Government Contracts Blog - JD Supra
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Government Contracts Blog Government Contracts Blog
Posted at 10:02 10:02 AM AM on 6, 2009 2009 by by Sheppard Sheppard Mullin Mullin Posted at on July July 6,
Recovery Update - RecoveryAct Act Update U.S. "Buy American" U.S.Stimulus: Stimulus: "Buy American" PRC "Buy Chinese" PRCStimulus: Stimulus: "Buy Chinese" Canada "Not"Not Pleased" Canadaand andWTO: WTO: Pleased" Obama signed signedinto into law law the American Recovery On February February 17, 17, 2009, President Obama Recovery and and Reinvestment Act of 2009 (Pub. L. No. 111-5), known popularly by a variety of names, Reinvestment Act popularly by a variety of names, including “ARRA,” “ARRA,”the the“Recovery “RecoveryAct,” Act,”and andthe the“Stimulus “StimulusAct.” Act.”We Wehave havepreviously previouslydiscussed discussed many of the provisions relating to the Recovery Act at some length, especially the implementing relating to the Act at the implementing regulations that were recently published this spring.
Now that chance to to see seehow howthe thepolicies policiesbehind behindthe theRecovery RecoveryAct Act are areunfolding unfolding in Now that we we have have had had a chance reality (and there are advocates and detractors on all sides of this debate), we thought might be reality (and there are advocates and detractors on all sides of this debate), we thought itit might be interesting to review how the Buy American provision provision of of the the Recovery Act Act (Section (Section 1605) is impacting U.S. relations with with its its international internationaltrade trade partners. partners. In brief, brief, many many countries countries remain cautiously optimistic optimistic about about U.S. Buy Buy American American practices practices under the Act, while while other other countries (such as Canada) seem to be gearing up for a trade war. This latter development should not, not, we we (such as Canada) seem to be gearing up for a trade war. This latter development should think, be think, be surprising surprising ---- aa protectionist protectionistreaction reaction on on the the part part of ofat at least least some some of our our trading trading partners partners seemed likely when the "Buy American" provision was first proposed in January 2009. seemed likely the "Buy American" provision was first proposed in January
Buy American Congressfirst first proposed proposedincluding including"Buy "Buy American" American" restrictions in the Recovery Recovery Act Act in When Congress January 2009, a number of commentators warned that such measures would prompt an January 2009, a number of commentators warned that such measures would prompt an international protectionist protectionist reaction reaction resulting resulting in in "trade "trade wars," wars," along along the the lines lines of of those those that developed during the initial years of the Great Depression following passage of developed during initial years of the Great following passage the SmootHawley Tariff anan attempt to to assuage Hawley TariffAct Actofof1930. 1930.InIn attempt assuagethese theseconcerns, concerns,the theSenate Senate added added language language indicating that the "Buy "Buy American" provision would be "applied in a manner consistent with American" provision would be "applied in a manner consistent with obligations under international agreements" (§ 1605(d)). 1605(d)). While While many United States States obligations agreements" (§ many hoped hoped that this provision would do the trick, it appears that its drafters did not understand that, in the provision would do the trick, it appears that its drafters did not understand context of stimulus legislation legislation aimed aimed primarily primarilyatatState State and and local governments, governments, its ameliorative minimal to effect would be minimal to nonexistent. nonexistent. It for the It turns turns out out that that international internationaltrade tradeagreements agreements are, are, for the most most part, part, entered entered into into between between the the
Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=2bbdb53a-dab0-4806-a869-9a6b4ee5712c
foreign countries; U.S. and and other foreign countries; individual individualStates Statesare aresometimes sometimes covered covered by bythe the agreements, agreements, but but only selectively (and city and county governments are rarely covered at all). The Senate may only selectively (and city and county governments are rarely covered at all). The Senate may have dressed dressedup upthe the"Buy "BuyAmerican" American" provision provision with aa fig have fig leaf leaf and and a nod toward international trade, but the plain fact is that the Recovery Act "Buy American" effectively trade, but the plain fact is that the Recovery Act "Buy American" provision has has effectively created an an almost almost pure pure"Buy "Buy American" American" requirement created requirement that that bars bars most most foreign foreign companies companies and and if sold by a U.S. company, company, employing U.S. persons) persons) from from participating participating in foreign products (even if Recovery Act opportunities and local local levels. levels. (Click (Click here for our opportunities at at the the State and here for our previous previous discussion discussion impacts of of the the Buy Buy American American provision provision of the Recovery Act). Act). on the impacts
Buy China the "Buy "Buy American" As ifif in in fulfillment fulfillmentofofthe thewarnings warningsabout aboutthe the international international backlash backlash to the restriction, the Financial Times recently reported that China has included a "Buy China" recently has included a "Buy provision in provision inits itslatest lateststimulus stimuluspackage. package.The Thenew newChinese Chinese edict, edict, dated dated June June 1, 1, 2009, 2009, directs directs that that "Government investment projects should buy domestically made products unless products or "Government investment projects should buy domestically made products unless products or services cannot cannot be beobtained obtainedininreasonable reasonablecommercial commercialconditions conditionsininChina." China." It continues: services "Projects that that really really need need to to buy buy imports imports should should be be approved approved by by the the relevant relevant government government departments before purchasing activity starts." departments before purchasing activity starts." The Financial Times The Financial Times observes observes that that "[t]he "[t]henew newedict edictbans bans local localgovernments governmentsand and departments departments domestic suppliers suppliersin in their their procurement. procurement. [However, [However, f]oreign f]oreign from discriminating discriminating against against domestic companies operating in China argue that the opposite is in fact true and that they have companies operating in China argue that the opposite is in fact true and that they have been been largely cut out largely out of of procurement procurement related related to the government’s stimulus stimulus package." package."
officials have dismay at at the thefact fact that that anyone anyonein inthe theinternational international community community Chinese officials have expressed expressed dismay problem with with a "Buy "Buy China" would have aa problem China" provision, provision,especially especially given given the the fact fact that that the the U.S. included a "Buy "Buy American" American"provision provisionininits itsstimulus stimuluspackage. package.The TheFinancial FinancialTimes Timesobserves observes that Chinese will will likely this move by the Chinese likely"amplify "amplifytensions tensionswith withtrade tradepartners partnersand andincrease increase the likelihood of protectionism around the world." likelihood of protectionism the world."
Bye-Bye Canada? Our neighbor to the the north north is is learning learning the thehard hardway waythe thedifficult difficult truth of the "true impact" of the Recovery Act's "Buy "BuyAmerican" American"provision. provision.Even Eventhough thoughthe theU.S. U.S.and andCanada Canadashare share close to $600 billion in bilateral trade and are each other's largest trading partners, and $600 billion in bilateral trade and are each other's largest trading partners, and even even though though the the U.S. and Canada have entered into numerous free trade agreements, Canadian companies U.S. and Canada have entered into numerous free trade agreements, Canadian companies find themselves continue to find themselves locked out in the cold when it comes to participating in in the the many U.S. Recovery Act projects that occur below the federal level. Canadian trade representatives U.S. Recovery Act projects that occur below the federal level. Canadian trade representatives have loudly loudly challenged and industry on on both both sides sides of the the border have challenged the the exclusion of of Canadian Canadian companies and Canadian products, and the issue has been raised all the way to the U.S. Trade companies and Canadian products, and the issue has been raised all the way to the U.S. Trade Representative and President Obama. Obama. Both Both have Canadian authorities authorities that Representative and President have assured assured Canadian that the the issues issues can can be resolved. Just last month, Debbie Meloh, spokeswoman for the U.S. Trade Representative, be resolved. Just last month, Debbie Meloh, spokeswoman for the U.S. Trade Representative, stated, perhaps perhapsdisingenuously, disingenuously,that thatthe theU.S. U.S.Government Governmentisiswilling willing to negotiate with with Canada stated, Canada for access, provided there is suitable "reciprocity." Canadian municipal leaders, meanwhile, access, provided there is suitable "reciprocity." Canadian municipal leaders, meanwhile, are are threatening to retaliate by keeping keeping U.S. companies companies from selling selling to to local local governments governments in in Canada, Canada, giving the 2009 to to roll roll back the the "Buy "Buy American" giving the U.S. until the middle of October 2009
Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=2bbdb53a-dab0-4806-a869-9a6b4ee5712c
requirements. requirements. Rumors of of aa trade trade war abound. abound.
The WTO's WTO's Reaction originally passed members of of the the WTO WTO When the Recovery Act was originally passed in February 2009, many members EuropeanUnion) Union) were were very very skeptical skeptical of of the the "Buy "Buy American" provision. (especially the European provision. President President Obama assuredthe theWTO WTO that thatthe theprovision provision would would be be applied applied consistent consistent with with America's free Obama assured trade obligations. The The lack lack of of penetration penetration into intothe the State State and and local local market market was, was, of of course, course, not not loudly proclaimed. While the WTO has continued to question the wisdom of the "Buy loudly proclaimed. While the WTO has continued the wisdom of the "Buy American" provision American" provisionand andwarned warnedagainst againstother otherprotectionist protectionistmeasures, measures, itithas has since since remained remained relatively silent on on publicly publicly criticizing criticizing the "Buy "Buy American" provision. This may well WTO is well be be due due to the fact that the WTO is already already hosting hosting aa number of of other other trade trade between the the U.S. U.S. and and its its foreign foreign trading partners, perhaps most most notably notably with with regard disputes between partners, perhaps regard to allegations of illegal subsidies to aircraft manufacturers -the U.S. alleges that the E.U. is illegal subsidies to aircraft manufacturers -- the U.S. alleges illegally subsidizing illegally subsidizingEADS/Airbus EADS/Airbuswith withimproper improperlaunch launchaid, aid,and andthe theE.U. E.U.argues argues that that the the U.S. is improperly subsidizing improperly subsidizingthe theBoeing BoeingCompany. Company.Just Just last last month, month, U.S. U.S.Trade Trade Representative Representative Ron Ron Kirk warned that the U.S. would move "swiftly and quickly" to squelch any additional aid Kirk warned would move "swiftly and quickly" to squelch any provided to Airbus Airbus from from members members of of the E.U. The underlying underlying dispute of "illegal "illegalsubsidies" subsidies" has has been simmering since before 2005 (when the U.S. raised its claims with the WTO), and the been simmering since before 2005 (when the U.S. raised its claims with the WTO), and the WTO is issue aapreliminary preliminary ruling later this year. WTO is expected expected to issue year. But, in in the the meantime, meantime, the rhetoric of a "trade war" war" informs the cross-Atlantic dialogue between the U.S. and the E.U. informs the cross-Atlantic dialogue between the U.S.
Conclusion If the If the Smoot-Hawley Tariff TariffAct Actofof1930 1930taught taught us us anything, anything, itit is is that that protectionist walls do not rescue a nation from a depression. Quite the contrary, they simply frustrate economic economic recovery recovery rescue a nation from a depression. Quite the contrary, they simply frustrate on Capitol Capitol Hill Hill and America who and stifle economic growth. But But there there are many on and many many across across America do not see it that way; and there are apparently many in China who do not see it that way do not see it that way; and there are apparently many in China who do not see it that way as aa simple simple case caseof of "tit "tit for for tat," either. And, And, perhaps perhaps as tat," ititseems seems that that there there are are an increasingly large large number of people in Canada who may not see it that way either. number of people in Canada who may not see it that way either. Apparently, things a bit more Apparently, Chris Chris Braddock Braddockof ofthe theU.S. U.S.Chamber Chamber of ofCommerce Commercesees sees things a bit more BusinessOnline OnlineBlog Blog reports reportsthat, that,in inMr. Mr. Braddock's Braddock's view, view, the the "Buy "Buy clearly. The Canadian Canadian Business American" end-game is becoming clear: "The point was to stimulate American jobs with American" end-game becoming clear: "The point was to stimulate American jobs with Mr. Braddock. Braddock. "Unfortunately, "Unfortunately, itit hasn’t American funds," says says Mr. hasn’t quite worked out that way."
Alas, when it comes to its its "Buy American" comes to American" restrictions, restrictions, the the Recovery Recovery Act Act has has stimulated only international bickering, bickering, both both with withour oursingle singlelargest largest trading tradingpartner partner and and our largest potential trading partner. Probably the last thing the present Administration wanted trading partner. Probably the last thing the present Administration wanted to to do do was was to to prove prove the the oft repeated repeatedcriticisms criticisms of of Smoot-Hawley wisdom of of former former President President Reagan’s Reagan’s oft protectionism. observed, "points "points in in the opposite direction: direction: more protectionism. History, History,President President Reagan Reagan observed, the opposite more trade, trade, increasing cooperation, cooperation, not not isolationism isolationism and and retaliation; retaliation; expanding expanding global global networks of not less; increasing investment, production, and communication, not mercantalist national economics shrinking shrinking tariff barriers." summeditit up up succinctly succinctly -- "Protectionism isn't behind tariff barriers." President President Reagan Reagan summed isn't just just bad bad economics, it's it's bad badpolitics." politics." But, as as we we all all know, know, politics are often oblivious oblivious to the ironic economics, are often
Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=2bbdb53a-dab0-4806-a869-9a6b4ee5712c
imperative imperative we we know knowas as the the Law Law of ofUnintended UnintendedConsequences. Consequences.
For developments with with regard trade agreements agreementswith with Taiwan Taiwan and and China, China, click click For other other recent recent developments regard to free trade here. here.
Authored by:
David S. S. Gallacher (202) 218-0033 [email protected] and and
W. Bruce Shirk (202) 741-8426 [email protected]
Government Contracts Blog Government Contracts Blog
Posted at 10:02 10:02 AM AM on 6, 2009 2009 by by Sheppard Sheppard Mullin Mullin Posted at on July July 6,
Recovery Update - RecoveryAct Act Update U.S. "Buy American" U.S.Stimulus: Stimulus: "Buy American" PRC "Buy Chinese" PRCStimulus: Stimulus: "Buy Chinese" Canada "Not"Not Pleased" Canadaand andWTO: WTO: Pleased" Obama signed signedinto into law law the American Recovery On February February 17, 17, 2009, President Obama Recovery and and Reinvestment Act of 2009 (Pub. L. No. 111-5), known popularly by a variety of names, Reinvestment Act popularly by a variety of names, including “ARRA,” “ARRA,”the the“Recovery “RecoveryAct,” Act,”and andthe the“Stimulus “StimulusAct.” Act.”We Wehave havepreviously previouslydiscussed discussed many of the provisions relating to the Recovery Act at some length, especially the implementing relating to the Act at the implementing regulations that were recently published this spring.
Now that chance to to see seehow howthe thepolicies policiesbehind behindthe theRecovery RecoveryAct Act are areunfolding unfolding in Now that we we have have had had a chance reality (and there are advocates and detractors on all sides of this debate), we thought might be reality (and there are advocates and detractors on all sides of this debate), we thought itit might be interesting to review how the Buy American provision provision of of the the Recovery Act Act (Section (Section 1605) is impacting U.S. relations with with its its international internationaltrade trade partners. partners. In brief, brief, many many countries countries remain cautiously optimistic optimistic about about U.S. Buy Buy American American practices practices under the Act, while while other other countries (such as Canada) seem to be gearing up for a trade war. This latter development should not, not, we we (such as Canada) seem to be gearing up for a trade war. This latter development should think, be think, be surprising surprising ---- aa protectionist protectionistreaction reaction on on the the part part of ofat at least least some some of our our trading trading partners partners seemed likely when the "Buy American" provision was first proposed in January 2009. seemed likely the "Buy American" provision was first proposed in January
Buy American Congressfirst first proposed proposedincluding including"Buy "Buy American" American" restrictions in the Recovery Recovery Act Act in When Congress January 2009, a number of commentators warned that such measures would prompt an January 2009, a number of commentators warned that such measures would prompt an international protectionist protectionist reaction reaction resulting resulting in in "trade "trade wars," wars," along along the the lines lines of of those those that developed during the initial years of the Great Depression following passage of developed during initial years of the Great following passage the SmootHawley Tariff anan attempt to to assuage Hawley TariffAct Actofof1930. 1930.InIn attempt assuagethese theseconcerns, concerns,the theSenate Senate added added language language indicating that the "Buy "Buy American" provision would be "applied in a manner consistent with American" provision would be "applied in a manner consistent with obligations under international agreements" (§ 1605(d)). 1605(d)). While While many United States States obligations agreements" (§ many hoped hoped that this provision would do the trick, it appears that its drafters did not understand that, in the provision would do the trick, it appears that its drafters did not understand context of stimulus legislation legislation aimed aimed primarily primarilyatatState State and and local governments, governments, its ameliorative minimal to effect would be minimal to nonexistent. nonexistent. It for the It turns turns out out that that international internationaltrade tradeagreements agreements are, are, for the most most part, part, entered entered into into between between the the
Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=2bbdb53a-dab0-4806-a869-9a6b4ee5712c
foreign countries; U.S. and and other foreign countries; individual individualStates Statesare aresometimes sometimes covered covered by bythe the agreements, agreements, but but only selectively (and city and county governments are rarely covered at all). The Senate may only selectively (and city and county governments are rarely covered at all). The Senate may have dressed dressedup upthe the"Buy "BuyAmerican" American" provision provision with aa fig have fig leaf leaf and and a nod toward international trade, but the plain fact is that the Recovery Act "Buy American" effectively trade, but the plain fact is that the Recovery Act "Buy American" provision has has effectively created an an almost almost pure pure"Buy "Buy American" American" requirement created requirement that that bars bars most most foreign foreign companies companies and and if sold by a U.S. company, company, employing U.S. persons) persons) from from participating participating in foreign products (even if Recovery Act opportunities and local local levels. levels. (Click (Click here for our opportunities at at the the State and here for our previous previous discussion discussion impacts of of the the Buy Buy American American provision provision of the Recovery Act). Act). on the impacts
Buy China the "Buy "Buy American" As ifif in in fulfillment fulfillmentofofthe thewarnings warningsabout aboutthe the international international backlash backlash to the restriction, the Financial Times recently reported that China has included a "Buy China" recently has included a "Buy provision in provision inits itslatest lateststimulus stimuluspackage. package.The Thenew newChinese Chinese edict, edict, dated dated June June 1, 1, 2009, 2009, directs directs that that "Government investment projects should buy domestically made products unless products or "Government investment projects should buy domestically made products unless products or services cannot cannot be beobtained obtainedininreasonable reasonablecommercial commercialconditions conditionsininChina." China." It continues: services "Projects that that really really need need to to buy buy imports imports should should be be approved approved by by the the relevant relevant government government departments before purchasing activity starts." departments before purchasing activity starts." The Financial Times The Financial Times observes observes that that "[t]he "[t]henew newedict edictbans bans local localgovernments governmentsand and departments departments domestic suppliers suppliersin in their their procurement. procurement. [However, [However, f]oreign f]oreign from discriminating discriminating against against domestic companies operating in China argue that the opposite is in fact true and that they have companies operating in China argue that the opposite is in fact true and that they have been been largely cut out largely out of of procurement procurement related related to the government’s stimulus stimulus package." package."
officials have dismay at at the thefact fact that that anyone anyonein inthe theinternational international community community Chinese officials have expressed expressed dismay problem with with a "Buy "Buy China" would have aa problem China" provision, provision,especially especially given given the the fact fact that that the the U.S. included a "Buy "Buy American" American"provision provisionininits itsstimulus stimuluspackage. package.The TheFinancial FinancialTimes Timesobserves observes that Chinese will will likely this move by the Chinese likely"amplify "amplifytensions tensionswith withtrade tradepartners partnersand andincrease increase the likelihood of protectionism around the world." likelihood of protectionism the world."
Bye-Bye Canada? Our neighbor to the the north north is is learning learning the thehard hardway waythe thedifficult difficult truth of the "true impact" of the Recovery Act's "Buy "BuyAmerican" American"provision. provision.Even Eventhough thoughthe theU.S. U.S.and andCanada Canadashare share close to $600 billion in bilateral trade and are each other's largest trading partners, and $600 billion in bilateral trade and are each other's largest trading partners, and even even though though the the U.S. and Canada have entered into numerous free trade agreements, Canadian companies U.S. and Canada have entered into numerous free trade agreements, Canadian companies find themselves continue to find themselves locked out in the cold when it comes to participating in in the the many U.S. Recovery Act projects that occur below the federal level. Canadian trade representatives U.S. Recovery Act projects that occur below the federal level. Canadian trade representatives have loudly loudly challenged and industry on on both both sides sides of the the border have challenged the the exclusion of of Canadian Canadian companies and Canadian products, and the issue has been raised all the way to the U.S. Trade companies and Canadian products, and the issue has been raised all the way to the U.S. Trade Representative and President Obama. Obama. Both Both have Canadian authorities authorities that Representative and President have assured assured Canadian that the the issues issues can can be resolved. Just last month, Debbie Meloh, spokeswoman for the U.S. Trade Representative, be resolved. Just last month, Debbie Meloh, spokeswoman for the U.S. Trade Representative, stated, perhaps perhapsdisingenuously, disingenuously,that thatthe theU.S. U.S.Government Governmentisiswilling willing to negotiate with with Canada stated, Canada for access, provided there is suitable "reciprocity." Canadian municipal leaders, meanwhile, access, provided there is suitable "reciprocity." Canadian municipal leaders, meanwhile, are are threatening to retaliate by keeping keeping U.S. companies companies from selling selling to to local local governments governments in in Canada, Canada, giving the 2009 to to roll roll back the the "Buy "Buy American" giving the U.S. until the middle of October 2009
Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=2bbdb53a-dab0-4806-a869-9a6b4ee5712c
requirements. requirements. Rumors of of aa trade trade war abound. abound.
The WTO's WTO's Reaction originally passed members of of the the WTO WTO When the Recovery Act was originally passed in February 2009, many members EuropeanUnion) Union) were were very very skeptical skeptical of of the the "Buy "Buy American" provision. (especially the European provision. President President Obama assuredthe theWTO WTO that thatthe theprovision provision would would be be applied applied consistent consistent with with America's free Obama assured trade obligations. The The lack lack of of penetration penetration into intothe the State State and and local local market market was, was, of of course, course, not not loudly proclaimed. While the WTO has continued to question the wisdom of the "Buy loudly proclaimed. While the WTO has continued the wisdom of the "Buy American" provision American" provisionand andwarned warnedagainst againstother otherprotectionist protectionistmeasures, measures, itithas has since since remained remained relatively silent on on publicly publicly criticizing criticizing the "Buy "Buy American" provision. This may well WTO is well be be due due to the fact that the WTO is already already hosting hosting aa number of of other other trade trade between the the U.S. U.S. and and its its foreign foreign trading partners, perhaps most most notably notably with with regard disputes between partners, perhaps regard to allegations of illegal subsidies to aircraft manufacturers -the U.S. alleges that the E.U. is illegal subsidies to aircraft manufacturers -- the U.S. alleges illegally subsidizing illegally subsidizingEADS/Airbus EADS/Airbuswith withimproper improperlaunch launchaid, aid,and andthe theE.U. E.U.argues argues that that the the U.S. is improperly subsidizing improperly subsidizingthe theBoeing BoeingCompany. Company.Just Just last last month, month, U.S. U.S.Trade Trade Representative Representative Ron Ron Kirk warned that the U.S. would move "swiftly and quickly" to squelch any additional aid Kirk warned would move "swiftly and quickly" to squelch any provided to Airbus Airbus from from members members of of the E.U. The underlying underlying dispute of "illegal "illegalsubsidies" subsidies" has has been simmering since before 2005 (when the U.S. raised its claims with the WTO), and the been simmering since before 2005 (when the U.S. raised its claims with the WTO), and the WTO is issue aapreliminary preliminary ruling later this year. WTO is expected expected to issue year. But, in in the the meantime, meantime, the rhetoric of a "trade war" war" informs the cross-Atlantic dialogue between the U.S. and the E.U. informs the cross-Atlantic dialogue between the U.S.
Conclusion If the If the Smoot-Hawley Tariff TariffAct Actofof1930 1930taught taught us us anything, anything, itit is is that that protectionist walls do not rescue a nation from a depression. Quite the contrary, they simply frustrate economic economic recovery recovery rescue a nation from a depression. Quite the contrary, they simply frustrate on Capitol Capitol Hill Hill and America who and stifle economic growth. But But there there are many on and many many across across America do not see it that way; and there are apparently many in China who do not see it that way do not see it that way; and there are apparently many in China who do not see it that way as aa simple simple case caseof of "tit "tit for for tat," either. And, And, perhaps perhaps as tat," ititseems seems that that there there are are an increasingly large large number of people in Canada who may not see it that way either. number of people in Canada who may not see it that way either. Apparently, things a bit more Apparently, Chris Chris Braddock Braddockof ofthe theU.S. U.S.Chamber Chamber of ofCommerce Commercesees sees things a bit more BusinessOnline OnlineBlog Blog reports reportsthat, that,in inMr. Mr. Braddock's Braddock's view, view, the the "Buy "Buy clearly. The Canadian Canadian Business American" end-game is becoming clear: "The point was to stimulate American jobs with American" end-game becoming clear: "The point was to stimulate American jobs with Mr. Braddock. Braddock. "Unfortunately, "Unfortunately, itit hasn’t American funds," says says Mr. hasn’t quite worked out that way."
Alas, when it comes to its its "Buy American" comes to American" restrictions, restrictions, the the Recovery Recovery Act Act has has stimulated only international bickering, bickering, both both with withour oursingle singlelargest largest trading tradingpartner partner and and our largest potential trading partner. Probably the last thing the present Administration wanted trading partner. Probably the last thing the present Administration wanted to to do do was was to to prove prove the the oft repeated repeatedcriticisms criticisms of of Smoot-Hawley wisdom of of former former President President Reagan’s Reagan’s oft protectionism. observed, "points "points in in the opposite direction: direction: more protectionism. History, History,President President Reagan Reagan observed, the opposite more trade, trade, increasing cooperation, cooperation, not not isolationism isolationism and and retaliation; retaliation; expanding expanding global global networks of not less; increasing investment, production, and communication, not mercantalist national economics shrinking shrinking tariff barriers." summeditit up up succinctly succinctly -- "Protectionism isn't behind tariff barriers." President President Reagan Reagan summed isn't just just bad bad economics, it's it's bad badpolitics." politics." But, as as we we all all know, know, politics are often oblivious oblivious to the ironic economics, are often
Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=2bbdb53a-dab0-4806-a869-9a6b4ee5712c
imperative imperative we we know knowas as the the Law Law of ofUnintended UnintendedConsequences. Consequences.
For developments with with regard trade agreements agreementswith with Taiwan Taiwan and and China, China, click click For other other recent recent developments regard to free trade here. here.
Authored by:
David S. S. Gallacher (202) 218-0033 [email protected] and and
W. Bruce Shirk (202) 741-8426 [email protected]
