Feb. 5 - Buy America Brouhaha: What Are the EU and Canada Hollering About? Their WTO Procurement Exceptions Are (Wisely) Much Br
The hysteria coming from European Union (EU) and Canadian officials about the Buy America and Buy American domestic preferences in the U.S. stimulus bill is particularly odd, given that both the EU and Canada have wisely excluded considerably broader swaths of their procurement activity from World Trade Organization (WTO) rules (and in the case of Canada also from the North American Free Trade Agreement, or NAFTA) than has the United States. Because of this, the EU and Canada have no obligation to provide U.S. firms with access to a wide array of their government contracts.
For instance, while the United States safeguards its preferences (only) for domestic iron and steel used in federally funded state transportation projects, Canada carves out steel, motor vehicles and coal altogether (for all provinces, for all sectors), and also carves out all construction contracts issued by the Departments of Transport. The EU carved out of its WTO procurement obligations contracts awarded by federal governments and sub-federal governments in connection with activities in the areas of drinking water, energy, transport or telecommunications.
These facts make a mockery of the EU and Canadian claims that the United States is acting in an aberrant manner and somehow starting a ?trade war.? The EU countries and Canada have excluded in their trade agreement commitments a much wider swath of procurement activity than the Buy America and Buy American provisions in question. And we?re not criticizing them for it; why should decisions by democratically elected parliaments about how to best spend tax dollars on domestic infrastructure be subject to constraints imposed by international trade agreements? There is no ?protectionism? at issue here.
But it is hypocritical for countries that wisely have taken broad trade-pact exceptions, which ensure that they have no obligation to provide U.S. firms with access to their taxpayer-funded projects, to attack the relatively narrow and modest U.S. domestic preferences.