Obscure Lawsuit Could Alter U.S. Trade Policy

Trade advocates are bracing for a ruling by a federal judge in Alabama in a little-noticed lawsuit whose outcome could dramatically alter the way the U.S. has conducted its trade policy over four decades.

Sometime in the next few weeks, U.S. District Judge Robert Propst is expected to rule in a labor-backed lawsuit challenging the constitutionality of the landmark North American Free Trade Agreement. The case has attracted the attention of some of the nation’s top legal scholars.

Although a finding of unconstitutionality would not undo the 1993 pact, it could make it more difficult for the United States to commit itself to future international endeavors and cast doubt on the legitimacy of a host of other global agreements, according to Bruce Ackerman, one of the nation’s leading constitutional scholars.

“It would destabilize the existing system of international law,” said the Yale University professor. “It would be difficult to declare NAFTA unconstitutional without calling into question our commitment to the WTO, the World Bank and many, many other economic arrangements.”

Such a scenario would also put the U.S. in the uncomfortable position of being committed under international law to a trade agreement that its own courts ruled in violation of its founding document.

“This is a Rod Serling plot,” said Robert Stumberg, an international law expert at Georgetown University’s Harrison Institute for Public Law. “We [would now have] entered the twilight zone, where an agreement that is binding on the U.S. vis-a-vis the rest of the world cannot be enforced internally.”

The case itself turns on the relatively narrow question of whether NAFTA, which links the economies of the U.S., Canada and Mexico in a giant free-trade zone, is a trade agreement or a treaty.

That question has historically been decided on a case-by-case basis as legal scholars and politicians debated when a pact has a broad enough impact to meet the higher test of a treaty.

During the first 150 years of U.S. history, most of this country’s major foreign policy commitments were forged through treaties, according to Ackerman. But after World War II, when international trade exploded, leaders began relying more heavily on some form of congressional-executive branch agreement rather than treaties to facilitate more commercial growth.

Between 1930 and 1992, the United States ratified 891 treaties and 13,178 international agreements, the government said.

The plaintiffs--the Made in the USA Foundation, a coalition of domestic manufacturers and unions, and the United Steelworkers of America--argue that NAFTA’s scope qualifies it as a treaty that, under the U.S. Constitution, required ratification by a two-thirds vote of the Senate, instead of the simple majority of both houses of Congress that favored it.

The Clinton administration insists NAFTA is not a treaty but a congressional executive agreement, a common tool in U.S. trade policy that requires the approval of a simple majority of both houses.

The administration maintains that even if the plaintiffs win their constitutional challenge, NAFTA would remain in place because the U.S. is bound under international law to honor its commitments to foreign governments.

“Under international law, we are not allowed to say, ‘Sorry, Mexico, sorry, Canada, we didn’t do this right,’ ” Justice Department attorney Martha Rubio argued in court earlier this year.

Given the stakes, a successful challenge to NAFTA is likely to be tied up in appeals for years as it wends its way to the Supreme Court, according to trade lawyers--and to create a long period of uncertainty for U.S. trade policy.

This legal skirmish is just the latest effort by globalization critics to slow the Clinton administration’s campaign to open markets around the world. With the U.S. trade deficit headed for another record year, unions and other groups are counting on lawsuits, shareholder activism and old-fashioned protests to draw attention to their concerns over job loss and erosion of national sovereignty.

In spite of the robust U.S. economy and near-record low unemployment, the Clinton administration has had a tough time convincing voters that free-trade agreements such as NAFTA are in their best interests.

The administration gives NAFTA credit for boosting trade between the U.S. and its NAFTA neighbors by more than 44% and creating at least 311,000 jobs. But the Made in the USA Foundation contends the trade agreement has cost more than 400,000 American jobs.

Last year, fierce grass-roots resistance forced the White House to abandon an effort to gain the fast-track authority that would allow the president to negotiate free-trade agreements more easily. The administration is sending its top trade officials on a domestic roadshow to drum up support for launching a new round of trade liberalization talks at this fall’s Seattle ministerial meeting of the World Trade Organization.

Joel Joseph, chairman and general counsel of the Made in the USA Foundation, argues that Americans are growing more disillusioned about trade agreements because they have witnessed the dark side of globalism, from the Asian financial crisis to the stepped-up competition from low-cost competitors overseas.

He and his supporters are counting on a win in Alabama to boost their political leverage in an election year and put pressure on Congress to at least consider revising NAFTA to include greater protections for labor, the environment and consumer health and safety.

“NAFTA was not designed to benefit workers, it was designed to benefit corporations and financial institutions,” said George Becker, president of the United Steelworkers, which claims that NAFTA has cost more than 7,000 steel jobs.

Although the foundation’s legal challenge has gained little notice on Main Street, it has become a cause celebre in legal circles because it has ignited a “battle of the stars” between Ackerman and Laurence Tribe of Harvard University, two of America’s most prominent constitutional scholars.

Tribe, a longtime critic of U.S. trade agreements, supports the plaintiffs’ notion that NAFTA--which regulates everything from investment rules to food safety and labor rights--is a treaty and was therefore adopted in violation of the Constitution.

However, he does not share Ackerman’s concerns that a ruling that NAFTA is unconstitutional would wreak havoc on America’s past or future foreign economic policy.

“To recommend searching constitutional inquiry each time the United States considers binding itself to the terms of an international agreement does not make one guilty of fostering international ‘destabilization,’ as Professor Ackerman has suggested,” he wrote in the Harvard Law Review.

But Ackerman argues that NAFTA, like dozens of other international agreements ratified since World War II, was developed by Congress and the executive branch as a way of countering the Senate’s isolationist tendencies.

He describes the so-called congressional-executive agreement as a more populist alternative to the Founding Fathers’ “anti-democratic” and “outmoded” decision to give the Senate control of foreign economic policy through the treaty process. In the end, Ackerman points out, the Senate still retains the power to reject any international agreement and insist that it be handled as a treaty.

“I think it would be very wrong for the courts to intervene to protect the Senate’s prerogatives when the Senate itself recognizes it is part of the team with the House,” he said.