Linking international markets and global justice

Michigan Law Review

Volumn 107, Issue 6, 2009, Pages 1039-1058

  Dunoff, Jeffrey L ^a  

^a NONE

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EID: 66249149032     PISSN: 00262234     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (70)

1. U.S. SMALL BUS. ADMIN., AN INTRODUCTION TO THE U.S. SMALL BUSINESS ADMINISTRATION (SBA) 8 (2007), available at http://www.sba.gov/ idc/groups/public/documents/sba-homepage/serv-abt-overview-english.doc.
2. ORG. FOR ECON. COOPERATION & DEV., THE SIZE OF GOVERNMENT PROCUREMENT MARKETS 29 (2002) [hereinafter OECD], available at http://www.oecd.org/dataoecd/34/14/ 1845927.pdf.
3. Professor of Human Rights Law, University of Oxford; Affiliated Overseas Faculty, the University of Michigan Law School.
4. For current purposes procurement should be distinguished from state trading, which is the commercial activity of state-owned enterprises.
5. MAJORITY STAFF OF H. COMM. ON OVERSIGHT AND GOV'T REFORM, 110TH CONG., MORE DOLLARS, LESS SENSE: WORSENING CONTRACTING TRENDS UNDER THE BUSH ADMINISTRATION, at i (Comm. Print 2007), available at http://oversight.house.gov/features/moredollars/ moredollars.pdf.
6. Procurement by sub-federal bodies was estimated to be $616 billion in fiscal year 2007 and $585 billion in fiscal year 2006. Trade Policy Review Body, Report by the Secretariat: Trade Policy Review: United States, 68, WT/TPR/S/200 (May 5, 2008).
7. OECD, supra note 2, at 7-8.
8. 41 U.S.C. §§ 10a-d (2000).
9. For an authoritative account, see DOUGLAS A. IRWIN ET AL., THE GENESIS OF THE GATT (2008).
10. U.S. Dept. of State, Suggested Charter for an International Trade Organization of the United Nations, U.S. Dept. of State Pub. 2598, Commercial Policy Series 93 (1946).
11. P. 98. For the standard history of these negotiations, see Annet Blank & Gabrielle Marceau, The History of the Government Procurement Negotiations Since 1945, 5 PUB. PROCUREMENT L. REV. 77, 82-83 (1996).
12. Agreement on Government Procurement, MTN/NTM/W/211/Rev.2, Apr. 12, 1979, available at http://www.wto.org/gatt-docs/English/SULPDF/91990048. pdf.
13. See H.R. REP. NO. 96-317, at 96 (1979) .
14. Agreement on Government Procurement, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 4(b), Legal Instruments-Results of the Uruguay Round, 33 I.L.M. 1125 (1994) [hereinafter GPA], available at http://www.wto.org/english/docs-e/ legal-e/gpr-94-e.pdf.
15. For extended analysis of the agreement, see SUE ARROWSMITH, GOVERNMENT PROCUREMENT IN THE WTO (2003), and Bernard M. Hoekman & Petros C. Mavroidis, Basic Elements of the Agreement on Government Procurement, in LAW AND POLICY IN PUBLIC PURCHASING: THE WTO AGREEMENT ON GOVERNMENT PROCUREMENT 13 (Bernard M. Hoekman & Petros C. Mavroidis eds., 1997). At the same time, treaties entered into force creating the World Trade Organization ("WTO"). In the discussion that follows, I shall use the terms GATT and WTO interchangeably.
16. World Trade Org., General Overview of WTO Work on Government Procurement, http:// www.wto.org/english/tratop-e/gproc-e/overview-e.htm (last visited Oct. 20, 2008).
17. See GPA, supra note 14, arts. IX, XIII, XVII, XX.
18. GPA parties include Canada; the European Communities, including its twenty-seven member states; Hong Kong, China; Iceland; Israel; Japan; Korea; Liechtenstein; the Kingdom of the Netherlands with respect to Aruba; Norway; Singapore; Switzerland; and the United States. World Trade Org., supra note 16.
19. See GPA, supra note 14, art. & app. I.
20. See id. art. I(4) & app. I.
21. H.R. DOC. NO. 103-316, vol. 1, at 1040 (1994).
22. WORLD BANK, GUIDELINES: PROCUREMENT UNDER IBRD LOANS ANDIDA CREDITS (rev. 2006), available at http://siteresources.worldbank.org/INTPROCUREMENT/ Resources/ ProcGuid-10-06-ev1.doc.
23. See, e.g., UNITED NATIONS ENVIRONMENT PROGRAMME, PLANNING FOR CHANGE: GUIDELINES FOR NATIONAL PROGRAMMES ON SUSTAINABLE CONSUMPTION AND PRODUCTION 29 (2008) (encouraging "sustainable procurement").
24. See, e.g., Organization of American States, Annual Report of the Secretry General 2002- 2003 OEA/Ser.D/III.53 (English) (2003), available at http://www.oas.org/SGInfAnual/2003/ English/Annual-Report. pdf.
25. See, e.g., U.N. Comm'n on Int'l Trade Law , UNCITRAL Model Law on Procurement of Goods, Construction and Services with Guide to Enactment (June 15, 1994), available at http://www.uncitral.org/pdf/english/texts/ procurem/ml-procurement/ml-procure.pdf.
26. See, e.g., Kenneth W. Abbott, Rule-Making in the WTO: Lessons from the Case of Bribery and Corruption, 4 J. INT'L ECON. L. 275 (2001).
27. General Agreement on Tariffs and Trade, art. III, para. 4, Oct. 30, 1947, 61 Stat. A-11, 55 U.N.T.S. 194 [hereinafter GATT].
28. This is only true, of course, for those WTO members that are parties to the GPA. For other WTO members, the operative norm remains that found in GATT Article III(8), which excludes government procurement from the national treatment obligation. It is interesting to compare these rules with dormant commerce clause analysis of state laws that facially discriminate against commerce from sister states. Both WTO and U.S. law generally prohibit discrimination against outsiders when the state acts as a regulator. However, the regimes diverge significantly with respect to the state's ability to discriminate when it is a purchaser. U.S. law permits states, as purchasers, to explicitly favor in-state interests over out-of-state interests, see Reeves, Inc. v. Stake, 447 U.S. 429 (1980), while the GPA strictly limits this power. We might expect precisely the opposite result: since the commitments to a single market and unified polity are dramatically stronger in the U.S. context, we might expect that the ability to discriminate against outsiders would be greater in the international context.
29. A highly controversial GATT panel used the product-process distinction to find that a process-based U.S. environmental measure violated Article III. Panel Report, United States- Restrictions on Imports of Tuna, DS21/R - 39S/155 (Sept. 3, 1991) (unadopted report); Jeffrey L. Dunoff, Reconciling International Trade with Preservation of the Global Commons: Can We Prosper and Protect?, 49 WASH. & LEE L. REV. 1407 (1992) (critiquing panel report). McCrudden notes that in a more recent dispute, Appellate Body Report, European Communities - Measures Affecting Asbestos and Asbestos-Containing Products, WT/DS135/AB/R (Mar. 12, 2001), the Appellate Body took "an important step away from the doctrine." P. 478.
30. Article III prohibits treatment that is less favorable; the mere fact that like domestic and foreign products are treated differently is not sufficient to establish less favorable treatment. Appellate Body Report, Korea-Measures Affecting Imports of Fresh, Chilled and Frozen Beef, para. 137, WT/DS161/AB/R & WT/DS169/AB/R (Dec. 11, 2000). Rather a panel must examine "whether a measure modifies the conditions of competition in the relevant market to the detriment of imported products." Id. If different treatment does not affect the foreign product's competitive opportunities then there is no violation of Article III.
31. The General Agreement on Trade in Services includes an exception for "measures . . . to protect public morals or to maintain public order." General Agreement on Trade in Services, art. XIV, Dec. 15, 1993, 33 I.L.M. 44 (1994) [hereinafter GATS]. A panel found that "the term 'public morals' denotes standards of right and wrong conduct maintained by or on behalf of a community or nation." Panel Report, United States-Measures Affecting the Cross-Border Supply of Gambling and Betting Services, para. 6.465, WT/DS285/R (Nov. 10, 2004). The panel found that U.S. laws designed to counter underage and pathological gambling fell within the scope of the GATS exception.
32. See Steve Charnovitz, The Moral Exception in Trade Policy, 38 VA. J. INT'L L. 689 (1998);
33. Nicolas F. Diebold, The Morals and Order Exceptions in WTO Law: Balancing the Toothless Tiger and the Undermining Mole, 11 J. INT'L ECON. L. 43 (2008).
34. For excellent discussions, see Steve Charnovitz, The WTO's Environmental Progress, 10 J. INT'L ECON. L. 685 (2007), and Henrik Horn & Petros C. Mavroidis, The Permissible Reach of National Environmental Policies, 42 J. WORLD TRADE 1107 (2008).
35. Pp. 538-52. For other approaches to using government contracts to promote public values, see Laura A. Dickinson, Public Law Values in a Privatized World, 31 YALE J. INT'L L. 383 (2006), and Jody Freeman, Extending Public Law Norms Through Privatization, 116 HARV. L. REV. 1285 (2003).
36. In 1996, Massachusetts passed legislation limiting state agencies from buying goods or services from firms doing business in or with Burma. In 1998, Japan and the European Community ("EC") each filed a WTO complaint against the United States, alleging that the law violated the GPA. Pp. 292-93. Contemporaneously, a trade association challenged the law in federal court. Eventually, the U.S. Supreme Court ruled that a federal statute imposing sanctions on Burma preempted the state statute. Pp. 295-97. As a result, the EC and Japan dropped their complaints, and no WTO body ever passed on the legality of the Massachusetts law.
37. Mich. Exec. Dir. No. 2004-2 (Mar. 24, 2004), available at http://www.michigan.gov/ gov/0,1607,7-168-36898-36900-88888--,00.html.
38. See, e.g., Appellate Body Report, United States-Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R (Oct. 12, 1998).
39. Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries, L/4903 (Nov. 28, 1979), GATT B.I.S.D. (26th Supp.) at 203 (1980) [hereinafter Enabling Clause].
40. See, e.g., UN Conference on Trade and Development, Generalized System of Preferences List of Beneficiaries, UNCTAD/ITCD/TSB/Misc.62/Rev.2 (2006) (listing beneficiaries for each of the Generalized System of Preferences programs currently in operation).
41. For a discussion of the economics and the politics behind these programs, see Jeffrey L. Dunoff, Dysfunction, Diversion and the Debate over Preferences: (How) Do Preferential Trade Policies Work?, in DEVELOPING COUNTRIES IN THE WTO LEGAL SYSTEM (Joel P. Trachtman & Chantal Thomas eds., forthcoming 2009).
42. Council Regulation 980/2005, 2005 O.J. (L 169) 1.
43. Enabling Clause, supra note 38, at para . 2(a) fn.3.
44. Appellate Body Report, European Communities-Conditions for the Granting of Tariff Preferences to Developing Countries, WT/DS246/AB/R (Apr. 7, 2004).
45. For an analysis and critique of the Appellate Body's reasoning in this dispute, see Jeffrey L. Dunoff, When-and Why-Do Hard Cases Make Bad Law? The GSP Dispute, in WTO LAW AND DEVELOPING COUNTRIES 283 (George A. Bermann & Petros C. Mavroidis eds., 2007).
46. See supra text accompanying note 34.
47. For example, the U.S. Supreme Court expressly invokes this distinction in justifying the market participant exception to the dormant Commerce Clause. See, e.g., Reeves, Inc. v. Stake, 447 U.S. 429 (1980); Hughes v. Alexandria Scrap Corp ., 426 U.S. 794 (1976).
48. This is a primary justification for the so-called market participant exception to the dormant Commerce Clause that states enjoy in the procurement context.
49. H. Lauterpacht, The Problem of Jurisdictional Immunities of Foreign States, 28 BRIT. Y.B. INT'L L. 220, 224 (1951).
50. This is not an argument that the state should be entirely free of restraint. Just because a private party in the marketplace can, for example, invidiously discriminate on the basis of race does not mean the state should "enjoy" the same power.
51. Many of the leading efforts to bring coherence to the doctrinal disarray in this area have appeared in this journal. See, e.g., Dan T. Coenen, Untangling the Market-Participant Exemption to the Dormant Commerce Clause, 88 MICH. L. REV. 395 (1989);
52. Donald H. Regan, The Supreme Court and State Protectionism: Making Sense of the Dormant Commerce Clause, 84 MICH. L. REV. 1091 (1986).
53. Focusing on the traditional distinction effectively asks us to evaluate the relative importance of a state's proprietary powers as opposed to its regulatory powers. But there seems to be little basis for creating a hierarchy of state functions and powers in this way, and BSJ does not attempt to do so.
54. Similar balancing imagery is found in much of the linkage literature. See, e.g., Frank J. Garcia, The Salmon Case: Evolution of Balancing Mechanisms for Non-Trade Values in WTO, in TRADE AND HUMAN HEALTH AND SAFETY 133 (George A. Bermann & Petros Mavroidis eds., 2006).
55. See, e.g., James Thuo Gathii, Re-Characterizing the Social in the Constitutionalization of the WTO: A Preliminary Analysis, 7 WIDENER L. SYMP. J. 137 (2001);
56. Andrew T.F. Lang, Reflecting on 'Linkage': Cognitive and Institutional Change in the International Trading System, 70 MOD. L. REV. 523, 536, 538 (2007).
57. Lang, supra note 51, at 538.
58. See Jeffrey L. Dunoff, "Trade and": Recent Developments in Trade Policy and Scholarship-And Their Surprising Political Implications, 17 NW. J. INT'L L. & BUS. 759 (1996-97).
59. See Lang, supra note 51, at 538 (making a similar observation about linkage scholarship); Dunoff, supra note 53 (same).
60. The term originates in legal pluralist thought and connotes an understanding of law as "an exclusive, systematic and unified hierarchical ordering of normative propositions." John Griffiths, What is Legal Pluralism?, 24 J. LEGAL PLURALISM & UNOFFICIAL L. 1, 3 (1986).
61. Andrew T.F. Lang, Re-thinking Trade and Human Rights, 15 TUL. J. INT'L & COMP. L. 335, 349 (2007);
62. see also Robert Wolfe, See You in Geneva? Legal (Mis)Representations of the Trading System, 11 EUR. J. INT'L REL. 339 (2005).
63. Figures obtained from WTO website. See Statistics Reports under Article XIX:5 of the GPA, http://www.wto.org/english/tratop-e/gproc-e/gpstat-e. htm (last visited Oct. 26, 2008).
64. Edward T. Swaine, Negotiating Federalism: State Bargaining and the Dormant Treaty Power, 49 DUKE L.J. 1127, 1134 n.23 (2000) (quoting Representative Rushing).
65. See, e.g., WTO Secretariat, Update of WTO Dispute Settlement Cases, WT/DS/OV/33 (June 3, 2008).
66. Other studies suggest that international efforts to reform domestic procurement systems have met with limited success. See, e.g., OECD/DAC WORLD BANK ROUND TABLE, I NTERNATIONAL BENCHMARKS AND STANDARDS FOR PUBLIC PROCUREMENT SYSTEMS, para 3 (2003), available at http://www.oecd.org/dataoecd/35/7Z2488588.pdf ("[D]evelopment of public procurement systems worldwide, that can deliver on the basic principles of a well functioning system, contribute to better governance and reduce the opportunity for corruption, has been slow");
67. see also Robert R. Hunja, Obstacles to Public Procurement Reform in Developing Countries, in PUBLIC PROCUREMENT: THE CONTINUING REVOLUTION 13 (Sue Arrowsmith & Martin Trybus eds., 2003).
68. Sanford Levinson, Compelling Collaboration with Evil? A Comment on Crosby v. National Foreign Trade Council, 69 FORDHAM L. REV. 2189, 2191 (2001) (analogizing the Supreme Court's decision striking down the Massachusetts law to Prigg v. Pennsylvania, 41 U.S. (16 Pet.) 539 (1842)).
69. GARY ORFIELD, THE GROWTH OF SEGREGATION IN AMERICAN SCHOOLS: CHANGING PATTERNS OF SEPARATION AND POVERTY SINCE 1968 (1993) (detailing Southern resistance to school desegregation orders and how conditionality of federal funding helped to advance racial integration).
70. Piero Foresti v. Republic of South Africa, No. ARB/(AF)/07/1 (ICSID (W. Bank) registered Jan. 8, 2007). Status updates on the case are available on the ICSID website. International Centre for Settlement of Investment Disputes, List of Pending Cases, http://icsid.worldbank.org/ ICSID/FrontServlet?requestType= GenCaseDtlsRH&actionVal=ListPending (last visited Jan. 5, 2009).