California Assemblyman Lloyd Levine thought he had found an eco-friendly way to help the state dispose of millions of scrap tires: use recycled U.S. tires in asphalt for road construction.
The Van Nuys Democrat hadn't counted on Canadian and Mexican rubber exporters crying foul. And though Gov. Arnold Schwarzenegger supported Levine's idea, he vetoed the assemblyman's bill in September, saying it would violate international trade pacts and invite retaliation against California goods.
Nobody in Sacramento was very happy with the outcome. "It's very disconcerting to think the federal government can make agreements that can compromise the state's ability to regulate for the health and welfare of its citizens," said Susan Durbin, a deputy attorney general for the state.
For state legislators, the veto highlighted the serious threat that international trade agreements pose to states' sovereignty. This is of particular concern in California, where state officials are caught between their economic dependence on trade and their concerns about the constraints on their ability to protect public health and the environment.
In the last year, the threat of conflicts with global trade pacts helped derail proposed state laws that would have beefed up screening for lead in imported candy from Mexico and created a tax on energy imports from Mexico to improve air quality at the border.
The problem arises because the U.S. is a member of the World Trade Organization and has signed such pacts as the North American Free Trade Agreement that prohibit discrimination against foreign firms or products.
A U.S. trade official in Washington, who spoke on the condition that his name not be used, said the Bush administration respected the rights of state and local officials to legislate as they saw fit. But he said trade-dependent states such as California had a lot to gain from agreements that force foreign governments to drop barriers to imports or open up their government contracts to U.S. firms.
"What we've done simply is to urge them to take into account the balance of interest as they make their individual decisions," the official said.
Under global pacts like the WTO, foreign entities can't force federal or state officials to change offending laws. But if the U.S. loses a trade case and doesn't revise the offending statute, it may face trade sanctions or large fines.
