The Obama Stimulus Violates International Law

by Julian Ku

OK, it only violates international trade law obligations, but that’s not nothing!  Specifically, the stimulus package recently passed by the U.S. House of Representatives contains a number of “buy American” requirements for the purchase of steel by recipients of the stimulus.  The EU is already getting set to challenge these provisions at the WTO, if they make it into U.S. law (and there is little doubt that it will).  Such provisions probably violate the Government Procurement Agreement of the WTO. The EU will probably have a pretty strong argument, since non-discrimination is at the heart of the  WTO system.  For instance, under Article III of the GPA, the U.S. is obligated to “provide immediately and unconditionally to the products, services and suppliers of [other GPA signatories] treatment no less favourable than … that accorded to domestic products, services and suppliers.” The stimulus doesn’t do this, at least with respect to steel.  

Now as a matter of U.S. law, it is perfectly OK for the U.S. to ignore its international law obligations in this and other circumstances. And that is fine with me. But it should give many more aggressive internationalists some pause that a solemn international agreement of the U.S. will be violated, and that barely anyone in the (Democratically-controlled) Congress or Presidency will care or notice.

7 Responses

  1. Yes, Julian, there is abosolute moral equivalency between violating CAT and violating the Government Procurement Agreement of the WTO.  How petty of those aggressive internationalists to overlook this breach of our solemn treaty agreements.  How hypocritical of them not to support free trade with the same fervor that they attack state torture.  It’s as if they are just using international law as a pretext to save lives and protect human dignity.  

  2. Why are the “buy American” requirements limited to steel? Why not have a blanket “buy American” requirement for all spending in the stimulus package? It appears that the influence of lobbyists in Congress is as strong as ever.

    What would happen if America’s trading partners had similar spending restrictions in their stimulus packages?

    Protectionism is considered to be an aggravating factor of the Great Depression. President Obama would be sending the wrong signals to America’s trading partners if this “buy America” provision passes.

  3. Man, the Steel industry must have the best lobbyists on the planet.  First they get Bush to protect them, and now Obama, both in violation of our WTO commitments?

  4. Obama administration needs to realize that in several months economic crisis and soaring deficit will be solely his administration’s and his party’s problem, so for any previous or future mistakes he’ll have to take the blame. Two-three months from now nobody will remember Bush’s policies and the Democrats have to be more careful on the long-term effects of massive spending. If the new stimulus fails, just like the past one, then this will balloon into Obama’s first political problem. We have to also realize, that on the long-term we won’t be able to afford more bailouts and there has to be alternative solutions, since we are passing the trillion Dollar deficit boundary. Printing more money can be utilized as short-term tool, but on the long run it will devastate economy. Something needs to be done immediately, but more regulation & spending does not seem to be a logical answer, we need another alternative solution. Maybe we should take pure libertarian approach and let the free market decide who wins or loses? This will cause social unrest and chaos, so as a society we can not afford this option either. Maybe we’ve killed the goose that laid eggs for us?

  5. In response to Mr. Welsh’s (sarcastic) comment.  I don’t think Julian is drawing moral equivalency between the opposition of torture and the support of free trade.  What he is doing, however, is pointing out the political trade offs involved for naive internationalists.  Indeed, international law doesn’t exist in a vacuum, and for the brooding internationalists who believe they can push progress in one area, while protecting in another, it might indeed be a painful experience over the next four years.  An obvious conclusion overblown by your misplaced anger.

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