Economic Development, Trade and Cultural Affairs Standing Committee

State & Locals Thank Ambassador Zoellick for excluding investor-state. The U.S.-Australia Free Trade does not include an investor-state provision. In this letter, State and Local organizations thank Ambassador Zoellick for hearing our arguments and concluding this issue in our favor.

On behalf of the nation's state and local officials from executive, legislative, and judicial branches of government, we are writing to thank you for not including the investor-state provision in the U.S.-Australia Free Trade Agreement (FTA) - a step that recognizes state and local authority as well as the modern and transparent legal systems that both nations enjoy. Equally important, we want to thank you for the marked improvement we have witnessed in USTR's effort to have the participation of state and local government representatives in the process through the Intergovernmental Policy Advisory Committee on Trade (IGPAC) during these negotiations.

As we have communicated to you and your staff, state and local governments support free trade efforts that preserve the authority of states and localities to regulate land-use, health, safety, and environmental measures, among others. Our objection to the investor-state provision stems from our concern that investors from nations with well-developed legal systems have abused such FTA provisions to challenge the authority of U.S. state and local governments. The Methanex and Loewen cases in particular have reinforced our concern that the provision will be abused by investors who simply hope to circumvent established legislative and judicial procedures.

In that spirit, we are requesting a meeting with you to discuss ways we can draft improved language for the investor-state provisions in future trade agreements. Our organizations will continue to have doubts about the effective uses of the investor-state provision until clear and direct language regarding what constitutes an expropriation is developed. It is our wish that we can collaborate to develop language that promotes legal standards consistent with the U.S. Constitution and applicable case law.

In sum, we appreciate the opportunity to work on this important agreement, truly appreciate your responsiveness to our concerns, and look forward to future meetings to address our continued concern regarding the investor-state provision.

Sincerely,

William T. Pound
Executive Director
National Conference of State Legislatures (NCSL)

 Donald J. Borut
Executive Director
National League of Cities (NLC)

Daniel M. Sprague
Executive Director
Council of State Governments (CSG)

Allen R. Frischkorn, Jr.
Executive Director
National Assoc. of Towns & Townships (NATaT)