Interpreting Urugual Round Agreements Act Section 102(B)’s Safeguards for State Sovereignty: Reconciling Judicial Independence with the United States Trade Representative’s Policy Expertise

In this Note, I address the concerns of one aspect of this academic commentary-the claim that the WTO Agreement may cause a tectonic shift in domestic regulatory power, away from the states and toward the federal government and/or the WTO. I argue that while the concerns about the loss of national sovereignty are exaggerated, there is a very real threat to the sovereignty of the States. Congress was aware of this danger and included a variety of provisions designed specifically to protect state sovereignty from federal encroachment in the Uruguay Round Agreements Act (URAA), the federal legislation incorporating the WTO Agreement into U.S. law. These safeguards are embodied in URAA section 102(b). Rather than automatically preempting state laws that a WTO Panel or Appellate Body has found to be in conflict with the WTO Agreement, section 102(b) gives the states an opportunity to present their case before a U.S. court, whom the statute commands to make an independent final determination as to the existence of a conflict. But an erroneous interpretation of two of section 102(b)’s key provisions-the judicial independence mandated by section 102(b)(2)(B)(i) and (ii) and the preemptive scope of section 102(b)(2)(A)-may deprive the States of the safeguards Congress put in place, and could cause an unintended shift of regulatory and interpretive authority towards the executive branch of the federal government. Preempting state laws that conflict with the WTO Agreement is a two-step process. First, the WTO DSB must adopt a WTO Panel or Appellate Body report finding that the state law in question conflicts with a provision of the WTO Agreement. Second, the United States, through the United States Trade Representative (USTR), must bring a separate action against the state in federal court for the purpose of invalidating the statute pursuant to section 102(b)(2)(A). The URAA’s legislative history states that the URAA does ”not automatically preempt or invalidate State laws that do not conform to the agreements even if there is a dispute settlement finding that the State measure is inconsistent,” but it does not specify the standard federal courts are to use to determine whether the URAA preempts a challenged state law.