Do Free Trade Agreements Threaten the States? Well, Maybe the Korea-U.S. FTA Does, At Least a Little
I am sympathetic to the concern, expressed in this short article, about the threat that international agreements pose to state laws. The American states, as I’ve argued here and here, need more autonomy in foreign affairs and in their interaction with international law, not less. But I think free trade agreements like NAFTA are generally the least intrusive of those agreements in many ways, since many of their provisions cannot be enforced directly against the states in most cases. Certainly, no free trade agreement has ever been used to override a state law in the U.S.
Still, the anti-trade site I linked to above may have a point with the pending Korean U.S. Free Trade Agreement. Unlike NAFTA and other FTAs I am aware of, KORUS seems to allow for ICSID arbitration of investor disputes, and ICSID enforcement as well. ICSID Award enforcement in the U.S. could permit, at least in theory, a Korean investor to enforce the relevant KORUS provisions in a U.S. court proceeding without the consent or intervention of the U.S. federal government. That is a big shift and could expose state laws to more foreign investor litigation than before. So