top 5 | international affairs
stantial risk for states that have trade-oriented economies. Despite rising global growth and increases in wages and productivity, many still feel that the prevailing neoliberal economic system of the last three decades has been a net loss. This rise in anti-trade sentiment could have a significant impact on state economies. In 2016, foreign direct investment, or FDI, into the United States declined slightly, despite remaining the number one destination for FDI globally. International consumers are still attracted to American goods and services. However, shifting markets, political uncertainty, and consumer preferences may act as a brake on continued growth. “At the end of the day, American products are well regarded around the world, and foreign companies want those products,” said David Mathe, export trade director for the state of Delaware and current SIDO president, when asked about the possible renegotiation of NAFTA and other trade agreements. “The U.S. business is focused on finding those markets and building
those business relationships. They want to leave the politics to the politicians.” The U.S. formally began the process to renegotiate the North American Free Trade Agreement, or NAFTA, on Aug. 16, 2017. The renegotiation process is expected to take several months or years. There is significant daylight between the three parties and it is unlikely that an agreement will be reached in 2018. Among the most contentious elements are the Section 19 dispute resolution panels, a key factor in the U.S. Canadian softwood lumber dispute, and how to address digital services, including sales. “The North American Free Trade Agreement went into effect almost 25 years ago and needs to be updated to reflect new issues and technologies that have emerged since that time,” said Robert Hamilton, the advisor for trade policy for Washington Gov. Jay Inslee. “Of paramount importance are rules governing trade over the internet, provisions that ensure the state-owned enterprises compete on a commercial basis without government support, and
stronger enforceable labor and environmental provisions.” Hamilton also serves as the chair of the Intergovernmental Policy Advisory Committee on Trade within the Office of the United States Trade Representative, or USTR. This is the primary advisory committee responsible for providing policy advice on trade policy matters to USTR on behalf of state and local governments. Trump has also signaled his concern with other U.S. trade partners, including those with Germany and South Korea. These two nations are major trading partners, generating $166.9 billion in trade in 2016. Overall, it is impossible to predict what specific actions the administration may take. As the contours of an America First trade policy begin to emerge at the federal level, state trade officials are continuing to make inroads at setting their own trade priorities.
Immigration
Global Conflicts
International and national security issues will continue to intrude on state policymaking over the coming year. Cybersecurity intrusions on state networks are likely to increase, bringing risks to critical infrastructure, personally identifiable information, and election systems. Conflict continues to blaze in the Middle East and potential confrontation with North Korea may loom. The Senate considered but ultimately did not vote on an amendment calling for a new round of military base realignment and closures or BRAC. The Defense Department has pushed for a new round of BRAC for several years. Military bases act as significant economic drivers and a new round of BRAC could exact a significant cost. Expect additional discussion of trimming the department’s inventory of real property in 2018.
President Trump and the Republican-held Congress are attempting to bridge the divide on immigration, especially the Deferred Action on Childhood Arrivals program. A shift in federal immigration policy could have a substantial impact on state governments. Reducing or rescinding federal transfers to states and localities that do not participate in immigration enforcement, so-called sanctuary cities, has been repeatedly floated by policymakers; however, federal courts have ruled that specific Congressional intent is required before the attorney general or others can rescind federal money. A reduction in legal immigration levels could have a serious workforce impact. A lack of service and farm workers have been reported in states as diverse as California, Oregon, Tennessee and Utah, raising workforce and economic concerns.
The international security picture remains unsettled as conflicts throughout Asia, Africa and the Middle East continue to flare. Non-state actors, including criminal gangs and terrorist groups, have demonstrated increasing competence and capability to strike far beyond their home ranges. Continued fighting in Burma, Sudan, and Yemen and famine in Ethiopia, Nigeria, and Somalia have the potential to enhance the push factors and exacerbate the global refugee crisis. States, which provide much of the support required for resettled persons, may be confronted with increased refugee flows, requiring additional services and funding. However, it is unclear how many refugees may be admitted. Resettlement of refugees and prevention of crime and terrorism will continue to consume state public safety officials.
JAN/FEB 2018 | CAPITOL IDEAS
National Security
19