Open Letter to Participants of Energy and Trade Working Group

Economic Development, Trade and Cultural Affairs

National Conference of State Legislatures
^{The Forum for America's Ideas}

April 15, 2005

An Open Letter to Participants in the State & Local Working Group on Energy
& Trade Policy

Dear Friends:

_{John Adams Hurson}_{Chairman, Health & Government}_{Operations Committee
Maryland House of Delegates
President, NCSL}
_{James E. Greenwalt}_{Director, Senate Information}_{Systems and Administrative
Services
Minnesota
Staff Chair, NCSL}
_{William T. Pound}_{Executive Director}

It is my pleasure to present our completed Interim Report on GATS and Electricity. I think that it is important to note and acknowledge that this report and the year of study that moved us to this point would not have been possible without your time and expertise. On behalf of the Working Group, thank you for your individual contributions. I also want to thank the Office of the U.S. Trade Representative (USTR) for engaging with us in what has proven to be, and will continue to be, a productive exchange and dialogue. Finally, I think it important to note the tremendous legal counsel and secretariat support of the Harrison Institute at Georgetown University Law Center.

The purpose of this interim report is to document the Working Group’s research and analysis thus far relative to the potential impact of trade negotiations under GATS – the General Agreement on Trade in Services – on domestic electricity policy. The report is termed “interim” recognizing that we are engaged in a learning process about evolving issues and that our findings and focus may change.

As part of this learning process, we have successfully commenced a dialogue with USTR at a level quite unprecedented for state and local officials. In the interest of continuing this dialogue, which both the Working Group and USTR have found informational and productive, I sent USTR a copy of our interim report and requested that USTR comment on our findings so far. Carol Balassa, USTR’s director for energy services negotiations, did comment, and you will find it appended at the end of this report.

Ms. Balassa has extended an invitation for a follow-up meeting. I look forward to that meeting, as this is an excellent opportunity to explore further questions we have concerning the impact that trade agreements have on state policy or legislation. A subsequent meeting will allow us the opportunity for additional clarification of Ms. Balassa’s comments. For instance, I would like further explanation of her comments on perceived factual inaccuracies as well as a further discussion of preemption concerns. We realize that trade agreements will not directly preempt state law, but trade agreements could conflict with state law, exposing us to sanctions, penalties, or other complications. There are also issues of distribution monopolies, transmission services, state-federal consultation processes, and GATS scheduling that merit further discussion.

I also appreciated USTR’s statement that “no trade deal [is] being negotiated on electricity between the U.S. and the EU or any other WTO members either bilaterally or in the GATS negotiations,” and I trust that if and when such discussions begin, the USTR will look to this report as a useful compendium of state and local information and concerns while considering the Working Group and its members to be long-term partners and resources.

In closing, I want to recognize two additional participants who have indicated their desire to be associated with the list on page 28 of the report:

Véronique Pluviose-Fenton, Principal Legislative Counsel for Policy and Federal Relations at the National League of Cities, and
Jim Kerr, North Carolina Utility Commissioner, First Vice-president of the National Association of Regulatory Utility Commissioners (NARUC), and member of NARUC’s Electricity Committee.

The Working Group’s purpose is strictly research and analysis and I hope that you, your colleagues, and your organizations find this report to be a useful tool for understanding international trade agreements and possible implications for state and local authorities. Should you have any questions about the Working Group or this interim report, do not hesitate to contact me or Jeremy Meadows, Committee Director for NCSL’s Economic Development, Trade & Cultural Affairs Committee (202-624-8664, jeremy.meadows@ncsl.org).

Best Regards,

George Eskridge
Representative, Idaho House of Representatives
Chair, Working Group on Energy & Trade Policy