Federalism and US Foreign Relations: Understanding State Actions

Federalism and US Foreign Relations:
Understanding State Actions
In 1787, the founders of the United States of America gathered in
Philadelphia because under the original constitution, the Articles of Confederation,
most authority had been granted to the states and the infant nation
was beginning to fragment into its constituent units. Indeed, state governments
engaged in their own international diplomacy and often perceived
that their own interests should take precedence over the interests of the
larger confederation. Nearly 220 years later, we find that most state governments
and even some larger municipal governments are once again actively
engaged in the international arena. States currently operate 180 offices
abroad and most governors lead state delegations abroad every year.
Federalism and how it relates to contemporary US foreign relations has
implications far beyond the borders of the United States. As the world’s
only superpower, the influence of the United States is felt in most corners
of the globe. The huge US economy is more than twice the size of the second
leading national economy in the world, that of Japan. In terms of individual
US states, three – California, New York and Texas – would have ranked in
2003 among the 10 largest nation-states in terms of the annual production
of goods and services (GDP); 22 among the top 25 nation-states; 38 among
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United States of America 43
the top 50; and all 50 states among the largest 72 national economies in
the world. There is no denying that states can be significant economic
actors on the global stage.
State government officials have traditionally viewed their purpose as
enhancing and safeguarding the interests of the people whom they represent.
This effort, however, has become much more complicated as a result
of globalization and what is referred to as “creative destruction” – destroying
the old economic structure from within in order to create a new one. In
terms of globalization, approximately 18 million US jobs are now tied to
exporting, inward foreign direct investment, and visits by foreign tourists.
Each state wants its share of these jobs and seeks for its own business community
to be globally competitive. State leaders also perceive the benefits of
setting up their own offices abroad and sponsoring periodic international
economic missions, rather than being satisfied with allowing US embassies
and consulates to promote the states’ collective interests overseas.
States also want to be on the right side of creative destruction. Each year
in the United States, over 600,000 new businesses are created, but almost
as many close their doors. More than 30 million new jobs are created annually,
but roughly 30 million are lost. Silicon Valley can do exceedingly well
in the era of creative destruction, but communities tied to older capitalist
economies, such as Detroit, Newark, and St. Louis, have struggled to keep
up. States understand that both domestic and
global conditions can affect how they will fare
economically and they have reacted accordingly
by becoming more involved internationally.
Various challenges now confront US federalism.
The first challenge is differentiating between
foreign affairs and foreign policy. Washington has
not been overly concerned about states engaging
in the international economy, establishing special
relationships with other non-central governments
abroad, or even solidifying international ties which
go beyond the economic dimension. However, the
national government wants the states to stay out of
foreign policy. Incidents of foreign policy include
Massachusetts’ unilateral sanctions against Burma
(Myanmar) and Illinois’ current sanctions against
Sudan. Washington argues that foreign policy
remains constitutionally in the exclusive domain of the national government
and that the nation must speak with “one voice” on key foreign policy issues.
The second challenge is the perceived erosion of state powers as a result
of US international treaty obligations. Various state officials have argued
that US commitments to the World Trade Organization, the North
American Free Trade Agreement (NAFTA), and other organizations have
Washington has not
been overly concerned
about states
engaging in the
international economy,
special relationships
with other non-central
abroad, or even
solidifying international
ties which go
beyond the economic
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stripped the states of some of the authority guaranteed to them by the US
Constitution. This is especially the case in Chapter 11 of NAFTA which
limits what state governments can do to protect the environment and the
health of their citizens.
The third challenge is the dearth of intergovernmental cooperation in
coping with the effects of globalization and creative destruction. State
government representatives complain that they need good data on export
and import activity at the local level but that Washington is actually
cutting back on data-gathering operations instead of expanding them.
The same officials add that there is no effective dialogue with Washington
over such issues as Chapter 11, and that inadequate consultation occurs
with the states before the national government commits itself to international
The fourth challenge is for all levels of government to engage in more
effective public-private sector collaboration. The United States is a major
underachiever in the export field and most companies simply do not ship
their products abroad. State and municipal governments are best equipped
to work with small and medium-sized businesses at the local level and
establish world-class infrastructures, including vastly improved public education
systems, which would assist these businesses to produce globally competitive
goods and services and then begin to export their production overseas.
The fifth challenge is common to all federal systems. Is federalism a plus
or a minus in coping with the exigencies of globalization and unprecedented
technology change? Are unitary systems better equipped to react
quickly and uniformly to international conditions? In the United States,
some states still engage in local protectionist practices which may turn off
foreign investors. These investors would also prefer to see one set of laws
governing business activity instead of 50 different state laws and one
national law. States may also have widely different positions on key international
issues. In a country with 300 million people spread across the
fourth largest territorial expanse in the world, would an enhanced role for
state and municipal governments in foreign affairs ultimately benefit the
individual American citizen?
The final challenge is for state governments to decide in the long run
what they actually want to do internationally. It is impressive that states now
operate 180 offices abroad compared with four in 1980. However, in 2002,
states operated 243 offices in 30 different countries, exemplifying how
subject the issue is to the whims of whichever state governor is in office.
Most state programs have failed to engage in serious long-range planning,
a situation which stands in stark contrast to the spending and planning
undertaken by the major provinces in Canada. State governments may give
lip service to the notion of “thinking globally and acting locally,” but their
journey into the realm of US foreign affairs has thus far been sporadic and
largely devoid of long-term vision and institutional continuity.
Earl Fry
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