Democrats Invite International Legal Fight

I am like a kid in a candy store right now. This is the stuff I want to become a Customs Attorney over.

Congressional leaders, trying to quell a dispute over “Buy American” provisions in the stimulus package, are crafting a version that would apply only when they don’t violate trade rules, according to industry officials and a congressional aide.

The lawmakers are reacting to a demand by the White House that the provisions satisfy U.S. obligations under the World Trade Organization. President Barack Obama “wants to ensure that any legislation that passes is consistent with trade agreements and doesn’t signal a change in our overall stance on trade,” White House Press Secretary Robert Gibbs said at a news briefing today.

The House Ways and Means Committee’s Democratic staff and aides to Senate Majority Leader Harry Reid, a Nevada Democrat, are working out the language, said a lobbyist who was briefed on the measure. The people familiar with the talks declined to be identified because the talks are confidential. Ways and Means spokesman Matthew Beck didn’t have an immediate comment, and Reid spokesman Jim Manley didn’t return a telephone message.

Steel companies, such as U.S. Steel Corp. and Nucor Corp., and labor unions are pushing language in the stimulus plan to mandate that projects use American-made iron, steel and other manufactured goods in building projects such as roads, bridges and tunnels.

They argue that the amendment, passed by the House of Representatives last week, already gives the Obama administration the option to waive that requirement if it would run counter to the rules of the WTO or North American Free Trade Agreement.

“We’ve always said this doesn’t violate our trade laws,” said Robert Baugh, executive director of the Industrial Union Council at the AFL-CIO. “If they need to restate it, fine."

Well...I sincerely wish them luck.

Really I do.  If these guys honestly think they can create a version of their protectionist "Union Treats" which will not violate the numerous treaties, agreements, and bilateral trade deals this nation has put together in the past 60 or so years, I'd like to read the legalese once they've wrapped up to see how they pulled it off.

For starters, there's the World Trade Organization's (WTO) 1996 Agreement on Government Procurements (GPA).  It was established as part of the Uruguay Round of WTO talks.  It pretty much states no nation can give preferential treatment to its own manufacturers in deciding what a government buys.

"Rules of Origin," often the basis for under the radar protectionism, are often suspended under the GPA.  This is done to ensure all countries, in particular the developing ones, have as fair a shot of being the provider of goods to any nation on this planet as long as they can prove they're getting it to its source in a reasonable amount of time.

Then if they somehow survive that legal minefield, there's the individual, bilateral trade agreements which now litter the globe.  Think NAFTA and CAFTA are pains in the ass to navigate?  There's one between China and Brazil.  There's another between Australia and Singapore.  Often times, these too will have stringent set of rules when it comes to government procurements.  NAFTA actually has a series of clauses which allowed the Canadian and Mexican governments the right to bid for American government procurements, no strings attached.  We got the same treatment from them.

Heck, I got a particular chuckle last week when researching the Australia-United States Free Trade Agreement (A-USFTA) after reading what they had to say about the "Buy American" provisions.

The Buy American provision would be a serious setback for Australia, which is a major exporting nation. In the Free Trade Agreement with the US, Australia secured much greater access to US government procurement, although there remain some restrictions on steel sales for transport projects.

It would also appear to run contrary to the commitment the G20 leaders gave in Washington before Christmas to avoid taking measures that affect free trade during the global financial crisis.

I'm not sure if the provisions would be a direct violation of the agreement and , especially the steel for highways, freeways, and bridges, but the Wikipedia entry summarizes the Government Procurement portion as following:

Government procurement

Subject to some exceptions, and the non-participation of some US states, the agreement required, in government and government agency procurement, that each party should accord to the other treatment no less favourable than the most favourable treatment accorded to domestic goods, services and suppliers.

Enter the lawyers.

It ought to be a blast to watch this new Presidential Administration get dragged before the World Trade Organization time and time again for violating their word on decades' old trade agreements.  As good intended as they are for trying to save jobs and ease fears in their Congressional Districts, these Congressmen and Senators are about to start a trade war because there will be retaliation which will kill even more jobs than these measures were meant to save.