The offshoring of American government

Cornell Law Review

Volumn 94, Issue 1, 2008, Pages 165-202

  Zuckerman, Michael A ^a  

^a and History

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EID: 57749091781     PISSN: 00108847     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (473)

1. See U.S. GOV'T ACCOUNTABILITY OFFICE, GAO-06-S42, OFFSHORING IN SIX HUMAN SERVICES PROGRAMS: OFFSHORING OCCURS IN MOST STATES, PRIMARILY IN CUSTOMER SERVICE AND SOFTWARE DEVELOPMENT 17 (2006) [hereinafter GAO OFFSHORING REPORT];
2. Diane Lindquist, Calls to State Agencies Go Around the World: Governments Move Toward Outsourcing, SAN DIEGO UNION-TRIB., Aug. 22, 2004, at Al, LexisNexis Academic.
3. See infra Part I.B.
4. See GAO OFFSHORING REPORT, supra note 1, at 3-5;
5. PHILIP MATTERA ET AL., GOOD JOBS FIRST, YOUR TAX DOLLARS AT WORK... OFFSHORE: HOW FOREIGN OUTSOURCING FIRMS ARE CAPTURING STATE GOVERNMENT CONTRACTS 2 (2004), available at http://www.goodjobsfirst.org/pdf/offshoringtext.pdf;
6. see also Stella M. Hopkins, U.S. Companies, Governments Rely on Foreign Workers to Save Money, CHARLOTTE OBSERVER, Aug. 10, 2003, at IA, LexisNexis Academic.
7. See Alan S. Blinder, How Many U.S. Jobs Might Be Offshorable? 2 (Ctr. for Econ. Policy Studies, Working Paper No. 142, 2007).
8. Kevin Rotfistein, Ted K Slams Mitt for Outsourcing Jobs: Mass Work Farmed Out to India, Utah, BOSTON HERALD, Feb. 23, 2006, at 6, LexisNexis Academic (quoting U.S. Sen. Ted Kennedy).
9. See GAO OFFSHORING REPORT, supra note 1, at 1 ("Media reports in 2004... inspired proposals... to restrict 'offshoring' in public programs....");
10. N. Gregory Mankiw & Phillip Swagel, The Politics and Economics of Offshore Outsourcing 2 (Am. Enter. Institute, Working Paper No. 122, 2005) ("[N]o economic issue generated more heat or shed less light than the debate over offshore outsourcing.").
11. See NAT'L FOUND, FOR AM. POLICY, ANTI-OUTSOURCING EFFORTS DOWN BUT NOT OUT 2-6 (2007), http://www.nfap.net/pdf/0407OutsourcingBrief.pdf [hereinafter NFAP REPORT].
12. See id. at 6.
13. U.S. CONST, art. I, § 8, cl. 3.
14. See Japan Line, Ltd. v. County of L.A., 441 U.S. 434, 446-49 (1979).
15. See id. at 449, 452-54.
16. See RON HIRA & ANIL HIRA, OUTSOURCING AMERICA: WHAT'S BEHIND OUR NATIONAL CRISIS AND HOW WE CAN RECLAIM AMERICAN JOBS 199 (2005).
17. See Michael J. Ballard & Mildred E. Warner, Taking the High Road: Local Government Restructuring and the Quest for Quality 1 (Cornell Univ. Dep't of City and Regional Planning, Cornell Working Papers in Planning No. 194, 2000), http://government.cce.cornell.edu/doc/reports/highroad.
18. See Peter T. Kilborn, Reagan Plan to Privatize Government Is Gaining Support from Democrats, N.Y. TIMES, Feb. 15, 1988, at A10.
19. Ballard & Warner, supra note 13, at 1.
20. Id.;
21. see also NAT'L ASSOC, OF STATE PROCUREMENT OFFICIALS, OFFSHORING AND PROCUREMENT: POSITIONING FOR THE FUTURE 3 (2005), http://www.naspo.org/whitepapers/OffshoringIssueBrief.pdf.
22. See OFFICE OF MGMT. & BUDGET, EXECUTIVE OFFICE OF THE PRESIDENT, THE PRESIDENT'S MANAGEMENT AGENDA 17 (2002) ("'Government should be market-based - we should not be afraid of competition, innovation, and choice. I will open government to the discipline of competition.'"
23. (quoting then-Governor George W. Bush)); Mildred Warner & Jennifer Gerbasi, Rescaling and Reforming the State Under NAFTA: Implications for Subnational Authority, 28 INT'L J. URB. & REGIONAL RES. 858, 859 (2004) (citation omitted).
24. See Press Release, INPUT, INPUT Predicts State & Local Government Outsourcing Market to Reach $20 Billion in 2011 (Jan. 31, 2007), http://www.input.com/corp/press/detail.cfm?news=1308.
25. COUNCIL OF ECON. ADVISERS, ECONOMIC REPORT OF THE PRESIDENT, H. DOC. 108-145, at 229 (2004), available at http://www.gpoaccess.gov/usbudget/fy05/pdf/2004-erp. pdf. [hereinafter 2004 ECONOMIC REPORT OF THE PRESIDENT] ;
26. see also GAO OFFSHORING REPORT, supra note 1, at 1.
27. Some refer to the practice as "offshore outsourcing," for example, 2004 ECONOMIC REPORT OF THE PRESIDENT, supra, but this Note simply refers to the concept as "offshoring. "
28. Blinder, supra note 4, at 2.
29. Bob Fernandez & Jane M. Von Bergen, State Governments Ave Offshoring Jobs, RUTLAND HERALD (Vt.), Mar. 13, 2004, LexisNexis Academic. Public sector offshoring also occurs in other countries.
30. See Andrew Taylor, Offshore Jobs Move Revealed in DWP Leak, FIN. TIMES (London), Jan. 23, 2006, at 3.
31. See GAO OFFSHORING REPORT, supra note 1, at 1.
32. See Press Release, INPUT, State & Local IT Outsourcing Spending to Grow by 75 Percent by FY10 (Jan. 23, 2006), available at http://www.input.com/corp/press/detail.cfm?news=1132.
33. See GAO OFFSHORING REPORT, supra note 1, at 8;
34. Hopkins, supra note 3, at 1A. The text of the act is located at PUB. L. NO. 104-193, 110 STAT. 2105 (codified as amended in scattered sections of 7, 8, 21, 25 & 42 U.S.C).
35. See GAO OFFSHORING REPORT, supra note 1, at 8-9. EBT systems generally allow beneficiaries to use a plastic card, similar to a debit-card, to redeem their public benefits.
36. See id. at 9.
37. See id. at 8-10.
38. See MATTERA ET AL., supra note 3, at 21.
39. See Press Release, Office of U.S. Rep. John D. Dingell, DeLauro, Dingell Introduce US Worker Protection Act (July 22, 2005), http://www.house. gov/dingell/documents/press-releases/109th-Congress/07-22-05.htm
40. (quoting U.S. Rep. Rosa DeLauro).
41. See GAO OFFSHORING REPORT, supra note 1, at 1 ("[N] o comprehensive data or studies show the extent of services offshoring by state governments and data for the federal government are limited.");
42. U.S. GOV'T ACCOUNTABILITY OFFICE, GAO-04-932, INTERNATIONAL TRADE: CURRENT GOVERNMENT DATA PROVIDE LIMITED INSIGHT INTO OFFHSORING OF SERVICES 3 (2004) [hereinafter GAO TRADE REPORT] ("[A]lthough there are anecdotal accounts of state governments using offshore sources, no comprehensive data or studies of the extent to which state governments use these sources are available."). This lack of reliable data also extends to offshoring in the private sector.
43. See generally Blinder, supra note 4, at 6-7 (collecting studies on estimates of job loss);
44. Mankiw & Swagel, supra note 6, at 24-27 (discussing various estimates of job loss).
45. See LEG. RESEARCH COMM'N, STATE OF KENTUCKY, OFFSHORE OUTSOURCING OF KENTUCKY STATE GOVERNMENT SERVICES: DIRECT CONTRACTING IS LIMITED BUT THE AMOUNT OF SUBCONTRACTING IS UNKNOWN, RESEARCH REPORT No. 325, at v (2005), available at http://lrc.ky.gov/lrcpubs/RR325.pdf [hereinafter KENTUCKY REPORT] ("The inability [of Kentucky] to determine whether contracted work is being outsourced overseas is typical of other states also.");
46. Nancy Hicks, Bill Would Require Contractors to Reveal Their Overseas Deals, LINCOLN J. STAR (Neb.), Feb. 14, 2008, at B2, LexisNexis Academic ("[N]o one seems to know how much business, paid for with state tax dollars, is conducted [overseas].");
47. How Many Jobs Are Involved?, PUBLIC CITIZEN, http://www.citizen.org/trade/offshoring/jobs (last visited Sept. 20, 2008).
48. See, e.g., E-mail from Jeff T. Holden, Dir., Office of Procurement Mgmt., S.D., to author (Oct. 9, 2007, 09:01:05 EDT) (on file with author) ("We do not currently have anything in state law or our contracts that requires a contractor to identify where they will perform the work related to a state contract.").
49. See, e.g., infra note 63 and accompanying text.
50. See generally GAO OFFSHORING REPORT, supra note 1 (finding that a majority of states had offshore contracts in certain human services programs);
51. MATTERA ET AL., supra note 3.
52. Compare E-mail from Carol Wilson, Dir. of Procurement, Dep't of Admin. Serv., Conn., to author (Oct. 9, 2007, 08:01:13 EDT)
53. (on file with author) (stating that offshoring "affects just about every state contract"), with E-mail from Chris Howe, Dir., Div. of Purchases, Kan., to author (Oct. 8, 2007, 10:20:33 EDT) (on file with author) (stating that offshoring "may appear on fewer than 5 transactions per year").
54. GAO OFFSHORING REPORT, supra note 1.
55. See id. at 1-2, 6.
56. See id. at 3.
57. See id. at 12-13.
58. See id. at 3.
59. The total magnitude of state spending on offshore contracts is difficult to quantify because many states classify contracts as offshore even when the contractor will not perform them exclusively offshore. See id. at 14. Further complicating this situation is some states' failure to maintain accurate records; the GAO found offshore state contracting in five states that reported no offshoring.
60. See id. at 10-11.
61. See id. at 17-20.
62. See id. at 10.
63. See id. at 21-22.
64. Hopkins, supra note 3, at 1A.
65. Id.
66. See Fernandez & Von Bergen, supra note 21.
67. Hicks, supra note 30.
68. For other anecdotal evidence of state offshore call-centers, see Amy Joi Bryson, Firm Is Asked to End India Outsourcing, DESERET MORNING NEWS (Salt Lake City), Mar. 24, 2004, LexisNexis Academic;
69. Karen Imas, Sending Jobs Overseas: A Growing Policy Debate in the Public Sector, MONTHLY ISSUE BRIEF (The Council of State Gov'ts/E. Regional Conf., New York, N.Y.), Oct., 2003, at 2-3.
70. See Hicks, supra note 30.
71. James Salzer, Offshoring: New Tech Program Will Force Layoffs, ATLANTA J.-CONST., Dec. 12, 2007, at ID, LexisNexis Academic.
72. See id.
73. See id.
74. See id.
75. Labor Agency Taps India Firm for State Project, FT. WAYNE J.-GAZETTE, Sept. 30, 2003, at 9, LexisNexis Academic.
76. Id.
77. The Governor's cancellation was not welcomed by everyone. Compare THOMAS L. FRIEDMAN, THE WORLD IS FLAT: A BRIEF HISTORY OF THE TWENTY- FIRST CENTURY 207 (2005) ("The deal would gready benefit... some Indiana tech workers;
78. and it would save Indiana state residents precious tax dollars that could be deployed to hire more state workers...."), with LOU DOBBS, EXPORTING AMERICA: WHY CORPORATE GREED IS SHIPPING AMERICAN JOBS OVERSEAS 35 (2004) ("[T] he taxpayers of Indiana... would have preferred that their tax dollars be used to help those out-of work Indiana residents find jobs.").
79. See Rothstein, supra note 5, at 6.
80. Id. (quoting U.S. Sen. Ted Kennedy).
81. See MATTERA ET AL., supra note 3, at 16.
82. FISCAL NOTE, H.B. 870 & S.B. 1113, 105th Gen. Sess., 1st. Sess. (Tenn. 2007), available at http://www.legislature. state.tn.us/bills/currentga/Fiscal/HB0870.pdf (noting that Tennessee spends 10 percent of $3 billion service contract expenditures on IT services, 15 percent of which are performed offshore).
83. CAL. STATE AUDITOR, THE STATE'S OFFSHORE CONTRACTING: UNCERTAINTY EXISTS ABOUT ITS PREVALENCE AND EFFECTS, Report No. 2004-115, in IMPLEMENTATION OF STATE AUDITOR'S RECOMMENDATIONS: AUDITS RELEASED IN JANUARY 2004 THROUGH DECEMBER 2005, Report No. 2006-406R 89, 89-90 (2006) [hereinafter CAL. AUDITOR REPORT].
84. FISCAL NOTE, L.B. 87, 99th Sess., Reg. Sess. (Neb. 2007), available at http://uniweb.legislature.ne.gov/FloorDocs/Current/ PDF/FN/LB87.pdf.
85. Memorandum from Dana B. Badgerow, Comm'r of the Dep't of Admin., Minn, to Tim Pawlenty, Governor, Minn. 1 (Feb. 21, 2007) (on file with author).
86. KENTUCKY REPORT, supra note 30.
87. Robert F. Worth, In New York Tickets, Ghana Sees Orderly City, N.Y. TIMES (late ed.), July 22, 2002, at Al ("If you are caught playing your radio too loudly in Times Square,' selling ice cream while parked in a Harlem crosswalk or dumping your kitchen trash in Prospect Park, your ticket does not just go to City Hall to be processed. It goes to Ghana.").
88. Id.
89. Id.
90. Id.
91. See Mankiw & Swagel, supra note 6, at 4-5;
92. Carolyn Said, Hot-Button Issue Makes for Lively Debate Along the Campaign Trail: Federal, State Lawmakers Seek to Regulate Sending Jobs Overseas, S. F. CHRON., Mar. 7, 2004, at 15.
93. See Mankiw & Swagel, supra note 6, at 4-5.
94. 2004 ECONOMIC REPORT OF THE PRESIDENT, supra note 19, at 229.
95. Jonathan Weisman, Bush, Adviser Assailed for Stance on 'Offshoring'Jobs, WASH. POST, Feb. 11, 2004, at A6 (quoting N. Gregory Mankiw).
96. For a sampling of controversy that erupted, see, for example, Press Release, U.S. Rep. Marion Berry, Berry Calls for Resignation of Administration Official who Claimed Benefits to Exporting American Jobs (Feb. 13, 2004), available at http://www.house.gov/berry/pressreleases/archive/ 021304Mankiw. html (calling for Mankiw's resignation);
97. Mike Allen, Hastert Rebukes Bush Adviser; Speaker Challenges Mankiw's Statements on U.S. Job Loss, WASH. POST, Feb. 12, 2004, at A17 ("'I understand that Mr. Mankiw is a brilliant economic theorist, but his theory fails a basic test of real economics.'" (quoting then-Speaker of the House Dennis Hastert)).
98. Barry Shlachter, Kerry's Offshoring Plan Being Questioned, FT. WORTH STAR-TELEGRAM, Oct. 21, 2004, at C1.
99. See supra note 7 and accompanying text.
100. See, e.g-., NJ. STAT. ANN. § 52:34-13.2 (West 2005);
101. S.B. 2385, 2008 Leg., Jan. Sess. (R.I. 2008) ("The state or any municipality shall not award a procurement contract for goods and services to be rendered or supplied by a vendor or contractor located outside the United States.");
102. H.B. 32, 24th Leg., Reg. Sess. (Haw. 2007);
103. L.B. 87, 100th Leg., 1st Sess. (Neb. 2007) (requiring all state service contracts to be awarded to U.S. companies to perform work in the U.S.);
104. S.B. 4077, 213th Leg., Reg. Sess. (N.Y. 2007) (requiring certain state contracts to include clause mandating all services under contract must be performed within U.S.);
105. Keep Jobs in Tennessee Act, H.B. 870, 105th Gen. Assem., 1st Reg. Sess. (Tenn. 2007);
106. Keep Jobs in West Virginia Act, H.B. 2389, 77th Leg., Reg. Sess. (W. Va. 2007);
107. S.B. 1266, 47th Leg., 1st Reg. Sess. (Ariz. 2005). This category also includes legislation that requires a state contractor to employ workers who are audiorized to work in the United States.
108. See, e.g., H.B. 692, 94th Gen. Assem., 1st Reg. Sess. (Mo. 2007) (requiring all state service contracts to include a clause that mandates that employees of contractors and subcontractors must be U.S. citizens);
109. S.B. 234, 114th Gen. Assem., 1st Reg. Sess. (Ind. 2005) (requiring state contractors to file an affidavit stating that each individual performing the state contract is audiorized to work in the United States);
110. H.B. 2207, 75th Leg., Reg. Sess. (W. Va. 2005).
111. See, e.g., 30 III. COMP. STAT. ANN. 517/10 (West 2005) (requiring state purchasing agencies to give preference to domestic products);
112. L.B. 87, 100th Leg., 1st Sess. (Neb. 2007) (giving preference to Nebraska-based companies as part of a requirement that state contractors perform services in the United States);
113. Ind. Exec. Order No. 05-05 (2005), available at http://www.in.gov/gov/files/EO-05-05-Buy-Indiana.pdf (establishing the preference for in-state goods).
114. See, e.g., H.B. 568, 95th Gen. Assem., 1st Reg. Sess. (111. 2007) (disqualifying an entity from state contract awards if it "has or uses a foreign call service center") ;
115. Job Preservation Act of 2007, S.B. 1255, 95th Gen. Assem., 1st Reg. Sess. (111. 2007) (disqualifying companies that lose 100 or more employees due to outsourcing from receiving certain state benefits, including procurement contracts);
116. H.B. 129, 2007 Leg., Reg. Sess. (N.H.) (prohibiting companies that have outsourced fifty or more New Hampshire jobs from bidding on state contracts);
117. H.B. 389, 2007 Leg., Reg. Sess. (Pa. 2007) (disqualifying from state contracts those contractors who have offshoring jobs within the past three years from bidding on state contracts).
118. See, e.g., CAL. ELEC. CODE § 2188.5 (West 2007) (prohibiting voter information from being sent outside the United States);
119. H.B. 2836, 74th Leg., Reg. Sess. (Or. 2007) (mandating, inter alia, disclosure of call-center location and prohibiting data transfer to foreign countries).
120. See, e.g., H.B. 5112, 2008 Gen. Assem., Feb. Sess. (Conn.);
121. H.B. 833, 160th Sess., Reg. Sess. (N.H. 2007).
122. See, e.g., N.C. GEN. STAT. § 143-59.4 (West 2005);
123. H.B. 4100, 94th Leg., 1st Reg. Sess. (Mich. 2007);
124. S.B. 861, 2007 Sess., Reg. Sess. (Va. 2007).
125. See, e.g., CAL. AUDITOR REPORT, supra note 60, at 92;
126. NFAP REPORT, supra note 7, at 3 (noting that California Governor Arnold Schwarzenegger vetoed five state offshoring bills, announcing: "There is a right way and a wrong way to expand economic opportunity in California. The wrong approach is to implement measures that restrict trade, invite retaliation or violate the United States Constitution or our foreign trade agreements.") (citation omitted);
127. STATE OF WASH., JOINT TASK FORCE ON STATE CONTRACTS 9-10 (2007);
128. SHANNON KLINGER & M. LYNN SYKES, NAT'L FOUND, FOR AM. POLICY, EXPORTING THE LAW: A LEGAL ANALYSIS OF STATE AND FEDERAL OUTSOLIRCING LEGISLATION 2-3 (2004), http://www.nfap.net/researchactivities/studies/NFAPStudyExportingLaw-0404.pdf.
129. See infra Part III.
130. See generally NFAP REPORT, supra note 7.
131. Id. at 2.
132. Id.
133. TENN. CODE ANN § 12-4-109(e) (West 2004). This statute was the first in the nation to give businesses an incentive not to offshore work.
134. See Tenn. Governor Signs Anti-Outsourcing Bill, CHI. SUN-TIMES, May 17, 2004, at 40. But, as of mid-2007, Tennessee had not implemented any of the preferences that the statute authorized.
135. See E-mail from Robert Barlow, Office of Contracts Review, Tenn., to author (Oct. 16, 2007, 10:53:06 EDT).
136. See, e.g, S.B. 13, 126th Gen. Assem., Reg. Sess. (Ohio 2005);
137. S.B. 1150, 58th Leg., 1st Reg. Sess. (Idaho 2005).
138. See NFAP REPORT, supra note 7, at 4 (seven bills restricted offshoring; three established commissions to study offshoring).
139. See id. at 3 (including five California bills).
140. See COLO. REV. STAT. ANN. § 8-18-103 (West 2005);
141. ILL. COMP. STAT. ANN. 517/10 (West 2005);
142. N.D. CENT. CODE § 44-08-01.1 (2005).
143. N.C. GEN. STAT. § 143-59.4 (West 2005).
144. See N.J. STAT. ANN. § 52:34-13.2 (West 2005).
145. Imas, supra note 47, at 2-3.
146. See NFAP REPORT, supra note 7, at 5;
147. Richard Raysman & Peter Brown, Anti-Out-sourcing Legislation: A Brief Summary, 238 N.Y.L.J. 3, 3 (2007) ;
148. Bob Sanders, Lawmakers Face a Slew of Labor-Related Measures, N.H. BUS. REV., Feb. 2, 2007, at 1.
149. See NFAP REPORT, supra note 7, at 5 (noting that as of April 10, 2007, state legislators had introduced forty-one offshoring bills).
150. S.B. 4077, 213th Leg., Reg. Sess. (N.Y. 2007).
151. See, e.g., H.B. 269, 25th Leg., 2d Sess. (Ala. 2008) ("The state shall procure only United States flags or Alaska flags that are manufactured in the United States.") ;
152. S.B. 1249, 48th Leg., 2d Reg. Sess. (Ariz. 2008) ("A state governmental unit shall not award a contract or development assistance to a vendor, bidder, contractor or subcontractor or an applicant for development assistance that performs the work at a site outside of the United States.");
153. H.B. 5112, 2008 Gen. Assem., Feb. Sess. (Conn. 2008) (requiring the state, inter alia, to identify offshore contracting and for vendors to disclosure offshore performance);
154. H.B. 1613, 94th Gen. Assem., 2nd Sess. (Mo. 2008) (suggesting that the state should prohibit offshore contracting to mitigate the impact of international trade);
155. L.B. 869, 100th Leg., 2d Sess. (Neb. 2008) (creating a disclosure requirement);
156. S.B. 2385, 2008 Gen. Assem., Jan. Sess., (R.I. 2008);
157. see also Jobs & Trade Act, A.B. 8567, 230th Leg., Reg. Sess. (N.Y. 2007) (suggesting that the state should prohibit offshore contracting to mitigate the impact of international trade).
158. Seejim Small, Bill Bans Arizona Contracts to Firms that Outsource to Foreign Companies, ARIZ. CAPITOL TIMES, Feb. 1, 2008, LexisNexis Academic. In Arizona, for example, State Representative David Schapira is against offshoring because he believes it will eventually result in lost jobs, stating, "Especially with the economy in the state its in right now the fear is the next piece may be job loss. I don't want to see that happen in Arizona "
159. Id.
160. Idaho Exec. Order No. 2007-09 (2007) ;
161. Press Release, Office of Governor of Idaho Governor Protects Idaho Jobs from Outsourcing (Aug. 31, 2007), available at http//gov.idaho.gov/ mediacenter/press/pr2007/praug07/pr-070.html.
162. Idaho Exec. Order No. 2007-09 (2007)
163. Id.
164. Alaska Admin. Order No. 216 (2004), available at http://www.gov.state.akus/ad-min-orders/216.html.
165. DRV. OF FIN., ALASKA. DEP'T OF ADMIN., ALASKA ADMIN. MANUAL 81.015 (2007) available at http://fin.admin.state.ak.us/dof/ak-admin-manual/resource/81 pdf.
166. Ind. Exec. Order No. 05-05 (2005).
167. Mich. Exec. Directive No. 2004-3 (2004).
168. Mo. Exec. Order No. 04-09 (2004).
169. N.C. Exec. Order No. 60 (2004).
170. Pa. Exec. Order No. 2006-08 (2006).
171. See E-mail from David Tincher, Dir., Purchasing Div., W. Va to author (Oct 29 2007, 11:21:53 EDT) (on file with author).
172. U.S. CONST, art. I, § 8, cl. 3.
173. Id. The Commerce Clause is divided into three parts: the Intrastate Commerce Clause, the Foreign Commerce Clause, and the Indian Commerce Clause.
174. See generally BORIS I. BITTKER, BITTKER ON THE REGULATION OF INTERSTATE AND FOREIGN COMMERCE (1999).
175. See, e.g., Gonzales v. Raich, 545 U.S. 1, 5 (2005) (holding that Congress's commerce power extends to criminalization of intrastate, noncommercial cultivation of medical marijuana);
176. Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241, 258 (1964) (upholding the Civil Rights Act of 1964 on Commerce Clause grounds);
177. Wickard v. Filburn, 317 U.S. 111, 128-29 (1942) (holding that the commerce power extends to the imposition of wheat quotas on farmers because the cumulative effect of local consumption affects interstate commerce);
178. Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 66-67 (1824) (opining that commerce includes all "commercial intercourse");
179. United States v. Clark, 435 F.3d 1100 (9th Cir. 2006) (holding that the commerce power extends to criminalization of international travel to engage in an unlawful sex act).
180. la2 See, e.g., cases cited supra note 111.
181. See Seelig v. Baldwin, 7 F. Supp. 776, 780 (S.D.N.Y. 1934) (opining that the drafters wanted to end "the mutual jealousies and aggression of the states, taking form in customs barriers and other economic retaliation");
182. Kenton R. O'Neil, Comment, "Buy American" Statutes: Should the Market Participant Doctrine Shield Pennsylvania's Steel Products Procurement Act from Commerce Clause Scrutiny?, 96 DICK. L. REV. 519, 524 (1992) ("The drafters of the Clause decided that the source of the problems of the Articles of Confederation stemmed from state governments which had been too responsive to local economic interests in the absence of a central government capable of economically unifying the several states.") (citation omitted).
183. See Robert J. Delahunty, Federalism Beyond the Water's Edge: State Procurement Sanctions and Foreign Affairs, 37 STAN. J. INT'L L. 1, 16-26 (2001).
184. U5 See generally Saikrishna Prakash, Our Three Commerce Clauses and the Presumption of Intrasentence Uniformity, 55 ARK. L. REV. 1149 (2003).
185. 441 U.S. 434, 448 (1979);
186. accord Prakash, supra note 115, at 1149 ("[O]ne might say that there is only one power-the power to regulate commerce-that applies [in all] three situations.").
187. See United States v. Clark, 435 F.3d 1100, 1113 (th Cir. 2006) ("Born largely from a desire for uniform rules governing commercial relations with foreign countries, the Supreme Court has read the Foreign Commerce Clause as granting Congress sweeping powers.").
188. Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 193-94 (1824).
189. See Clark, 435 F.3d at 1113.
190. See Japan Line, 441 U.S. at 448 n.13 (noting that "[i]t has never been suggested that Congress' power to regulate foreign commerce could be... limited" by the constraints of federalism);
191. Bd. of Trs. of Univ. of 111. v. United States, 289 U.S. 48, 57 (1933) ("The principle of duality in our system of government does not touch the authority of Congress in the regulation of foreign commerce.").
192. See Clark, 435 F.3d at 1111;
193. Prakash, supra note 115, at 1166-67.
194. 514 U.S. 549 (1995) (invalidating the Gun Free School Zone Act of 1990 as exceeding Congress's commerce power because the statute encroached on state police powers).
195. 529 U.S. 598 (2000) (invalidating the Violence Against Women Act of 1994 as exceeding Congress's commerce power because it was not directed at instrumentalities, channels, or goods involved in intestate commerce).
196. See generally BITTKER, supra note 110, § 6.
197. See, e.g., C & A Carbone, Inc., v. Town of Clarkstown, 511 U.S. 383, 401 (1994) (O'Connor, J., concurring) ("The scope of the dormant Commerce Clause is a judicial creation.");
198. Prakash, supra note 115, at 1169 (highlighting that the Dormant Commerce Clause is a creature of Constitutional interpretation performed by courts and that the resulting jurisprudence is "very complicated and byzantine.").
199. See U.S. CONST, art. I, §8, cl. 3;
200. United Haulers Ass'n v. Oneida-Herkimer Solid Waste Mgmt. Auth., 127 S. Ct. 1786, 1793 (2007).
201. But see Camps Newfound/Owatonna, Inc. v. Town of Harrison, 520 U.S. 564, 610 (1997) (Thomas, J., dissenting) ("The negative Commerce Clause has no basis in the text of the Constitution, makes little sense, and has proved virtually unworkable in application.").
202. i27 See Bd. of Trs. of Univ. of 111. v. United States, 289 U.S. 48, 56-57 (1933) ("It is an essential attribute of the [foreign commerce] power that it is exclusive and plenary. As an exclusive power, its exercise may not be limited, qualified or impeded to any extent by state action.").
203. S.-Cent. Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 87 (1984).
204. See United Haulers Ass'n, 127 S. Ct. at 1792;
205. Hon. Sandra L. Lynch, judge, U.S. Cir. Ct., The United States, the States, and Foreign Relations, Address at Suffolk University Law School (Feb. 17, 2000),
206. in 33 SUFFOLK U. L. REV. 217, 225 (2000).
207. Trojan Techs., Inc. v. Pennsylvania, 916 F.2d 903, 909 (3d Cir. 1990).
208. See Lynch, supra note 129, at 225.
209. See, e.g., Piazza's Seafood World, LLC v. Odom, 448 F.3d 744, 749-50 (5th Cir. 2006) (applying interstate dormant commerce framework to dormant foreign commerce challenge);
210. Antilles Cement Corp. v. Acevedo Vila, 408 F.3d 41. 46 (1st Cir. 2005) ("Although the language of dormant Commerce Clause jurisprudence most often concerns interstate commerce, essentially the same doctrine applies to international commerce."). Most of the Court's dormant Foreign Commerce Clause jurisprudence concerns taxation.
211. See, e.g, Barclays Bank PLC v. Franchise Tax Bd., 512 U.S. 298 (1994);
212. Itel Containers Int'l Corp. v. Huddleston, 507 U.S. 60 (1993);
213. Wardair Can. Inc. v. Fla. Dep't of Revenue, 477 U.S 1 (1986);
214. Container Corp. of Am. v. Franchise Tax Bd., 463 U.S. 159 (1983);
215. Japan Line, Ltd. v. County of L.A., 441 U.S. 434 (1979).
216. See, e.g., United Haulers Ass'n, 127 S. Ct. at 1793.
217. Or. Waste Sys., Inc. v. Dep't of Envtl. Quality, 511 U.S. 93, 99 (1994).
218. See Kraft Gen. Foods, Inc. v. Iowa Dep't of Revenue and Fin., 505 U.S. 71, 81-82 (1992);
219. Philadelphia v. New Jersey, 437 U.S. 617, 624 (1978);
220. Nat'l Foreign Trade Council v. Natsios, 181 F.3d 38, 66-67 (1st Cir. 1999) ("Under standard Commerce Clause analysis, a statute that facially discriminates against interstate or foreign commerce will, in most cases, be found unconstitutional."), affd in result sub nom.
221. Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363 (2000).
222. 437 U.S. 617.
223. Kraft Gen. Foods, 505 U.S. at 92.
224. Philadelphia v. New Jersey, 437 U.S. at 624.
225. Id.
226. Pike v. Bruce Church, Inc., 397 U.S. 137, 145 (1970) ("Even where the state is pursuing a clearly legitimate local interest, this particular burden on commerce has been declared virtually per se illegal.");
227. see also Philadelphia v. New Jersey, 437 U.S. at 624;
228. Piazza's Seafood World, LLC v. Odom, 448 F.3d 744, 750 (5th Cir. 2006) (holding that a Louisiana catfish labeling statute that prevented foreign fish from being labeled as "cadish" is per se invalid because it facially discriminates against foreign commerce).
229. Maine v. Taylor, 477 U.S. 131, 151 (1986).
230. Id. at 151.
231. Id. at 148.
232. See Hunt v. Wash. Apple Adver. Comm'n, 432 U.S. 333 (1977).
233. Washington Apple involved a dormant Commerce Clause challenge to North Carolina's prohibition on the importation of non-USDA certified apples. Vd. at 336-42.
234. The Court found that the practical effect of this regulation was to discriminate against Washington apples, which were not USDA-certified but rather certified by Washington under its higher standards. Id. at 351-52;
235. see also Dean Milk Co. v. City of Madison, 340 U.S. 349 (1951) (striking down regulations that milk had to be processed near the city of Madison because other less restrictive alternatives exist to protect health and safety).
236. Wash. Apple, 432 U.S. at 353.
237. Pike, 397 U.S. at 142 (invalidating a California regulation requiring farmers to pack cantaloupes locally).
238. Wardair Can., Inc. v. Fla. Dep't of Revenue, 477 U.S. 1, 8. (1986);
239. see Japan Line, Ltd. v. County of L.A., 441 U.S. 434, 448 (1979) (opining that foreign commerce is a "matter of national concern," and that "'with respect to foreign intercourse and trade the people of the United States act through a single government'") (citation omitted).
240. Japan Line, 441 U.S. at 434-35;
241. see infra Part II.B (discussing foreign affairs preemption).
242. Id. at 451 (citation omitted).
243. Id. at 450.
244. Id. at 452-53.
245. Id. at 453.
246. Id. at 456.
247. Id. at 457.
248. 463 U.S. 159, 194 (1983).
249. Id. at 197.
250. Id. at 194.
251. Id. at 195 (noting that the Executive Branch did not file an amicus brief).
252. See, e.g., Piazza's Seafood World, LLC v. Odom, 448 F.3d 744, 749 (5th Cir. 2006) (Louisiana catfish labeling statute);
253. Antilles Cement Corp. v. Acevedo Vilá, 408 F.3d 41 (1st Cir. 2005) (Puerto Rico Buy American Act);
254. Nat'l Foreign Trade Council v. Natsios, 181 F.3d 38, 68-70 (1st Cir. 1999), off d in result sub nom. Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363 (2000) (Massachusetts Burma Law);
255. Trojan Techs., Inc. v. Pennsylvania, 916 F.2d 903, 912 (3d Cir. 1990) (Pennsylvania Steel Products Procurement Act);
256. Bd. of Trs. of the Employee's Ret. Sys. of Bait. v. Mayor & City Council of Bait., 562 A.2d 720 (Md. 1989) (South Africa divestment ordinance).
257. 467 U.S. 82 (1984).
258. See id. at 101.
259. See id. at 100.
260. id.
261. See Reeves, Inc. v. Stake, 447 U.S. 429, 437 (1980) ("There is no indication of a constitutional plan to limit the ability of the States themselves to operate freely in the free market").
262. See Wunnicke, 467 U.S. at 93 ("Our cases make clear that if a State is acting as a market participant, rather than as a market regulator, the dormant Commerce Clause places no limitation on its activities.");
263. White v. Mass. Council of Constr. Employers, Inc., 460 U.S. 204, 206 (1983) (holding that Boston was acting as a market participant when it required its contractors to employ city residents on projects that the city paid for with public funds).
264. Reeves, 447 U.S. at 446-47.
265. See Wunnicke, 467 U.S. at 93.
266. See Wis. Dep't of Indus., Labor & Human Relations v. Gould Inc., 475 U.S. 282, 289 (1986) (holding diat Wisconsin acted as a market regulator by prohibiting state purchases from violators of federal labor law);
267. Wunnicke, 467 U.S. at 97-98.
268. 467 U.S. at 82.
269. Id. at 85 n.4, 100-01.
270. See, e.g., Antilles Cement Corp. v. Acevedo Vila, 408 F.3d 41, 47 (1st Cir. 2005) (opining that case law on the matter "appears to be in some disarray");
271. Nat'l Foreign Trade Council, Inc. v. Giannoulias, 523 F. Supp. 2d 731, 748 (N.D. Ill 2007) ("It is not a foregone conclusion . . . that the market participant exception applies to the Foreign Commerce Clause. Courts have split on the issue.") (citations omitted);
272. J.T. Hutchens, Note, The Market-Participant Exception and the Dormant Foreign Commerce Clause, 5 CARDOZO PUB. L. POL'Y & ETHICS J. 445, 446 (2007).
273. Compare Trojan Techs., Inc. v. Pennsylvania, 916 F.2d 903, 910 (3rd Cir. 1990) (exception applies),
274. and K.S.B. Technical Sales Corp. v. N.J. Dist. Water Supply Comm'n, 75 N.J. 272, 296 (1977) (same),
275. with Nat'l Foreign Trade Council v. Natsios, 181 F.3d 38, 52 (1st Cir. 1999) (exception likely does not apply),
276. aff'd in result sub nom. Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363 (2000).
277. 916 F.2d at 903.
278. Id. at 904-05.
279. 181 F.3d at 38.
280. Id. at 60.
281. Reeves, Inc. v. Stake, 447 U.S. 429, 437-38 n. 9 (1980).
282. Id.
283. Id.
284. For further treatment of the market participant exception, see infra Part II.A.3.c.
285. See Kraft Gen. Foods, Inc. v. Iowa Dep't of Revenue & Fin., 505 U.S. 71, 76 (1992);
286. United States v. Clark, 435 F.3d 1100, 1115 n.18 (9th Cir. 2006) ("It is now universally acknowledged that foreign trade or commerce includes both goods and services.") (citations omitted).
287. See id.
288. Even if a state with minimal offshore contracts restricts offshore contracting, the restriction would amount to more than an incidental burden on foreign commerce. See Japan Line, Ltd. v. County of L.A., 441 U.S. 434, 455-56 (1979) (opining that even de minimis inference in the domestic commerce
289. Wickard v. Filburn, 317 U.S. Ill, 128-29 (1942) (considering the cumulative affect of commercial activity);
290. Nat'l Foreign Trade Council v. Natsios, 181 F.3d 38, 53 (1st Cir. 1999), aff'd in result sub nom. Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363 (2000).
291. Cf. Bob-Lo Excursion Co. v. Michigan, 333 U.S. 28 (1948) (holding that a state civil rights statute did not affect foreign commerce because the effect was so minimal as applied to a Michigan ferry operator that traveled between Detroit and a small Canadian island).
292. Cf. Or. Waste Sys., Inc. v. Dep't of Envtl. Quality, 511 U.S. 93, 99 (1994). Offshore contract restrictions need not discriminate against foreign corporations to discriminate against foreign commerce.
293. See Natsios, 181 F.3d at 53.
294. See, e.g., Keep Jobs in Tennessee Act, H.B. 870, 105th Gen. Assem., 1st Reg. Sess. (Tenn. 2007) ("Each vendor submitting a bid or contract to provide services and all development assistance applicants shall certify that the services covered by the bid, contract or development assistance will be performed in the United States.");
295. S.B. 4077, 213th Leg., Reg. Sess. (N.Y. 2007) ("State contracts shall be required to include a provision stating all services performed under such contract or any subcontract awarded under such contract shall be performed within the United States.");
296. S.B. 1266, 47th Leg., 1st Reg. Sess. (Ariz. 2005) ("A State agency . . . shall not enter into any agreement . . . that results in a state service position being directly or indirectly established or transferred outside of the United States.").
297. N.J. STAT. ANN. § 52:34-13.2 (West 2005).
298. See Kraft Gen. Foods, 505 U.S. at 81.
299. See Bacchus Imps., Ltd. v. Dias, 468 U.S. 263, 273 (1984) ("A discrimination claim . . . requires a comparison of the two classifications . . . It could always be said that there was no intent to impose a burden on one party, but rather the intent was to confer a benefit on the other.").
300. See, e.g., Press Release, Office of Governor of N.J., Codey Signs Bill to Protect New Jersey Jobs from Offshore Outsourcing (May 5, 2005);
301. Press Release, Office of Governor of Mich., Market Denial, Not Market Access, Governor Granholm Joins Rep. Steve Beida to Keep State Contracting Jobs in Michigan, U.S. (Mar. 22, 2004) ("'Today, I have signed two executive directives that will ensure that Michigan taxpayers are not subsidizing the export of jobs.'" (quoting Mich. Governor Jennifer M. Granholm)).
302. Press Release, Office of Governor of N.J., supra note 187.
303. See, e.g., William Welsh, Offshore Storm: States Get Tangled in Contractor's Outsourcing Moves, WASH. TECH, Apr. 19, 2004, available at http://www.washingtontechnology.com/print/19-2/23301- 1.html (quoting a policy associate at the National Conference of State Legislators who suggests that states employ offshore contracting restrictions to combat growing local economic problems).
304. See Kraft Gen. Foods, 505 U.S. at 81.
305. See Philadelphia v. New Jersey, 437 U.S. 617, 624 (1978).
306. Pike v. Bruce Church, Inc., 397 U.S. 137, 145 (1970).
307. Amerada Hess Corp. v. N.J. Taxation Div., 490 U.S. 66, 78 (1989).
308. See infra notes 195-02 and accompanying text.
309. See Andy Opsahl, The Line Government Won't Cross, GOV'T TECH, Oct. 2, 2006, http://www.govtech.com/gt/101350.
310. See FRIEDMAN, supra note 55, at 207 (arguing that the offshoring deal "would save Indiana state residents precious tax dollars that could be deployed to hire more state workers somewhere else, or build new schools that would permanently shrink its roles of unemployed").
311. See SUSAN B. HANSEN, GLOBALIZATION AND THE POLITICS OF PAY: POLICY CHOICES IN THE AMERICAN STATES 137-43 (2006).
312. GAO TRADE REPORT, supra note 29, at 71.
313. See Hutchens, supra note 171, at 463 ("The states certainly have the option of not spending the money ....").
314. See Opsahl, supra note 195.
315. See Amir Hefetz & Mildred Warner, Beyond the Market Versus Planning Dichotomy: Understanding Privatisation and its Reverse in U.S. Cities, 33 LOCAL GOV'T STUD. 555, 556 (2007).
316. Cf: C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383, 394 (1994) ("[H]aving elected to use the open market to earn revenues . . ., the town may not employ discriminatory regulation to give that project an advantage over rival businesses from out of State.").
317. See Japan Line, Ltd. v. County of L.A., 441 U.S. 434, 450 (1979).
318. Cf. Bedilehem Steel Corp. v. Bd. of Comm'rs of the Dep't of Water & Power, 80 Cal. Rptr. 800, 805-06 (1969) (holding that the California Buy American Act undermines the federal government's power to conduct foreign relations).
319. See id. at 803.
320. See generally Trade Compliance Center: Making America's Trade Agreements Work for You!, http://tcc.export.gov/Trade-Agreements (last visited Oct. 2, 2008).
321. Cf. Bethlehem Steel Corp., 80 Cal. Rptr. at 803 n.6 (citation omitted).
322. See OFFICE OF THE U.S. TRADE REP., EXECUTIVE OFFICE OF THE PRESIDENT, THE PRESIDENT'S TRADE POLICY AGENDA 14 (2007) [hereinafter PRESIDENT'S TRADE POLICY AGENDA];
323. Jean Heilman Grier, Recent Developments in International Trade Agreements Covering Government Procurement, 35 PUB. CONT. L.J. 385, 386 (2006).
324. Mildred Warner & Jennifer Gerbasi, Is There a Democratic Deficit in the Free Trade Agreements? What Local Governments Should Know, PUB. MGMT., Mar. 2004, at 16, 17.
325. PRESIDENT'S TRADE POLICY AGENDA, supra note 208, at 14.
326. See generally Grier, supra note 208; Office of the U.S. Trade Rep., USTR Focus on Government Procurement, http://www.ustr.gov/ Trade-Sectors/Government-Procurement/Section-Index.html (last visited Oct. 2, 2008) ("A longstanding objective of U.S. trade policy has been to open opportunities for U.S. suppliers to compete on a level playing field for foreign government contracts.").
327. See OFFICE OF THE U.S. TRADE REP., EXECUTIVE OFFICE OF THE PRESIDENT, TRADE FACTS: STATE GOVERNMENT PROCUREMENT AND TRADE AGREEMENTS: SENDING A POSITIVE SIGNAL ABOUT WELCOMING INTERNATIONAL BUSINESS AND INVESTMENT (2006), http://www.ustr.gov/assets/ Document-Library/Fact-Sheets/2006/asset-upload-file344-9260.pdf [hereinafter USTR, SENDING POSITIVE SIGNAL].
328. See id.
329. See, e.g., Consolidated Appropriations Act, 2004, Pub. L. No. 108-199, § 647, 118 Stat. 3, 361-62 (2004) (requiring a one-year, limited ban on offshoring certain federal agency contacts in 2004).
330. See OFFICE OF THE U.S. TRADE REP., EXECUTIVE OFFICE OF THE PRESIDENT, TRADE FACTS: BIPARTISAN TRADE DEAL (2007), http://www.ustr.gov/assets/Document-Library/Fact-Sheets/2007/ asset-upload-file127-11319.pdf [hereinafter USTR, BIPARTISAN TRADE DEAL].
331. OFFICE OF THE U.S. TRADE REP., EXECUTIVE OFFICE OF THE PRESIDENT, ANNUAL REPORT ON DISCRIMINATION IN FOREIGN GOVERNMENT PROCUREMENT 1 (2001).
332. See Grier, supra note 208, at 387.
333. Agreement on Government Procurement art. III, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 4B, 1915 U.N.T.S. 103;
334. cf. General Agreement on Trade in Services, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1B, 1915 U.N.T.S. 103 (dealing with the private sector).
335. See Grier, supra note 208, at 390 (noting that the United States applies a $526,000 threshold for member states to be subject to GPA provisions);
336. James E. Meadows, Dealing with the Offshore Outsourcing Controversy, 807 PLI/PAT 413, 434-35 (2004).
337. See Grier, supra note 208, at 388.
338. See id. at 395.
339. See Warner & Gerbasi, supra note 209, at 17 ("Clearly, protectionist legislation would be contrary to the spirit of the trade agreements ....").
340. See Brannon P. Denning & Jack H. McCall, Jr., The Constitutionality of State and Local "Sanctions" Against Foreign Countries: Affairs of State, States' Affairs, or a Sorry State of Affairs?, 26 HASTINGS CONST. L.Q. 307, 331-34 (1999).
341. See supra Part I.B.
342. See Aaditya Mattoo & Sacha Wunsch-Vincent, Pre-empting Protectionism in Services: The GATS and Outsourcing, 7 J. INT'L ECON. L. 765, 765 (2004).
343. See Nat'l Foreign Trade Council v. Natsios, 181 F.3d 38, 53 (1st Cir. 1999),
344. affd in result sub nom. Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363 (2000);
345. cf. Japan Line, Ltd. v. County of L.A., 441 U.S. 434, 453 (1979).
346. Daniel Pruzin, Outsourcing: At WTO Meeting, India Signals Concern About U.S. Moves to Counter Outsourcing, WTO Rep. (BNA) ISSN 1529-4153 (Mar. 9, 2004).
347. Id.
348. Id.
349. Id.
350. Id.
351. See Press Release, Dep't of Commerce of India, Market Denial, Not Market Access, Says Jaitley Reacting to Reported US Move to Ban Outsourcing (May 26, 2003), available at http://commerce.nic.in/PressRelease/ pressrelease-detail.asp?id=363 (last visited Oct. 2, 2008).
352. Pruzin, supra note 227.
353. See Bedilehem Steel Corp. v. Bd. of Comm'rs of the Dep't of Water & Power, 80 Cal. Rptr. 800, 805 n.11 (1969).
354. See Press Release, U.S. Mission to the United Nations in Geneva, Trade Policy Review of India: Statement by Ambassador Peter F. Allgeier, U.S. Permanent Representative to the WTO (May 24, 2007), available at http://geneva.usmission.gov/Press2007/0524TPRIndia.html ("We understand diat India is considering the possibility of joining the WTO Agreement on Government Procurement (GPA), and we strongly encourage its accession to the agreement.");
355. OFFICE OF THE U.S. TRADE REP., EXECUTIVE OFFICE OF THE PRESIDENT, TRADE FACTS: U.S.-INDIA TRADE POLICY FORUM (2006), http://www.ustr.gov/assets/Document-Library/Fact-Sheets/ 2006/asset-upload-file321-9583.pdf (describing the ongoing nature of U.S.-India bilateral negotiations).
356. See Steven Chase, U.S. Bills Threaten Canada's Call Centres: American Contracts Could Be Affected, THE GLOBE & MAIL (Canada), Feb. 19, 2004, at B1, LexisNexis Academic (quoting a letter from the Canadian Ambassador to United States sent to U.S. Trade Representative: "NewJersey's proposed [offshoring] legislation would unduly and unjustifiably affect crossborder trade in a number of key service sectors including business services, distribution services, financial services and tourism and travel-related services.").
357. See E-mail from Matthew Shannon, Foreign Affairs Canada and Int'l Trade, Gov't of Can., to author (Oct. 17, 2007, 12:02:00 EDT) (on file with author);
358. Chase, supra note 236.
359. See Chase, supra note 236.
360. Stephen Handelman, Getting Hung Up on Call Centers: Why an Anti-Outsourdng Bill in New Jersey Could Wreak Havoc in Canada, TIME INT'L, Apr. 18, 2004, at 30, LexisNexis Academic.
361. See E-mail from Matthew Shannon, supra note 237;
362. Letter from Robert Zoellick, U.S. Trade Rep., to Michael Kergin, Ambassador of Can. to the U.S. (Aug. 11, 2003) (on file with author).
363. See Letter from Robert B. Zoellick, supra note 240.
364. See Chase, supra note 236.
365. USTR, SENDING POSITIVE SIGNAL, supra note 212.
366. Id.
367. See Japan Line, Ltd. v. County of L.A., 441 U.S. 434, 453 n.18 (1979).
368. See Denning & McCall, supra note 223, at 350.
369. See Japan Line, 441 U.S. at 450.
370. See Alisa B. Klein & Mark B. Stern, Back to First Principles: The Constitutional Rationale for Invalidating Local Sanctions Against Foreign Trade, 33 LAW & POL'Y INT'L BUS. 77, 93 (2001).
371. See Adam Mordecai, Note, Anti-Offshoring Legislation: The New Wave of Protectionism, 5 RICH. J. GLOBAL L. & BUS. 85, 102 (2005) ("Any successful protectionist measures will do little to create jobs and will only serve to encourage foreign retaliation, thus resulting in more jobs lost than saved.") (citation omitted);
372. O'Neil, supra note 113, at 542 ("Retaliation causes increased trade barriers, which in turn result in the loss of gains from trade and deterioration in the economic welfare of the nation.") (citation omitted).
373. See S.-Cent. Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 92 (1984);
374. Klein & Stern, supra note 248, at 91 ("And it is axiomatic that when the interests of all of the nation's citizens are concerned, the power to act lies exclusively with the federal government.").
375. See Nat'l Foreign Trade Council v. Natsios, 181 F.3d 38, 53 (1st Cir. 1999) ("Massachusetts has chosen a course divergent. . . from the federal law, thus raising the prospect of embarrassment for the country."),
376. aff'd in result sub nom. Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363 (2000).
377. See Anderson L. Cao, Comment, Limiting States' Roles in Foreign Commerce: Teaching Old-World Dogs New-World Tricks, 23 HOUS. J. INT'L L. 349, 373-74 (2001).
378. See id. at 374.
379. See, e.g, Natsios, 181 F.3d at 65-66.
380. But this too is questionable. See infra notes 266-71 and accompanying text.
381. See Wardair Can., Inc. v. FIa. Dep't of Revenue, 477 U.S. 1, 8 (1986);
382. S.-Cent. Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 100 (1984);
383. Japan Line, Ltd. v. County of L.A., 441 U.S. 434, 446 (1979).
384. See Reeves v. Stake, 447 U.S. 429, 437-38 n. 9 (1980);
385. supra Part II.A.2.c.
386. See supra Part II.A.3.
387. See United States v. Pink, 315 U.S. 203, 233 (1942) ("Power over external affairs is not shared by the States; it is vested in the national government exclusively.");
388. Hutchens, supra note 171, at 476 (arguing that applying the market-participant exception to dormant Foreign Commerce Clause "would do violence to the foreign affairs powers that the Constitution vests solely in the federal government").
389. See Mattoo & Wunsch-Vincent, supra note 225, at 773.
390. See Reeves, 447 U.S. at 436-41.
391. See, e.g., Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528 (1985) (holding that state and local governments must pay the federal minimum wage).
392. See, e.g., U.S. Term Limits, Inc. v. Thornton, 514 U.S. 779, 841 (1995) (Kennedy, J., concurring) ("The States have no power, reserved or otherwise, over the exercise of federal authority within its proper sphere.") (citation omitted).
393. See Kevin P. Lewis, Dealing with South Africa: The Constitutionality of State and Local Divestment Legislation, 61 TUL. L. REV. 469, 484-85 (1987).
394. Hutchens, supra note 171, at 462;
395. Lewis, supra note 264, at 485.
396. See, e.g., S.B. 1249, 48th Leg., 2d Reg. Sess. (Ariz. 2008);
397. Job Preservation Act of 2007, S.B. 1255, 95th Gen. Assem., 1st Reg. Sess. (Ill. 2007);
398. supra note 76.
399. See, e.g., H.B. 389, 2007 Leg., Reg. Sess. (Pa.) (disqualifying those contractors who have offshored jobs within the past three years from bidding on state contracts);
400. H.B. 568, 95th Gen. Assem., 1st Reg. Sess. (Ill. 2007) (disqualifying an entity from state contract awards if it "has or uses a foreign call service center").
401. See N.J. STAT. ANN. § 52:34-13.2 (West 2005).
402. See O'Neil, supra note 113, at 538-39.
403. See S.-Cent. Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 100 (1984); supra Part II.A.3.
404. See infra Part II.B.
405. See Nat'l Foreign Trade Council v. Natsios, 181 F.3d 38 (1st Cir. 1999),
406. aff'd in result sub nom. Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363 (2000).
407. See United States v. Pink, 315 U.S. 203, 233 (1942).
408. See Zschernig v. Miller, 389 U.S. 429, 441 (1968) (Stewart, J., concurring) ("[E]ven in absence of a treaty, a State's policy may disturb foreign relations ")
409. Id. at 429.
410. Id. at 440-42.
411. Natsios, 181 F.3d at 51-52.
412. Id. at 52 ("We do not read Zschernig as instructing courts to balance the nation's interests in a unified foreign policy against the particular interests of an individual state.").
413. Compare Trojan Techs., Inc. v. Pennsylvania, 916 F.2d 903, 909 (3d Cir. 1990),
414. with Bethlehem Steel Corp. v. Bd. of Comm'rs of the Dep't of Water & Power, 80 Cal. Rptr. 800 (1969).
415. See Bethlehem Steel, 800 Cal. Rptr. at 803.
416. See Trojan Techs., 916 F.2d at 909.
417. Jack Goldsmith, Statutory Foreign Affairs Preemption 22 (John M. Olin Law Sc Econ. Working Paper No. 116, 2007).
418. See Natsios, 181 F.3d at 59 (rejecting, as novel and unsupported, the argument that the market participant exception exists as to the foreign affairs power).
419. See id. at 52.
420. Those who argue that recent Supreme Court decisions evince the Court's preference to decide cases on preemption grounds instead of dormant commerce grounds contend that the Court should avoid needless constitutional confrontation. See, e.g., Leanne M. Wilson, Note, The Fate of the Dormant Foreign Commerce Clause After Garamendi and Crosby, 107 COLUM. L. REV. 746, 784-85 (2007) (suggesting the elimination of dormant foreign commerce in favor of foreign affairs preemption). But the Court has never indicated that dormant foreign commerce challenges are disfavored, and dormant foreign affairs preemption does in fact implicate the Constitution vis-à-vis the Supremacy Clause.
421. See BITTKER, supra note 110, §5.06[F].
422. See Bethlehem Steel Corp., 80 Cal. Rptr. at 803 ("Only the federal government can fix the rules of fair competition when such competition is on an international basis .... State regulation can only impede, not foster, national trade policies.").
423. See supra Part II.A.3.
424. See supra Part II.A.3.b.2.
425. Cf. Trojan Techs., Inc. v. Pennsylvania, 916 F.2d 903, 909 (3d Cir. 1990) (opining that any interference with foreign relations is merely speculative).
426. Cf. Bethlehem Steel Corp., 80 Cal. Rptr. at 805.
427. Cf. Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363 (2000) (invalidating Massachusetts Burma law on statutory preemption grounds).
428. See Opsahl, supra note 195;
429. Salzer, supra note 49;
430. Alison Lake, Why Not Mumbai?, GOVTECH, Dec. 19, 2006, http://www.govtech.com/pcio/102966 ("The public sector's skepticism, even hostility, toward offshore outsourcing seems off-base, given its apparent success in the private sector.").
431. See Hopkins, supra note 3, at 1A.
432. See Labor Agency Taps India Firm for State Project, supra note 53, at 9.
433. Fernandez & Von Bergen, supra note 21.
434. See FRIEDMAN, supra note 55, at 207.
435. Mark B. Baker, "The Technology Dog Ate My Job": The Dog-Eat-Dog World of Offshore Labor Outsourcing, 16 FLA. J. INT'L L. 807, 814 (2004).
436. See Small, supra note 97.
437. Fernandez & Von Bergen, supra note 21;
438. see also Press Release, Office of Governor of N.J., supra note 187 ("It is foolish for the state to send taxpayer dollars abroad to hire workers in India, China or Indonesia when these same jobs can be performed by the unemployed here in the United States.'"
439. (quoting N..J. State Senator Shirley K. Turner)).
440. Ed Parry, "Not in My Backyard" - State Lawmakers Fight Offshoring, SEARCHCIO.COM, Mar. 15, 2004
441. (quoting N.J. State Senator Shirley K. Turner) (on file with the author).
442. See Karen MacPherson, States Sending Jobs Overseas: Legislatures Consider Ban on "Outsourcing" Government Business, PITTSBURGH POST-GAZETTE, Apr. 4, 2004, at A8, LexisNexis Academic ("'By hiring Americans, you create taxpayers. You pump money into your local economy.'")
443. (quoting Ohio State Rep. Marcy Kaptur). Similarly, as one public-employee union official declared, "'It's outrageous to use taxpayer dollars to erode your tax base.'"
444. Hopkins, supra note 3, at 1A.
445. See Press Release, Office of Governor of N.J., supra note 187 ("'Not only are we losing the benefits those jobs bring to the individual, but we also lose the tax and economic growth benefits those jobs bring to the state.'"
446. (quoting N.J. State Senator Shirley K. Turner)).
447. See Opsahl, supra note 195. Interestingly, Texas has engaged in "bestshoring," which requires the work to be performed in, of course, Texas. Id.
448. See generally Jennifer Gerbasi & Mildred E. Warner, Privatization, Public Goods and the Ironic Challenge of Free Trade Agreements, 39 ADMIN. & SOC. 127 (2007) (arguing that subnational governments are fundamentally concerned with democracy, voice, and choice);
449. Warner & Gerbasi, supra note 209, at 18 (remarking that the primary role of state government is to guard and serve residents). As one lawmaker says, state government "should not be in the business of putting our own citizens out of work."
450. Press Release, Office of Governor of N.J., supra note 187.
451. See Lindquist, supra note 1, at A1 (noting that the cost to run a Florida state call-center increased after the state contractor moved offshore).
452. See generally DELOITTE CONSULTING, CALLING A CHANGE IN THE OUTSOURCING MARKET: THE REALITIES FOR THE WORLD'S LARGEST ORGANIZATIONS 2-3 (2005) (discussing the hidden costs of offshoring).
453. See supra notes 199-200 and accompanying text.
454. It is a well-established principle that, "whether a case is decided on preemption or dormant Commerce Clause grounds, the judicial verdict can be reversed by Congress." BITTKER, supra note 110, § 5.06[F].
455. Cf. Japan Line, Ltd. v. County of L.A., 441 U.S. 434, 457 (1979) ("The problems to which appellees refer are problems that admit only of a federal remedy. They do not admit of a unilateral solution by a State.").
456. See Gerbasi & Warner supra note 303, at 143.
457. See USTR, BIPARTISAN TRADE DEAL, supra note 215.
458. See Gerbasi & Warner, supra note 303, at 142 ("New agreements target government regulation of areas traditionally reserved to states including the protection of health, morals, and economic development within state borders. Lack of involvement of states in the negotiation of these rules can undermine their traditional areas of authority.").
459. See id.
460. Warner & Gerbasi, supra note 209, at 18.
461. Gerbasi & Warner, supra note 303, at 144;
462. see also Hefetz & Warner, supra note 201, at 558.
463. See Mildred E. Warner & Amir Hafetz, Managing Markets for Public Service: The Role of Mixed Public-Private Delivery of City Services, 68 PUB. ADMIN. REV. 155, 163 (2008).
464. See GAO TRADE REPORT, supra note 29, at 4;
465. Justin Kent Holcombe, Solutions for Regulating Offshore Outsourcing in the Service Sector: Using the Law, Market, International Mechanisms, and Collective Organization as Building Blocks, 7 U. PA. J. LAB. & EMP. L. 539, 549 (2005).
466. See supra Part I.B.
467. See, e.g., MacPherson, supra note 300 ("'No one has yet done a comparison of the costs to the state vs. the costs of sending the jobs overseas.'") (citation omitted).
468. Holcombe, supra note 315, at 549. Similarly, a union official recently testified, "The outsourcing debate is hampered by the lack of objective data to reinforce policy recommendations to either allow the continued unrestricted use of outsourcing or to restrict outsourcing to protect American jobs."
469. Public Hearing Before Assembly Outsourcing and Off-Shoring Commission, 212th N.J. Leg. 39 (Sept. 14, 2007) (statement of Eric Richard, Legislative Affairs Coordinator, N.J. State AFL-CIO).
470. See O'Neil, supra note 113, at 544.
471. HANSEN, supra note 197, at 7.
472. Alan Blinder, Offshoring: The Next Industrial Revolution?, 85 FOREIGN AFF. 113, 121 (2006).
473. See, e.g., Labor Agency Taps India Firm for State Project, supra note 53, at 9 (reporting that Indiana's Governor canceled an offshore contract after public backlash).