Labor and Economic Development

May 16, 2007

The Honorable Susan C. Schwab
U.S. Trade Representative
Executive Office of the President
600 17th Street, N.W.
Washington, D.C. 20508

Dear Ambassador Schwab:

I am writing on behalf of the National Conference of State Legislatures (NCSL) to commend you and your staff for the positive news that has been released in the past weeks relative to states’ interests in the General Agreement in Trade in Services (GATS) and Free Trade Agreement (FTA) negotiations. NCSL has repeatedly expressed concerns about some of these points since the renewal of Trade Promotion Authority (TPA) in 2002 and is pleased to now see some fruits to those engagements.

As you know, the Antigua gaming decision has been of particular concern to state legislators. NCSL was very pleased with Ambassador Veroneau’s May 4^th announcement that the United States would be invoking article XXI of GATS to clarify the U.S. commitment on recreational services relative to Internet gambling. NCSL has been on record supporting a withdrawal of any commitment to gaming and I am pleased to learn that USTR has begun the process. State legislators remain concerned, however, that USTR’s “clarification” of the commitment sufficiently encompass gambling beyond Internet gaming and protect states’ authority to regulate these industries. I also urge USTR to consult actively, timely, and meaningfully with the states if our trading partners make any claims for compensatory adjustments.

Most recently, you and key House leaders announced agreement on new provisions for the FTAs pending under TPA. This agreement contained provisions on labor, the environment, intellectual property, investment, procurement, and port security. NCSL is most pleased to see the “no greater rights” language of the 2002 TPA incorporated into the text of the FTAs’ investment chapters and to see that procurement chapters will explicitly allow for government purchasing policies and practices to require labor and environmental protections. NCSL looks forward to working with you and your staff as you draft the FTA language to implement the provisions of the “Bipartisan Trade Deal” so that state sovereignty is ensured while maximizing the economic benefits of trade agreements.

While I thank you for these positive developments with GATS and the FTAs, they do not completely address all of the concerns state legislators have raised. I expect that the interests of the states will continue to be heard as USTR seeks agreements to manage and capitalize on international commerce. I am also confident that the principles outlined in our Free Trade & Federalism and Presidential Trade Promotion Authority policies will guide you as extant FTAs are implemented, current FTAs are finalized, and the fate of TPA is discussed. Please do not hesitate to contact me or Jeremy Meadows of NCSL's Washington staff (202-624-8664 or jeremy.meadows@ncsl.org) to further discuss our concerns and possible solutions.

Sincerely,

William T. Pound

Executive Director

Encl: NCSL Free Trade & Federalism Policy
NCSL Presidential Trade Promotion Authority Policy

CC:      Senator Max Baucus, Chair, Senate Finance Committee
            Senator Chuck Grassley, Ranking Member, Senate Finance Committee
            Congressman Charles B. Rangel, Chair, House Committee on Ways & Means
            Congressman Jim McCrery, Ranking Member, House Committee on Ways & Means

WTP/jdm

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