John Linarelli

Global Procurement Law in Times of Crisis: New Buy American Policies and Options in the WTO Legal System

This is a draft chapter for the forthcoming Sue Arrowsmith & Robert D. Anderson (eds.), The WTO Regime on Government Procurement: Challenge and Reform (Cambridge University Press, 2011). What should governments do to protect their citizens in a global economic crisis? National economies are interdependent and economic risk is systemic on a global scale, but economic policy remains pervasively national in scope. Fiscal policy has not been the subject of much in the way of collective action at the global level, and if it has, states accomplish it in ad hoc political (as opposed to legal) arrangements in response to particular crises. States retain primary responsibilities for structuring institutions to promote economic justice for their citizens. Despite moves towards conceptualizing justice as a global concern, justice remains primarily a concern for domestic constitutional orders. Fiscal policy and economic justice are widely understood as the domain of the political orders of states, national in their reach, tied to notions of statehood. These features of the state are in tension with the increasingly complex interdependencies of states and with the dense web of treaty commitments they have undertaken, particularly in economic matters. The US risked destabilization of these substantial treaty commitments to liberalize procurement markets when President Barack Obama signed the American Recovery and Reinvestment Act of 2009 into law in February 2009. The Act forbids the use of funds appropriated by the US Congress under the Act on the “construction, alteration, or repair of public buildings or public works unless all of the iron, steel, and manufactured goods used in the project are produced in the United States” but requires that these restrictions “shall be applied in a manner consistent with United States obligations under international agreements”. This chapter has two aims. First, it will assess whether the new Buy American provision in the Recovery Act and its implementing federal regulations breach WTO commitments. It will also examine whether the Buy American provisions breach FTA commitments of the US, although the FTA analysis is tangential to the WTO analysis. US trading partners have a weak argument that the US violated its GPA and FTA commitments liberalizing government procurement, but that they may have a plausible claim that the US has violated the WTO Subsidies and Countervailing Measures Agreement. Some countries may have, moreover, a GATT Article XXIII non-violation nullification or impairment claim, but an assessment of the merits of such a claim requires a good deal of further empirical research on the effects of the new Buy American preference on the balance of concessions and the legitimate expectations of affected WTO members and FTA signatories. What follows from this analysis, however, is that the WTO legal system is ill equipped to respond to the economic needs of states when global economic crisis strikes. The second aim of this chapter is to suggest an avenue for a tentative prescription for dealing with future economic crises from a trade perspective. While the overriding emphasis has been on new paradigms of financial regulation, countries should not ignore the potential for new ways of regulating international trade and procurement liberalization. WTO members should develop a new and narrowly tailored safeguards regime from a coordinated and multilateral standpoint specifically to deal with global economic crises. The WTO Safeguards Agreement and the GATT Escape Clause were not designed to deal with such crises. If all or many states promulgate buy-national or other protectionist policies to stimulate their economies during economic crises, that would be another Smoot Hawley moment, resulting in a severe shrinkage of international trade and a reversal of the achievements in trade liberalization that have occurred over the past sixty years. But if states fail to coordinate their fiscal stimulus programs, then fiscal stimulus will be less effective. The lack of coordination might result in free riding, as states implementing stimulus measures add to their public debt while free riding states benefit from increased exports without sharing public debt burdens. The result would be either that states will not promulgate stimulus programs or will promulgate limited programs because they cannot be assured of their effectiveness and that the benefits will flow to their citizens. To promote coordination, a state could strategically implement conditional stimulus legislation, in which its procurement markets are opened on a reciprocal basis only to the exports of states that have enacted stimulus packages. Such policy coordination could preserve hard-fought gains in trade liberalization, but as importantly, it may promote fiscal policy coordination during times of economic crises when such coordination is essential. The US did not pursue such reciprocity, perhaps because it could not have been accomplished, or perhaps not accomplished easily or quickly. The policy solutions, however, are in globally coordinated systemic risk regulation in which procurement rules and policies should play a substantial part. Expenditures of government funds relate directly to economic justice in states and globally.

Research handbook on global justice and international economic law

The fairness of institutions of global economic governance ranks among the most pressing issues of our time. Most approaches to understanding the complex structure of treaties and intergovernmental organizations such as the WTO tend to uncritically accept an economic focus, highlighting gains from trade and the merits of progressive trade and investment liberalization. While the economic arguments are compelling, other ways of thinking about the roles of these institutions have received less attention. The Research Handbook fills this gap by offering a substantial interdisciplinary examination of the normative and policy underpinnings of the international economic order.

Law, Rights and Development

The fairness of institutions of global economic governance ranks among the most pressing issues of our time. Most approaches to understanding the complex structure of treaties and intergovernmental organizations such as the WTO tend to uncritically accept an economic focus, highlighting gains from trade and the merits of progressive trade and investment liberalization. While the economic arguments are compelling, other ways of thinking about the roles of these institutions have received less attention. The Research Handbook fills this gap by offering a substantial interdisciplinary examination of the normative and policy underpinnings of the international economic order.

Global justice and international economic law : opportunities and prospects

Part I. Theorizing Justice in International Economic Institutions: 1. Approaching global justice through human rights: elements of theory and practice Carol C. Gould 2. Global equality of opportunity as an institutional standard of distributive justice Daniel Butt 3. Human persons, human rights, and the distributive structure of global justice Robert C. Hockett 4. Global economic fairness: internal principles Aaron James Part II. How Justice Gets Done in International Economic Institutions: 5. The conventional morality of trade Chin Leng Lim 6. The political geography of distributive justice Jeffrey L. Dunoff 7. Democratic governance, distributive justice and development Chantal Thomas Part III. Skepticism about the Role of Justice in International Economic Institutions: 8. Global justice and trade Fernando Teson and Jonathan Klick 9. Jam tomorrow: a critique of international economic law Barbara Stark 10. Doing justice: the economics and politics of international distributive justice Joel P. Trachtman.

The Limited Case for Permitting SME Procurement Preferences in the WTO Agreement on Government Procurement

This is a chapter in the forthcoming book, Sue Arrowsmith & Robert D. Anderson, The WTO Regime on Government Procurement: Challenge and Reform (Cambridge University Press, 2011). The chapter puts under scrutiny public procurement policies designed to benefit SMEs per se, as small or medium sized enterprises, and to evaluate whether the GPA (and hence possibly other trade agreements liberalizing procurement markets) should be more accommodating to these policies, even though these policies might restrict international trade. The chapter also evaluates whether the GPA should be more accommodating to policies designed to benefit firms controlled by individuals who belong to historically disadvantaged groups. Contrary to the standard argument that SME procurement policies are trade protectionist, there are cases in which they enhance competition and reduce procurement costs, though the conditions for these benefits are narrow and depend on proper institutional design. The economic merits of SME preference policies complement the noneconomic policy justifications for procurement preference policies to support firms owned and controlled by historically disadvantaged individuals, or HDIs. Any agreement to liberalize procurement markets should deal with the reality that some states have longstanding policies supporting firms owned and controlled by historically disadvantaged individuals, rooted in the constitutional orders of those states. Substantial noneconomic rationales, grounded in notions of social justice and human rights, support these programmes, but the domain of these rationales as they are currently understood is limited to domestic societies. This limitation affects all negotiations to liberalize trade across national borders, in that states (or their leaders) do not hold the view that they have obligations to support the programmes of other states in the area of social justice. I argue that all WTO members should have an equal opportunity to implement noneconomic policies having to do with promoting justice within their borders for their citizens. The GPA, at least by default or implicitly, currently gives only powerful WTO members the ability to employ SME and HDI policies. The GPA should accommodate SME and HDI policies for purposes of creating a level playing field between large market and small market WTO members. Particularly as to procurement preference policies to benefit HDIs, the GPA should accommodate HDI friendly policies to respect values of social justice and human rights that well-ordered domestic societies are required to respect. The weakness of the GPA to accommodate SME and HDI policies likely offers insights on why the GPA has had difficulties becoming a multilateral WTO agreement.

Global Justice and International Economic Law: Acknowledgments

Part I. Theorizing Justice in International Economic Institutions: 1. Approaching global justice through human rights: elements of theory and practice Carol C. Gould 2. Global equality of opportunity as an institutional standard of distributive justice Daniel Butt 3. Human persons, human rights, and the distributive structure of global justice Robert C. Hockett 4. Global economic fairness: internal principles Aaron James Part II. How Justice Gets Done in International Economic Institutions: 5. The conventional morality of trade Chin Leng Lim 6. The political geography of distributive justice Jeffrey L. Dunoff 7. Democratic governance, distributive justice and development Chantal Thomas Part III. Skepticism about the Role of Justice in International Economic Institutions: 8. Global justice and trade Fernando Teson and Jonathan Klick 9. Jam tomorrow: a critique of international economic law Barbara Stark 10. Doing justice: the economics and politics of international distributive justice Joel P. Trachtman.

Global Justice and International Economic Law: Contents

Part I. Theorizing Justice in International Economic Institutions: 1. Approaching global justice through human rights: elements of theory and practice Carol C. Gould 2. Global equality of opportunity as an institutional standard of distributive justice Daniel Butt 3. Human persons, human rights, and the distributive structure of global justice Robert C. Hockett 4. Global economic fairness: internal principles Aaron James Part II. How Justice Gets Done in International Economic Institutions: 5. The conventional morality of trade Chin Leng Lim 6. The political geography of distributive justice Jeffrey L. Dunoff 7. Democratic governance, distributive justice and development Chantal Thomas Part III. Skepticism about the Role of Justice in International Economic Institutions: 8. Global justice and trade Fernando Teson and Jonathan Klick 9. Jam tomorrow: a critique of international economic law Barbara Stark 10. Doing justice: the economics and politics of international distributive justice Joel P. Trachtman.

Global Justice and International Economic Law: Critical Responses to Contemporary Theorizing About Justice and International Economic Institutions

Part I. Theorizing Justice in International Economic Institutions: 1. Approaching global justice through human rights: elements of theory and practice Carol C. Gould 2. Global equality of opportunity as an institutional standard of distributive justice Daniel Butt 3. Human persons, human rights, and the distributive structure of global justice Robert C. Hockett 4. Global economic fairness: internal principles Aaron James Part II. How Justice Gets Done in International Economic Institutions: 5. The conventional morality of trade Chin Leng Lim 6. The political geography of distributive justice Jeffrey L. Dunoff 7. Democratic governance, distributive justice and development Chantal Thomas Part III. Skepticism about the Role of Justice in International Economic Institutions: 8. Global justice and trade Fernando Teson and Jonathan Klick 9. Jam tomorrow: a critique of international economic law Barbara Stark 10. Doing justice: the economics and politics of international distributive justice Joel P. Trachtman.

Global Justice and International Economic Law: Contributors

Part I. Theorizing Justice in International Economic Institutions: 1. Approaching global justice through human rights: elements of theory and practice Carol C. Gould 2. Global equality of opportunity as an institutional standard of distributive justice Daniel Butt 3. Human persons, human rights, and the distributive structure of global justice Robert C. Hockett 4. Global economic fairness: internal principles Aaron James Part II. How Justice Gets Done in International Economic Institutions: 5. The conventional morality of trade Chin Leng Lim 6. The political geography of distributive justice Jeffrey L. Dunoff 7. Democratic governance, distributive justice and development Chantal Thomas Part III. Skepticism about the Role of Justice in International Economic Institutions: 8. Global justice and trade Fernando Teson and Jonathan Klick 9. Jam tomorrow: a critique of international economic law Barbara Stark 10. Doing justice: the economics and politics of international distributive justice Joel P. Trachtman.

TRIPS, Biotechnology and the Public Domain: What Role Will World Trade Law Play?

TRIPS Article 27.3(b) contains a proprietary model for protecting innovation in biotechnology. This chapter explains the provision and sets forth the contentious WTO history of the provision. Developing countries that are relatively rich in biodiversity and traditional knowledge but poor in capital and scientific expertise favor a commons approach to agricultural innovation, an approach that is not reflected in TRIPS. Some developed countries are headquarters to firms developing this biodiversity and traditional knowledge into commercially exploitable forms of intellectual property, and it is these countries that are interested in a strong propietary model for biotechnological innovation. This paper examines how Europe and European law enters this debate. It examines European law relating to biotechnological innovation. The European position on TRIPS coverage of biotechnological innovation does not depart significantly from the United States position or from the position of the Quad group of countries generally. European law is converging with US law on adoption of a propietary model. Given the highly contentious nature of the subject and the sometimes vociferous developing country opposition to strong intellectual property protection, TRIPS and biotechnology will remain one of the more hotly contested topics of the Doha Round.