for Policy Alternatives. Our work is generating numerous requests to expand or translate our analysis for constituencies that want to play a more active role in the international policy-making process. Most notably, the requests come from the legal staff of U.S. federal agencies; state, local and provincial governments in North America; CARICOM, the trade alliance of small Caribbean nations; and NGOs from North America, Europe, Africa and the Caribbean that are advocates for sustainable development. We seek both funding and collaborators with whom we can work on the following major issues. While the issues are integrated, we can also address them separately as noted below. Sovereignty & Sustainable Development Governments at all levels are locked in a wasteful competition for foreign direct investment. International investment agreements promote rather than curb this competition. Worse yet, the scope of provisions for National Treatment, MFN Treatment, and limits on performance requirements curtail the ways in which governments can ensure that their spending on investment incentives stimulates local economic development. Under Ford Foundation funding, we are completing a survey analysis of the potential impact of investment agreements on American economic development practices. After a series of briefings, domestic policy-makers have asked us to analyze specific programs in greater depth to show how they are vulnerable to attack under trade or investment agreements. They have also expressed great interest in future monitoring of investment negotiations in order to increase their own participation in that process. Policy-makers from Caribbean and African countries have told us that they have no capacity to implement their obligations under WTO agreements, much less analyze the potential impact of investment agreements like the MAI or FTAA. They request the same kind of preliminary analysis of their economic development programs that we have conducted for American states. This need is particularly acute for the islands that are affected by the recent WTO ruling against European banana preferences and African nations, including South Africa, that include land reform as part of their strategy for sustainable development. Regulatory Powers of Government The investment agreements, both existing and proposed, empower foreign investors to challenge traditional powers of government to regulate land use, conserve natural resources, promote economic development and enforce corporate accountability. For example, private investors are using NAFTA to: attack the use of punitive damages to enforce corporate accountability in the United States, use federal laws to regulate transportation of hazardous substances in Canada, and invoke local authority to deny a hazardous waste permit in Mexico. While all of these investors have incurred actual damages, they are seeking considerably more in terms of loss of future profits. We have been asked by the legal staff of U.S. federal agencies to expand and translate our analysis of how investment agreements change the rules for challenging the regulatory power of government. This analysis involves a comparison of international vs. domestic legal standards as well as an analysis of how the fiscal impact of damages could alter the lawmaking process. Market Powers of Government In a global economy, the market power of government as an investor and as a purchaser goods and services is increasing, just as the regulatory power of government is waning. The market power of American states to use non-economic criteria for purchasing goods and services is being challenged as a violation of WTO rules both in the WTO and in a U.S. federal court. At stake are the human rights, economic development or environmental criteria that are used in hundreds of state and local purchasing policies. Among the issues we need to address are: (1) whether the attempt by the United States to use country-specific exceptions to protect many of these laws will work when the WTO procurement agreement does not permit such exceptions; and (2) whether the process used by the United States to commit 37 states to follow the WTO agreement was unconstitutional. If our preliminary analysis is correct, then the WTO agreement is not enforceable against states unless either (1) Congress passes explicit legislation to commit all states to comply with the agreement; or (2) state legislatures agree to waive their laws that do not comply with the agreement. While both of the constitutional options would produce a healthier debate, the direct engagement of state legislatures is by far the preferable alternative, which is endorsed by the National Conference of State Legislatures. The analysis that we propose would strengthen the NCSL position. Democratic Multilateral Initiatives In its most far-reaching decisions, the World Trade Organization has suggested that it will defer to moral, environmental or labor policies that limit trade, but only if there is a multilateral approach to solving a global or regional problem. A framework already exists in the form of UN human rights agreements, hundreds of multilateral environmental agreements (MEAs), and hundreds of labor standards under the International Labor Organization (ILO). The problem is that the enforcement mechanisms for most of these multilateral initiatives have not been developed. We would like to develop strategies that enable consumers and subnational governments to use their purchasing power, where appropriate, to implement international standards. We would need to clarify the legal foundation for subnational governments to use the authority that is already reserved to them under many human rights and labor agreements. Preemption of Local Democracy Subnational governments are the laboratories of democracy, particularly in countries that have federal systems like the United States and Canada. Under implementing legislation for NAFTA and the WTO agreements, the United States federal government can ask the courts to preempt state or local law based on the broad language of the trade agreements. However, this runs counter to recent Supreme Court decisions, which hold that before Congress may preempt state or local law, Congress must express a clear intent to preempt a specific type of law. Otherwise, the Court reasoned, Congress would not be accountable for the results of its sweeping preemption language. We propose to write and disseminate a legal analysis that (1) establishes why it would be unconstitutional to preempt state or local law under the vague language of trade agreements, and (2) identifies options for how Congress could implement broad trade principles in a way that is accountable and constitutional. Sovereignty Protection in Federal Systems The negotiators of international investment agreements believe that they can preserve lawmaking powers within their own countries by invoking country-specific exceptions for many nonconforming laws. Our research suggests that open-ended exceptions have been and would continue to be ignored by dispute resolution panels, and that even when "grandfathering" works to protect local laws, it also freezes future lawmaking authority. If our initial analysis is correct, then either the negotiating strategy will have to change or the agreements will have to be sold to domestic constituencies without the claim that the agreements pose no risk to domestic sovereignty interests. To fully assess the sovereignty protection strategies, we need to analyze issues such as the viability of statutory limits on private litigation and whether country-specific exceptions will fail to work as a strategy for sovereignty protection. 2. Building an International Infrastructure for Democratic Participation With the exception of Germany, subnational officials have not played a meaningful role in shaping national policy on the content of trade or investment agreements, even though those agreements are designed to affect the way that a federal system functions in a global economy. There are many reasons why subnational officials have not participated. The international issues are complex, not traditionally matters of local concern, and the logistical burden of involving lower levels of government is significant. Only a few selected representatives of state and local government in the United States are briefed on trade or investment policy, and most of them have limited expertise to interpret what they are told. For example, they have been told by federal trade negotiators that the international agreements do not change the rules of governance, and that even if they did, that sovereignty protections would avoid any local impact. Our analysis shows that these assurances are not justified. We believe that subnational officials can and should play a vital role in shaping what amounts to a new economic constitution that limits their power. However, for both practical and political reasons, an infrastructure is necessary to empower their participation. We seek funds to begin work on four components of that infrastructure.   Local/Global Leadership Connections The work begins with identifying people, both elected officials and staff professionals, who are willing to play a leadership role. Leadership in this context involves defining the subnational interests in international policy, expressing those interests to national leaders, and sharing information and ideas across international borders. Diversity on several levels is crucial for building an effective leadership network. First, partisan balance is necessary to avoid the limits of partisan politics. Second, diversity among branches and levels of government is essential to capture the needs of the federal system. Third, geographic and ethnic diversity is important to reflect regional economic and cultural interests. Finally, national diversity can establish needs that are shared by officials in a democratic society, regardless of nationality. The benefit of such diversity can be derived in the form of one-on-one input for planning and analysis, but the optimal benefit would come from direct interaction as a contact group that meets on a periodic basis. Capacity for Legal & Policy Analysis The nations that lead international negotiations rely upon a huge infrastructure of legal, economic and other experts to cope with the complexity of competing interests and legal systems. In the United States, this includes not only the staff of many federal agencies, but also an advisory system of more than 800 business participants and their legal advisors. There are latent capacities within many nations’ universities, nonprofit institutions and subnational governments that could be recruited, trained and networked to support subnational leaders. Small and developing countries could tap into the same network of analysts. Mutual Education Network Once the nucleus of a support network is available, the network must develop its ability to communicate through web pages, list serves, contributions to existing newsletters and contact at national meetings. Several communications networks of this kind have been organized by public interest NGOs and business organizations, respectively. However, the volume, style and purpose of these networks does not make them suitable for the needs of public sector activists. Stronger Legislative Participation As one federal agency lawyer told us, there is no home for state and local interests in the family of federal agencies that work on trade and investment policy. National legislatures, on the other hand, are designed to represent local and regional interests in the national capital. While Congress or Parliament is not a substitute for a strong subnational infrastructure for leadership and analysis, it is the most appropriate venue for subnational leaders to express their views and expect that the message will be used to shape policy. In the United States, at least, there is much that Congress could do to strengthen its own oversight and participation in complex international negotiations. We have developed a set of options to strengthen legislative oversight, hearings on proposed agreements, and implementing legislation for international agreements.

B. Consumer Choice Campaigns

For the past two years we have served as legal counsel to the Consumer’s Choice Council, a rapidly growing alliance of over 55 environmental, consumer and labor organizations. CCC’s mission is to enable consumers to use their market power to shape a global economy that conserves environment resources, sets high standards for consumer health, and respects international human and labor rights. In cooperation with CCC, we are seeking resources to create a legal and market framework for consumer choice strategies. The outcome of work in the next decade will set the trend for trade rules and market power for many more years to come.

We propose to develop legal analysis that establishes that voluntary, nondeceptive product labels are a form of free speech protected under the First Amendment of the United States Constitution. This analysis could stave off enforcement of an adverse WTO decision against voluntary labeling programs in the United States, and it could promote an interpretation of WTO rules so as to limit their adverse effect on voluntary labeling. We also propose to examine free speech doctrines in the legal systems of other countries to determine whether they could provide similar protection for voluntary labeling programs. Promoting Mandatory Labeling Programs In addition to voluntary labels, mandatory product labels can provide consumers with important information, particularly regarding information that manufacturers would not otherwise voluntarily disclose. One of the most controversial types of mandatory labels involves genetically modified organisms (GMOs). The United States Trade Representative has argued that the European Union’s mandate for labeling genetically modified corn and soybeans and a Japanese proposal to label genetically engineered food violate trade rules. On behalf of the Consumer’s Choice Council (CCC), we have met with European Union trade officials to discuss the labeling issue. We propose to continue working with CCC to promote interpretations of trade rules that recognize the right of governments to require product manufacturers to provide consumers with information concerning how their products are made. We have also drafted federal legislation for CCC that would require the labeling of genetically engineered food sold in the United States. Ironically, although the First Amendment could provide a powerful shield for private labeling threats, it could also pose a serious threat to mandatory labeling programs. In 1996, a federal court of appeals struck down a Vermont law that required labeling of milk from cows that had been treated with a genetically engineered hormone. The court of appeals concluded that the law violated the milk producer’s right under the First Amendment not to speak. We propose to (1) develop labeling strategies that would avoid implicating the First Amendment rights of product manufacturers, and (2) develop a legal analysis challenging the reasoning of the court of appeals in the Vermont case, which held that mandatory disclosure of information on product labels should be subject to strict scrutiny under the First Amendment. 2. Defending Government Purchasing Based on Environmental and Social Criteria Governments and consumers use social and environmental criteria when deciding which products to purchase. The federal government, for example, has purchasing preferences for "environmentally preferable" products, including recycled and biobased products. Similarly, 48 states have purchasing preferences for recycled products, and a growing number of cities are enacting laws that discourage the purchase of old growth timber or timber that is not harvested in a sustainable manner. California prohibits state agencies from buying products that are manufactured by slave labor, and numerous local governments have enacted laws banning the purchase of products made in sweat shops. These laws are susceptible to challenge under the WTO’s Government Procurement Agreement (GPA), which like other trade rules, discourages distinctions between products based upon how the products are made. State and local governments collectively purchase about twice as much as the federal government every year, and several of our trading partners argue that state and local procurement laws violate WTO rules. In addition to our work with CCC to promote environmentally responsible purchasing by federal, state and local governments, we propose to refute the arguments that trade rules limit government use of social and environmental purchasing criteria. A primary element of this work would be thorough analysis of our preliminary finding that the federal government violated the constitution when it committed state governments to follow the WTO procurement agreement. Because state purchasing power is a politically sensitive issue, USTR chose to bind only the procurement laws of 37 of the 50 states. Our analysis is that this selective coverage of only certain states violates principles of federalism embodied in the Tenth Amendment and the Equal Footing Doctrine. We have raised the issue with both U.S. and E.U. trade officials, and neither have identified any defects in our analysis. We plan to complete our analysis, publish it in a law journal, and distribute it to both foreign and domestic trade officials, state attorneys general, and state and local legislators.

C. Human Rights and Free-Burma Campaigns

The decade of the 90s began with a triumph for democracy and human rights when the National League for Democracy won free elections in Burma with 82% of the seats in Parliament. That democracy was crushed by the Myanmar military government, which turned triumph into tragedy with its reign of forced relocations, forced labor, systematic rape, political repression, and drug trafficking. Free-Burma campaigns have organized independently in the North America, Europe and the Pacific Rim, and we have become a principal legal advisor to the campaign organizers in the United States. Our next year of activity involves three stages of work, which include outreach through an amicus campaign, strategic planning with other human rights constituencies, and support for advocacy that links the campaigns in Europe, North America and the Pacific Rim.