FOREIGN-TRADE AGREEMENTS - A NEW FEDERAL PARTNER

The North American Free Trade Agreement (NAFTA) and the General Agreem ent on Tariffs and Trade (GATT) shift power away from state and local government in the federal system. They impose new rules on the exercis e of state and local powers over procurement and the regulation of foo d, environmental, health, product and service standards, investments, services, financial services, economic development, and land transport ation. States will have to comply with various reporting and registrat ion requirements, and may be subject to stricter nondiscrimination obl igations toward imported goods and services than under the commerce cl ause of the U.S. Constitution. State and local governments will be jud ged by international panels, whose judgments the United States must en force or suffer trade sanctions from aggrieved trading partners. Yet, states have not strongly opposed NAFTA and GATT. The greatest state op position has been to automatic preemption, which the Clinton administr ation promised to avoid as much as possible. Nevertheless, increased p ower over federalism has moved to the executive branch, business, and trade-dispute panels, with less power for state and local governments.