Free Trade Agreements

Issue: Free Trade Agreements


Free trade agreements (FTAs) and bilateral investment treaties can impact state courts. The intent of FTAs is to remove barriers to the flow of services between nations, including legal services.  State courts may receive pressures to effectuate some types of regulatory easing for foreign lawyers seeking to practice in the USA.  Many investment treaties contain investor-state dispute settlement procedures that can circumvent domestic court processes.


CCJ urged the US Trade Representative (USTR) and Congress to only approve trade agreements provisions that recognize and support the sovereignty of state judicial systems and the enforcement of state court judgments and to clarify that under existing trade agreements, foreign investors shall enjoy no greater substantive and procedural rights than US citizens and businesses.


Numerous international trade agreements (whether finalized or pending negotiation) cover “services.”  These include General Agreement on Trade in Services (GATS - the grandparent of subsequent multi-lateral proposals), the Trans-Pacific Partnership (TPP) agreement (with respect to Pacific Rim countries), the Trade in Services Agreement (TiSA) (involving 23 nations who have expressed impatience with the GATS process), and the more recently proposed Transatlantic Trade and Investment Partnership (commonly called T-TIP or the US-EU trade agreement). After the January change in Administration, the US has withdrawn from the TPP.  The other multilateral agreements being negotiated (the TTIP and the TiSA) are in limbo.  The Office of the U.S. Trade Representative (USTR) is currently focusing on renegotiating the North American Free Trade Agreement (NAFTA) with focus on manufactured goods.  Canada and Mexico are very willing to engage in these negotiations.


With respect the US-EU trade negotiations, the new Administration is evaluating to what degree a multilateral agreement makes more sense than individual bilateral agreements with countries like Germany or the UK that have large manufacturing enterprises.  The TiSA negotiations are now being led by Australia.  And with respect to trade in services generally, there is no indication of any change in the USTR’s negotiation approach on professional services.  The USTR has consistently taken the position that there should be a “mutual recognition” approach to the regulation of professions such as accounting, architecture, and the law.  This means the USTR encourages the regulators professions to engage in meaningful dialogues to create inbound licensing policies that promote rather than inhibit cross border exchange of goods and services. 

The CCJ Working Group on Foreign Lawyers and the International Practice of Law has been a prime vehicle for international communications with respect to regulation of cross border legal practice.  Working group (chaired by Chief Judge Jonathan Lippman (ret.) along with Chief Justices Myron Steele (ret.) and Jerry VandeWalle) reports to the CCJ Professionalism Committee at the current CCJ midyear meeting.

The State Dep. Advisory Committee on Private International Law is re-examining investment treaty procedures to resolve investor claims against governments.  NCSC staff shares CCJ concerns about arbitration panels potentially resolving cross border business disputes in derogation of state court sovereignty.