Missouri Governor Bob Holden learned how volatile globalization issues have become when his Democratic primary challenger, Claire McCaskill, started banging away on him for offshoring the state's call center for food stamp and welfare recipients to India. Holden, a labor-friendly Democrat, moved to get the jobs back home. But McCaskill, the state auditor, who made opposition to offshoring of state jobs a central theme of her "Blueprint for Economic Change" campaign, beat Holden in the August 3 vote--becoming the first challenger to defeat an incumbent governor in a primary in a decade.

The Missouri race provided the latest indication that the debate over trade and economic globalization issues is shifting to the states, as are debates on many issues once thought to be the exclusive province of federal officials. While Congress remains the primary battleground in fights over free-trade agreements and tax policies that benefit the "Benedict Arnold" corporations that John Kerry condemned for transferring jobs to countries with low wages and lax environmental regulations, state officials are often the first to feel the heat when factories close and service jobs are outsourced. Pennsylvania Governor Ed Rendell, noting that his state has suffered job losses in manufacturing for forty-four consecutive months, says he can't live up to his promise to bring prosperity and stability "without taking action to ensure that Pennsylvanians have a fair shot at remaining employed and that companies based in our state can compete in an increasingly unfair international trade system."

Rendell and Iowa Governor Tom Vilsack have emerged as key players in a revolt against federal trade policies that would deny state and local governments the authority to give preferences in contract awards to firms that create jobs where the tax dollars that pay for those contracts are collected. As recently as the late 1990s, governors tended to be advocates for trade agreements, based on their faith in promises that those deals would create new markets. But they and state legislators have become increasingly concerned about job losses. Under pressure from unions, more than three dozen states have begun exploring legislative remedies that prevent offshoring of state jobs and give preferences to firms that create jobs at home, employ union workers or pay a living wage. Environmental groups have, as well, begun pushing with some success for procurement policies that seek products with recycled content, that promote alternative energy and that require the purchase of fuel-efficient vehicles. And they have grown increasingly savvy about the need to defend these initiatives from attempts by the federal government to barter away state sovereignty.

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