ically expressed views of their fellow citizens. As Judge Posner has noted, this unrestricted citation of non-United States law "would mean that any judge wanting a supporting citation has only to troll deeply enough in the world's Corpus Juris to find it." In a telling irony, a consistent application of such jurisprudence would result in strict limitations on abortion and free speech-anathemas to most if not all transnationalists. Should America rely on national laws of say Ireland in determining whether there is a constitutional right to abortion? Or follow the lead of Zimbabwe where journalists must be licensed by the government? Ultimately, transnationalists fundamentally misunderstand their country's origins. The American people founded and then repeatedly defended this sovereign republic to ensure that they and not some outside entity-be it King George III, the European Court of Human Rights, or the United Nations-controlled their destiny. Yes, we borrowed from other nations' legal traditions, especially the Anglo-Saxon rule of law. But we always did so through the democratic process found in our Constitution. Other countries are free to pursue their notions of "justice." That's why so many of our ancestors fled those lands to come here. The Reaffirmation of American Independence Resolution simply confirms that tradition and our nation's sovereignty. PREPARED STATEMENT OF THE HONORABLE BOB GOODLATTE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF VIRGINIA Mr. Chairman, thank you for holding this important hearing. As you know, recently there has been a deeply disturbing trend in American jurisprudence. The Supreme Court, the highest court in the land, has begun to look abroad to international law instead of our own Constitution as the basis for its decisions. Supreme Court Justice Sandra Day O'Connor made a troubling prediction last fall that the Supreme Court will rely "increasingly on international and foreign courts in examining domestic issues as opposed to our Constitution, as the basis for its rulings. Several western nations have begun to rely upon international conventions and U.N. treaties when interpreting their own constitutions, which is a frightening prospect, given that most of these materials are crafted by bureaucrats and non-governmental organizations with virtually no democratic input. The new Supreme Court trend to cite these types of foreign authorities is a threat to both our nation's sovereignty and the democratic underpinnings of our system of government. Our nation's founders were well aware of this danger when they drafted the Declaration of Independence, which declares that King George had "combined to subject us to a jurisdiction foreign to our constitution and unacknowledged by our laws." The Supreme Court's trend is particularly troubling because it comes at a time when the Court is deciding such fundamental issues as the very wording of the Pledge of Allegiance, the meaning of the First Amendment, and other issues that are uniquely American. Our nation's judges, and Supreme Court justices, took an oath to defend and uphold the U.S. Constitution-and it is time that Congress remind these unelected officials of their sworn duties. That is why I joined with my friend and colleague, Congressman Tom Feeney, to introduce the Feeney/Goodlatte resolution, which expresses the sense of Congress that the Supreme Court should not cite foreign authorities when interpreting the U.S. Constitution. This resolution sends a clear message that the Congress is not willing to simply stand idly by and see our nation's sovereignty weakened. I believe the judicial branch is guaranteed a very high level of independence when it operates within the boundaries of the U.S. Constitution. However, when judges and justices begin to operate outside of those boundaries, Congress must respond. We must be steadfast guardians of the freedoms that are protected in the Constitution of the United States of America. Thank you again, Mr. Chairman, for holding this important hearing. PREPARED STATEMENT OF PUBLIC CITIZEN'S GLOBAL TRADE WATCH Public Buyers Up • Congress Watch • Critical Mass ● Global Trad. Watch • Health Research Group • Langation Group Testimony of Public Citizen's Global Trade Watch For Hearing on the Appropriate Role of For the House Judiciary Committee's Subcommittee on the Constitution The introduction of H. Res. 97 by Rep. Tom Feeney (R-FL) and dozens of co-sponsors has focused needed attention on the impact of judgments, laws, or pronouncements of foreign institutions on U.S. law and policy. Often ignored in this debate, however, is the impact of international trade agreements and tribunals on U.S. laws and regulations, which are arguably already having a greater impact on the United States. This short brief summarizes some of the main implications that international trade agreements and tribunals have for U.S. sovereignty, focusing on the Central America Free Trade Agreement (CAFTA) now being debated by the House. For more information on CAFTA, or on the implications of other trade agreements for U.S. sovereignty, do not hesitate to contact Public Citizen's Global Trade Watch at www.tradewatch.org. CAFTA & Sovereignty 1. Supporters of CAFTA, including the Office of the U.S. Trade Representative (USTR), say the agreement merely creates a level playing field for U.S. businesses by granting U.S. exports the same duty-free treatment now enjoyed by CAFTA imports to the United States under the Caribbean Basin Initiative (CBI), arguing that the agreement also protects the federal system of shared power. • If CAFTA only created a level playing field for U.S. businesses by granting U.S. exports the same duty-free treatment granted to CAFTA nation's imports under the CBI, CAFTA would be a one-sentence pact: “tariff treatment for United States and Central American goods shall be on a reciprocal basis," plus a few pages of tariff schedule adjustments. • Instead, CAFTA contains 1,000 pages of international law imposing: a) obligations about how foreign service sector firms operating within U.S. territory may be regulated (Ch. 11), b) property rights not set forth in the U.S. Constitution that would affect U.S. land-use policy (Ch. 10). c) structures on how our federal and state tax dollars may be spent (Ch. 9). CAFTA puts Members of Congress interested in reducing tariff barriers in the unacceptable position of having to choose between U.S. sovereignty and "free trade." 2. CAFTA explicitly requires the United States Executive Branch and Governors and Congress, state legislatures and local authorities to conform all existing and future federal, state and local laws to over 1,000 pages of CAFTA-established international law that goes far beyond trade matters (such as cutting tariffs and removing quotas) and extends far beyond ensuring laws are nondiscriminatory (i.e. obligations to treat domestic and foreign goods alike), CAFTA contains numerous absolute requirements that express policies countries may or may not maintain regardless if they treat domestic and foreign players alike. And, CAFTA threatens our system of federalism by requiring that Congress and the federal Executive Branch impose CAFTA's obligations on states: 215 Pennsylvania Ave SF • Washington, DC 20003 ● (202) 546-4996 • www.citizen.org "The parties shall ensure that all necessary measures are taken in order to give effect to the provisions of this Agreement, including their observance, except as otherwise provided in this Agreement, by state governments." (CAFTA Art. 1.4) Accepting an obligation for the federal government to pre-empt state policies that do not conform to U.S. laws that other CAFTA nations believe violate CAFTA's dictates are subject to challenge in a new international tribunal that CAFTA would establish. The United States would face trade sanctions until laws deemed "CAFTA-illegal" by this tribunal were changed or eliminated. (CAFTA Art. 20.16) Bizarrely, CAFTA's new Chapter 20 international tribunal is designed so as to always include two "judges" from other CAFTA nations, but only one U.S. “judge." (CAFTA Art. 20.9) NAFTA's similar international tribunal ruled against U.S. restrictions on Mexican-domiciled trucks' access to U.S. roads. The Bush administration sought to weaken U.S. safety and environmental standards to comply with NAFTA's tribunal. Congress passed a law to stop implementation of the NAFTA ruling. The administration successfully overturned Congress in U.S. court and passed new regulations to allow in the Mexican trucks. Mexico refused to meet new regulations requiring truck inspections and is now threatening trade sanctions because the United States failed to meet the NAFTA tribunal's orders. Requiring U.S. domestic law to conform to the extensive non-trade provisions in CAFTA is in contradiction to the sovereign rights of the elected representatives of the U.S. federal, state and local governments. 3. Other provisions of CAFTA also submit the United States to the jurisdiction of international tribunals established under the auspices of the United Nations (UN) or World Bank. (CAFTA Art. 10.16.3) · These UN and World Bank tribunals would be empowered to order the payment of U.S. tax dollars to foreign investors who claim the United States is not meeting the new protections CAFTA would grant to foreign investors. (CAFTA Art. 10.17) · This aspect of CAFTA, called “investor-state dispute resolution," shifts decisions over the payment of U.S. tax dollars away from Congress and outside of the Constitutionally-established Art. III federal court system (or even U.S. state system) and into the authority of international tribunals. 4. The standard of review for these UN and World Bank tribunals is not U.S. law but rather international law set out in CAFTA. · CAFTA Art. 10-22 “... when a claim is submitted... the tribunal shall decide the issues in dispute in accordance with this Agreement and applicable rules of international law. • This includes a minimum standard of treatment for foreign investors set forth by "customary international law" (CAFTA Art. 10.5.1, Annex 10-B) and established in “principal legal systems of the world.” (CAFTA Art. 10.5.2(a)) • These international tribunals judge whether foreign investors operating within the United States are being provided the proper property rights protections. ⚫ The standard for property rights protection that is the basis for the tribunals' decisions and award of U.S. tax dollars are not property rights established by the U.S. Constitution as interpreted by the U.S. Supreme Court, but rather international property rights standards set forth in CAFTA, as interpreted by an international tribunal. · H.Res. 97 would exclude from U.S. courts the jurisprudence and standards of foreign court systems. CAFTA would subject the United States to judgment under international, not U.S. legal standards, and would do so in international tribunals. 2 USTR has noted that no existing state or local laws would have to be changed to implement CAFTA. This is a very careful, but not very honest, use of language. First, while such laws would not have to be immediately changed, if they were successfully challenged either in a CAFTA Chapter 20 tribunal or before the UN or World Bank, the United States would face trade sanctions until a law successfully challenged under Chapter 20 was conformed with CAFTA or would be required to pay a foreign investor damages for a successful Chapter 10 challenge. Second, CAFTA includes two Annexes containing lists of laws that can violate certam specific CAFTA rules. Annex I-14 grandfathers in existing state and local laws that violate some CAFTA rules. However, any changes to these laws or new laws in these areas must conform to CAFTA. Plus, such existing laws are only excepted from having to meet certain listed CAFTA rules, while other CAFTA obligations still must be met. Annex II lists areas of state and local law service sector regulation in which future policies would also be allowed to violate CAFTA rules. However, U.S. Annex II only covers the areas that are excluded from the WTO's General Agreement on Trade in Services (GATS). Yet, in GATS, important areas of state and local regulation - such as freedom to set zoning laws regarding retail services (stores) and the right to ban gambling - are not protected. Thus, CAFTA newly would expose these areas of state and local regulation to a Chapter 10 foreign investor challenge at the UN and World Bank tribunals. 5. CAFTA establishes a double standard - greater rights are given to foreign investors operating within the United States than are provided by the U.S. Constitution for U.S. citizens and businesses. • The foreign investor protection provisions contained in CAFTA's Chapter 10 and the establishment of a separate "court" system available only to foreign investors form the core of this double standard. • NAFTA contains similar extraordinary foreign investor rights and access to the UN and World Bank tribunals. Under NAFTA's similar system, the U.S. lost one case on the merits, faces 14 more cases, and has spent over $3 million defending a single case. • The Loewen v. United States NAFTA case demonstrates the threat to U.S. sovereignty that the expansion of this system via CAFTA would entail. In that case. Loewen, a Canadian funeral home conglomerate. challenged a Mississippi state court ruling. The state court had ruled against Loewen in a private contract dispute with a Biloxi funeral home. The only government action in question was the normal function of a state court in a private business dispute. The Canadian company claimed that having to follow the standard rules of U.S. civil procedure - such as the posting of a bond for appeal - violated their NAFTA foreign investor rights. The World Bank tribunal in the case ruled that the state court's normal operation was a "government action" regulated by NAFTA's terms and that the court's conduct violated the Canadian firm's special NAFTA-granted investor rights. • USTR has tried to counter concerns about future CAFTA Chapter 10 cases by arguing that no U.S. laws have been subject to successful NAFTA cases. USTR claims that the Loewen case is not relevant because it was "dismissed." In fact, the World Bank tribunal issued a 100-page ruling on this case. All that was dismissed was the Canadian firm's right to collect the hundreds of millions it claimed in damages. The United States only dodged this huge financial liability because of an error by one of the Canadian firm's lawyers. While Loewen's trade lawyer had won the NAFTA case, the firm's bankruptcy lawyer reincorporated the failing firm as a U.S. corporation. This terminated Loewen's "foreign" investor status and thus it could not collect - even though it won on the merits. ⚫ But the substantive legal precedent has been established under NAFTA and would be expanded under CAFIA. Foreign investors do not have to follow the standard rules of U.S. civil procedure or accept as adequate the normal functions of domestic court system while U.S. citizens and companies must. • This experience caused U.S. legal scholars and state and local officials to oppose the "investor-state” system's grant of property rights in trade pacts that extend beyond U.S. law. Critics include the Conference of State Supreme Court Chief Justices and the National Association of Attorneys General. 3 6. Congress was so concerned about this problem that it specifically included language in the 2002 Fast Track legislation to prevent its recurrence. • The legislation requires that future trade pacts grant to foreign investors "no greater substantive rights with respect to investment protections than US. investors in the United States” (19 USCA § 3801(3)) and that, future agreements should establish “standards for expropriation and compensation for expropriation, consistent with United States legal principles and practice” and “fair and equitable treatment [stundurds] consistent with United States legal principles and practice..." ⚫ Yet, although some words included in NAFTA's investor protection system were changed relative to CAFTA's provisions, CAFTA clearly fails Congress' test. In turn, the Conference of State Supreme Court Chief Justices, the National Association of State Attorneys General and the National Conference of State Legislators have written Congress expressing continuing concern about CAFTA's expansion of this unacceptable attack on U.S. property rights standards. Instead of basing foreign investors' property rights on U.S. law, as Congress required, CAFTA provides for foreign investor operating within the United States: a “minimum standard of treatment" set forth by "customary international law" (CAFTA Art. 10.5.1, Annex 10-B) and established in "principal legal systems of the world.” (CAFTA Art. 10.5.2(a)) CAFTA also allows compensation for regulatory takings called "indirect expropriation" in CAFTA (Art. 10, Annex 10-C (4)) – which is not allowed under U.S. law. 7. The serious sovereignty threats identified in NAFTA's foreign investor protection regime not only were not fixed in CAFTA, but new problems were created because CAFTA expands on what sorts of U.S. domestic decisions and actions are subject to compensation claims in the international tribunals under international law. ⚫ For instance, CAFTA goes beyond NAFTA to subject investment agreements “between a national authority... and an investor of another Party that grants the covered investment or investor rights with respect to natural resources or other assets that a national authority controls. "(CAFTA Art. 10.28) • This means that when U.S. companies obtain mining, logging or other concessions on U.S. federal lands their rights under U.S. law and their contracts are determined in domestic courts while foreign investors with the identical contracts would be able to take their disputes with the U.S. government to the UN and World Bank tribunals. This not only creates an unacceptable double standard, it cedes control of federal lands policy to international tribunals. • Under NAFTA's similar foreign investor rights, 41 challenges to domestic regulatory policy have been filed, with eleven completed cases and five cases where foreign investors forced payment totaling over $35 million over zoning laws, construction permits, toxics bans and more. Only one NAFTA investor case had to do with expropriation of an investor's property. The others were attacks on regulations. 8. U.S. state procurement rules also threatened under CAFTA. • Governors from numerous states withdrew from having to comply with CAFTA procurement rules because they forbid anti-offshoring and other key procurement laws. • CAFTA's Chapter 9 strictly limits what criteria procuring entities may use in describing goods and services sought and qualification for bidders in ways that undermine many existing procurement laws, including "Buy America" or "Buy Local" laws. In response to these criticisms, the Bush administration has sought to talk around that fact by listing certain exceptions to that general rule. What are rules limiting domestic procurement policy doing in a trade agreement? |