Date of this Version
When I visited here in 1997, I talked about the need to bind sub-federal actors like states and provinces to international obligations.1 States and provinces are large economic actors. If you took a list of the largest nations and then compared state and provincial Gross National Products (GNPs) with those, you would find that there were more than thirty states that would rank in the top fifty nations in terms of GNP. You will probably find at least two, three, or four provinces that would rank in the top fifty as well. So it is clear for economic welfare reasons that there is a need to bind sub-federal governments like states and provinces to international trade agreement obligations. Indeed, as trade agreements have been extended into the nontariff barrier area, new topics like services and investment, and so-called linkage topics like environment and labor, where states exercise significant regulatory and enforcement powers, the need to bind sub-federal governments becomes all the more clear. In the North American Free Trade Agreement (NAFTA) and in the World Trade Organization (WTO), we have applied obligations to states and provinces, but we have used a variety of techniques to protect the measures that were inconsistent with these agreements. So we have a ways to go. In fact, you could argue that most of the obligations in these trade agreements, at least in the new areas like services and investment, are stand-still obligations. They only prevent new protectionism. They do not scale back the existing protectionism that is maintained by states and provinces. For instance, there was grandfathering of laws, both within the GATS (General Agreement on Trade in Services) and the NAFTA services and investment chapters.