Stateline Story

States chart their own foreign policy

Maine may not have a seat at the United Nations, but its state lawmakers are dealing with Caracas , Havana and Khartoum as if those foreign capitals were nearby Boston.

In the past few months, Maine Gov. John Baldacci (D) has engineered a controversial oil deal with Venezuela, met with maligned Cuban dictator Fidel Castro and supported an effort to divest state funds from Sudan to protest human rights violations there.

"It's a practical response to the fact that we're in an international economy," said Richard Davies, a senior policy advisor to Baldacci.

The diplomacy isn't limited to Maine. States increasingly are becoming more assertive on the international stage.

More than 30 states now export goods to Cuba despite tight U.S. trade restrictions. Organizations in eight states brokered deals to import heating oil for the poor this winter from Venezuela, despite strained relations between the White House and Venezuelan President Hugo Chávez. Three states — Illinois, New Jersey and Oregon — passed laws to divest state funds from companies with interests in war-scarred Sudan. In the Southwest, states are engaging in bilateral talks with Mexico to stop crime along the border.

Foreign-policy experts warn that some state policies — such as friendly ties between state capitols and Venezuela and Cuba — could undermine federal power abroad. Likewise, states risk swings in U.S. foreign policy, and some state policies are in danger of running afoul of international trade agreements and U.S. court rulings.

Despite the risks, international trade is a powerful magnet for states, and governors are emerging as the chief ambassadors for states seeking trade deals.

Last year, the country exported more than $900 billion in commodities, with 26 states exporting more than $10 billion apiece, according to the World Institute for Strategic Economic Research , a Massachusetts-based research center on foreign trade. Texas topped all states with nearly $129 billion in exports.

In the past three years, governors have led trade missions — meant to link state business with overseas partners — to China, Cuba, Ecuador , England, France, Germany , India, Ireland, Japan, Peru , South Korea and Taiwan.

Gov. Jim Doyle (D) of Wisconsin, for example, has been on trade missions to China, the Czech Republic, Germany, Ireland, Japan, Mexico and Poland since his election in 2002. His office says the goal is to find markets for the state's bigger industries, such as industrial and electrical machinery.

International jaunts by governors used to raise eyebrows, but are becoming de rigueur, said Bill Whalen, who tracks California and national politics for the Hoover Institution, a free-trade think tank based in California. California's economy alone is so large it would rank independently among the top 10 in the world, so its ability to navigate global politics is vital, Whalen said.

"Governors have become much more aggressive in terms of overseas affairs. Fifteen years ago, if a governor spent time going to Europe, then people would think he was running for president and brushing up on his foreign policy. But now, there is a legitimate interest because the trips are tied to economic health," Whalen said.

For the U.S. government, though, there's a potential for states to undercut U.S. interests abroad.

Maine's Baldacci has drawn criticism nationally and in his own state because of detractors' concerns that trading with Cuba helps keep Castro in power and that brokering an oil deal undermines President Bush's strained relations with Venezuela's president, Chávez.

The South American leader has called Bush a "madman" and has worked to diminish U.S. influence in the Western Hemisphere. Bush has criticized social reforms in the country and questioned Chávez's commitment to democracy.

CITGO, owned by the national oil company of Venezuela, distributed nearly 40 million gallons of heating oil to communities in eight states, including Harlem and the Bronx in New York City, and parts of Delaware, Connecticut, Maine, Massachusetts, Pennsylvania, Rhode Island and Vermont.

In the Venezuela deal, Maine officials took up an offer from Chávez and negotiated with CITGO to get the state more than $5 million to help with its low-income heating program. Davies, Baldacci's advisor, said CITGO made no request in return, "direct or implied," he said. The benefit was that "low-income people in Maine didn't freeze to death," he said.

Similarly, Maine's trade deals with Cuba are expected to bring up to $20 million to the state, he said.

But Mike Heath, executive director of the Christian Civic League of Maine and one of Baldacci's most vocal critics, argued the governor is being irresponsible by dealing with Castro and Chávez.

"He's interjecting himself with leaders who are well-known as being enemies of our nation. There are obvious implications. Why did Castro himself meet with him? Was it because we were selling apples? No. There is some benefit for Castro for being seen with a governor from America. He is successfully undermining President Bush, and that's no good," Heath said.

The United States has a longstanding embargo on communist Cuba, allowing only limited trade for items such medicine, food and agricultural products. But U.S. exports to Cuba have increased in recent years, up to $400 million in 2004. Agriculture has been key to the development, and governors have been forceful in connecting state businesses to the island.

Travel to Cuba also is limited, but governors have been able to bypass the restrictions because they are overseas on government business, one of the few exceptions to the travel restriction. Last year, Nebraska Gov. Dave Heineman (R) visited Cuba twice to promote wheat and soybean crops.

States themselves also take risks in assuming global roles. With states increasingly becoming tied to trade with nations such as China, which bought almost $42 billion in state merchandise last year, a sudden overhaul of foreign policy could severely damage state economies dependent on foreign markets.

"If there was a change of heart in Washington and the focus became less on trade and more on human rights and the military, then states will find themselves in an awkward position," Whalen said.

In addition, legislators and trade experts said states increasingly are running into problems when state law conflicts with international agreements or foreign policy.

Two years ago, California Assemblyman Lloyd Levine (D) won legislative approval for a bill that would have used old tires from the state's dumps to pave roads — a " pragmatic way of addressing two problems," he said. But California Gov. Arnold Schwarzenegger (R) vetoed it for fear it would shut out related businesses across the border, violating provisions of the North American Free Trade Agreement (NAFTA).

The bill eventually became law in 2005 after some legal tinkering, but Levine said it shows how NAFTA and other international agreements have eroded the power of state governments to solve their own problems. " I think the states have lost a little bit of power to the federal government and international organizations without even realizing it. And unfortunately, there's not a lot that states can do," Levine said.

Now, an effort in several states to ban investment of state funds in Sudanese-tied companies could be in for legal troubles. A trade group that won a 2000 U.S. Supreme Court decision throwing out a state-led boycott of companies with ties to Burma has threatened a lawsuit against Illinois for its divestment in Sudanese-tied companies.

The group, the National Foreign Trade Council, sued Massachusetts after lawmakers in 1996 ordered the state to boycott companies with ties to Burma because its human rights record. The Supreme Court ruled against Massachusetts on grounds the state overstepped its authority and delved into foreign policy.

"[T]he state Act is at odds with the President's authority to speak for the United States among the world's nations to develop a comprehensive, multilateral Burma strategy," wrote Justice David Souter for the majority. "The state Act undermines the President's capacity for effective diplomacy," he added.

Doug Farquhar, a trade expert for the National Conference of State Legislatures , said the ruling could be used against states that pass similar laws against businesses with Sudanese ties. "This is very scary. It (the Supreme Court ruling) opens up the fact that international organizations and foreign governments can use trade agreements to bring cases and lawsuits over state policies."

Twenty-five years ago, about 20 states passed laws against doing business with South Africa because of apartheid, Farquhar noted. "Many of these types of laws would not be allowed today," he said.

Amnesty International estimates government-backed militias in Sudan have killed at least 200,000 civilians. Divestment bills are intended to cut off money to the Sudanese government, and thus, the militias. Supporters of divestment laws said there are bills to withhold state money from Sudanese-tied businesses in at least seven states.

William Reinsch, president of the National Foreign Trade Council, said state lawmakers should run for Congress if they want to influence foreign policy. The group advocates more open global trade; its board of directors includes Boeing, ExxonMobil, Halliburton and Wal-Mart.

"We call this stuff chicken-soup diplomacy. Everyone feels better — we've done our part for democracy and so on and so forth — but they really haven't done anything," Reinsch said.

Indeed, the growing international presence of governors should come as no surprise to the chief executive sitting in the Oval Office, who nurtured close ties with Mexico as Texas' governor before moving to Washington D.C. Plus, being versed in global affairs doesn't hurt politically. Three of the last four presidents were former governors: Bush, Bill Clinton of Arkansas and Ronald Reagan of California.