1. Christopher Yukins & Allen Green
ABA Public Contract Law Section – International Procurement Committee – Presentation on International Trade Agreements October 10, 2019
Christopher Yukins &
Allen Green
Program information:

2. REading

3. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3443244

4. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3432377

5. Key concepts

6. The Coca-Cola Concept

7. “It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy If a foreign country can supply  us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.
Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776)

8. What Is Goal of Protectionism?
Protect Jobs
Industrial policy
Ensure security of supply

9. Prewar Protectionism

10. World War II

11. United States’ suggested charter for predecessor to World Trade Organization (1946)
”. . .the ITO Charter was never ratified due in large part to the refusal of the United States Congress to join any further international organizations. Nevertheless, through executive agreements, the United States joined twenty-one other countries in signing the Protocol of Provisional Application of the General Agreement on Tariffs and Trade. Through this agreement between nations tariffs and other barriers to free trade were steadily reduced over decades by means of increased membership and GATT negotiating Rounds. ” – Text § 2:26

12.
WTO on non-discrimination (Most Favored Nation) versus national treatment -
Textbook, Sec. 2:27:
One core provision of the GATT is Article I which makes a general commitment to the long standing practice of “most favored nation treatment” (“MFN”).1 Article I requires each Contracting Party to accord unconditional MFN status to all other Contracting Parties. Thus, any privilege granted by any Contracting Party to any product imported from any other country must also be “immediately and unconditionally” granted to any “like product” imported from any Contracting Parties.2
Another core provision of GATT is Article III. Article III incorporates the practice of according “national treatment” to imported goods by providing, with specifically enumerated exceptions, that the products of one Contracting State shall be treated in the same manner regarding taxation and regulation as domestic goods. As such, under Article III, products of the exporting GATT Contracting State must be treated no less favorably than domestic products of the importing Contracting State under its laws and regulations concerning sale, internal resale, purchase, transportation and use.3 In addition to the Articles above, the GATT also prohibits the use of certain kinds of quantitative restrictions. For example, Article XI generally, but not completely, prohibits the use of other “prohibitions or restrictions” on imports from Contracting Parties.4

13. EU: A country’s essential security interests = interests vital to the country's military capabilities, not economic interests

14. World Trade Organization GPA Parties and observers

15. GPA Parties and observers
Elements of WTO Government Procurement Agreement (text § 2:37):
National treatment/non-discrimination
Publication of information on laws, etc.
Publication of intended procurement
Certain approved methods of procurement
Minimum time periods
Development of specifications – no intentional discrimination
Tender documents must be provided
Minimize conditions; assess activities inside and outside country
Comply with tender requirements
Transparent award information
Domestic review procedures
GPA Parties and observers

16. World Trade Organization Government Procurement Agreement
“Government procurement as discussed earlier, was not included in the scope of coverage for the GATT in 1947; indeed, government procurement was expressly excluded from the national treatment obligation. At the Uruguay Round which created the WTO, the GPA was created through a revision of the plurilateral GATT Procurement Code. ” – Text, § 2:34
World Trade Organization
Free Trade Agreements
Government Procurement Agreement
Trade Agreements Act
FAR

17. U.S. Domestic Preference Law: Supplies
Trade Agreements Act: Above $180,000 (approx.)
Buy American Act
Micro-
Purchase

18. Case Study: Implementing Buy AMERICAN

19. What Is “Manufacturing”?
ARRA
From Recovery Act administrative implementation:
The Councils have considered in the past including a definition of “manufacture” in the FAR but did not do so because of the case-specific nature of its application. The definition may be different for canned beans than for an aircraft However, . . .there is also a longstanding record of interpretation of “manufacture” under the Buy American Act. (See for example B of November 3, 1975, which addressed the issue of whether a radio had been manufactured in the United States. The GAO did not find against the Army position that, if the final manufacturing process takes place in the United States, the end product is “manufactured in the United States.”)
See, e.g., Veterans Administration, Comp. Gen. B , 1967 CPD ¶ 16 (May 22, 1967) (citing legislative history of Buy American Act to show that assembly of motors with pumps constituted “manufacture” in the United States).

20. U.S. Trade Agreements Act: A “Walled Garden”
GPA &
Free Trade Agreements
Europe
USA
Some Asian Nations
Some Latin American Nations

21. Convergence: Procurement Regulation
Best Practices
U.S.
Europe
Others

22. USA Model Law for States
USA - Federal EU
World Bank
WTO
USA Model Law for States
Acquisition Planning
Publication of Opportunities
Electronic Auctions
Open Procedure
Competitive Dialogue
Frameworks
Contract Award Notices
Bid Challenges
Exclusion
Contract Administration
CONVERGENCE

23. The RECIPROCity CONCEPT

24. Reciprocal Defense Procurement Agreements

25. Defense – Memoranda of Understanding
Authority for the defense MOUs rests in the “public interest” exception to the BAA. The agreements serve as a national security benefit, enhance alliance-wide security objectives, and serve as an underpinning for armaments cooperation. – Text § 2:21

26. Defense – Memoranda of Understanding – UK Example
Discuss
Don’t discriminate

27. Security of Supply

28. Angela Merkel’s Mobile Phone

29. Germany Canceled Verizon Contract
Thu Jun 26, 2014
German government cancels Verizon contract in wake of U.S. spying row
BERLIN
REUTERS/RICK WILKING
The German government has cancelled a contract with U.S. telecoms firm Verizon Communications Inc VZ.N as part of an overhaul of its internal communications, prompted by revelations last year of U.S. government spying.
Reports based on disclosures by former U.S. intelligence contractor Edward Snowden alleged Washington had conducted mass surveillance in Germany and had even eavesdropped on Chancellor Angela Merkel's mobile phone.
Berlin subsequently demanded talks with Washington on a "no-spy" deal, but these collapsed after the United States appeared unwilling to give the assurances Germany wanted.
Germany also launched an overhaul of its internal communications and secure government networks. This is one of the first actions involving a U.S. firm to result.
"The pressures on networks as well as the risks from highly developed viruses or Trojans are rising," Germany's Interior Ministry said in a statement on Thursday.
"Furthermore, the ties revealed between foreign intelligence agencies and firms in the wake of the U.S. National Security Agency (NSA) affair show that the German government needs a very high level of security for its critical networks."
Verizon has been providing network infrastructure for the German government's Berlin-Bonn network, used for communication between ministries, since 2010, the statement said. The contract is set to expire in 2015.
The government said Deutsche Telekom AG DTEGn.DE would replace services provided by Verizon, and noted Deutsche Telekom was already responsible for the most sensitive communications between ministries or between the government and German intelligence agencies.
Information on the value of the contract was not immediately available.
According to reports and documents published last year, Verizon was obliged to turn over international and domestic calling records of its customers to U.S. intelligence agencies.
Verizon is the second-biggest U.S. telephone company behind AT&T Inc T.N in terms of revenue.
Detlef Eppig, head of Verizon's German unit Verizon Germany said on Thursday: "Verizon Germany is a German company and we comply with German law."
Verizon did not receive any demands from Washington in 2013 for data stored in other countries, the company said.
"The U.S. government cannot compel us to produce our customers' data stored in data centres outside the U.S., and if it attempts to do so, we would challenge that attempt in a court," it added.
The firm declined to comment on whether there had been requests in previous years.
(Reporting by Thorsten Severin; Additional reporting by Marina Lopes in Washington D.C.; Writing by Alexandra Hudson; Editing by David Holmes and Eric Walsh)

30. GPA, Art. III Leaves Discretion To Discriminate Regarding Classified Work
1. Nothing in this Agreement shall be construed to prevent any Party from taking any action or not disclosing any information that it considers necessary for the protection of its essential security interests relating to the procurement of arms, ammunition or war materials, or to procurement indispensable for national security or for national defence purposes.

31. Trump Administration

32. February 2017

33. Proposed Changes to Domestic Content Requirements
– What Percent Content Makes an Item “Foreign” Under the Buy American Act
Iron and Steel Items
Other Items
Existing Law
50%
Trump Proposal
5% foreign iron or steel
45% foreign content (could decrease to 25%)

34. Price Preferences Applied Against Foreign Items Under Buy American Act
Small Businesses
Other Businesses
Existing Law
12% price preference
6% price preference
Trump Proposal
30% price preference
20% price preference

35. “Squeezing” the Buy American Act
Acquisitions Above Trade Agreements Thresholds (typically $180,000):
Buy American Act Does Not Apply
Buy American Act Applies: Acquisitions from $10,000 to the Trade Agreements Thresholds
Micro-Purchases (Currently up to $10,000):

36. Today

38. Conclusion