the visible hand

it is the theory which decides what can be observed – einstein

Procurement policies and free trade

Posted by ecoshift on February 1, 2009

The following may be of some interest to those who wish California’s procurement policies would prioritize local California products…

Out of Gaps In Treaties, First Salvos Of Trade War –
By Anthony Faiola
Washington Post Staff Writer
Sunday, February 1, 2009; Page A01

“In the United States, a move to greatly expand Buy American provisions as part of the $819 billion fiscal stimulus package has generated shock waves in other countries, with Canadian and European officials in particular rising up in protest. The provision, passed by the House on Wednesday, would mostly bar foreign steel and iron from the infrastructure projects laid out in the stimulus package. A Senate version still being considered goes further, requiring, with few exceptions, that all stimulus-funded projects use only American-made equipment and goods.

Yet depending on how the language on a Buy American provision may ultimately read, experts on trade law say it remains unclear whether it would categorically violate a WTO agreement on government procurement the United States signed in 1996.

“There are lots of institutional firewalls to prevent trade wars that exist today that did not exist during the Great Depression,” said Gary Hufbauer, senior fellow with the Peterson Institute for International Economics. “That could help now. But there is still a lot of room for damage, maybe pretty bad damage, that can be done in the gray area of the rules.”

Although the legality of the Buy American provision may be in question, that might not prevent a potentially dramatic series of countermeasures by America’s trading partners if it is passed and signed by President Obama. For that reason, analysts are seeing it as a major test for Obama, arguing it could signal that the United States may be changing course from a decades-long embrace of free trade because times are now too tough to maintain that path. ”


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