"Made in California" labelling - Protectionism?

We are familiar with the Buy American provisions. Now a proposed Bill in California that encourages "Made in California" labelling is making the news. News about it is found here. The Bill is found here.

The purpose of the Bill is stated here:

"The Made in California Program, a public and private collaboration, is hereby created within the Governor’s Office of Business and Economic Development. The purposes of the program are to encourage consumer product awareness and to foster purchases of high-quality products manufactured in this state."

Private businesses can participate in the program on a voluntary basis. I am not sure if there is a GATT violation here but the Canada-US Blog termed it as State Protectionism.

"Canadian manufacturers and exporters should be concerned about the proliferation of State Buy America initiatives. This is just one example of a developing problem for cross-border trade."

It may just be a labelling program without any international trade law implications. Or who knows - a Canada-Us dispute at the WTO?

Local jeans, tariffs and WTO disputes

Reports of an EU tariff on US made jeans was in the news recently. This is a result of a longstanding dispute which has reached the compliance stage - the EU measures are in relation to non-compliance by the US of the WTO decision in DS217 (United States — Continued Dumping and Subsidy Offset Act of 2000) in relation to the Byrd Amendment.The dispute itself had many other complainants (9 of them).Would the impact be much more if all these complainants imposed retaliatory tariffs?

I had blogged months ago about the urge to "but local". 

Some lessons from this dispute:

1. Compliance in WTO disputes need not always result in doing away with the challenged measure.the measure can continue but the country must be prepared to face the trade consequences.

2. WTO disputes, at times, are lengthy propositions - compliance and retaliation can take years. We have seen many disputes that are pending for ages.

3. The WTO dispute settlement system does have teeth - non-compliance can lead to retaliatory tariff. One can ignore implementing a WTO decision. But retaliation can be a consequence.

Buy American - WTO compatible?

Found this interesting website by the Coalition for a Prosperous America which encourages the purchase of locally produced products (in the US) as a way of supporting local production and the US economy. So you can buy anything from shirts to jeans online on this website - ALL MADE in the USA only. 

This, of course is not a US government mandate but an initiative of a private organization encouraging use of locally made products. Can measures taken by private parties be attributed to the government and thus potentially be subject to WTO action in cases where indirect or substantial government involvement exists? Is there any government involvement here? What is the relation of the Buy American Act provisions to this movement? Worth a study?

Buy local?

"Buy local" seems to the the flavour now. It made news in France over demands of separate shelves in super markets selling French made goods while the U.S.Olympic national dress issue grabbed headlines for a few days. However both these were not "State measures" and hence were outside the purview of WTO provisions. An interesting discussion on this issue in the comments section of this IELP blogpost initiated by Marc Benitah made very interesting reading.

(Courtesy:vculevis.wordpress.com)

Ever wondered where your pair of jeans was manufactured? This blogpost from the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) espouses the cause of "buy American" to boost the American economy and jobs. 

"Buying American isn’t just an antiquated idea. Our future as a nation depends on reviving our economy to create good jobs that allow those who put in a fair day’s work to receive a fair day’s pay: to raise families and send the next generation to college. By supporting American manufacturers, we can all do our part to be America’s real job creators. For more ideas on reviving the American economy, go to www.aflcio.org/Issues/Jobs-and-Economy/Economy."

They make the point that a strong industrial base and buying local was always part of the U.S. growth story and one should encourage buying local in housing, food and clothing. Three websites of "buy American" emphasize the point of the advantages of buying local as compared to imported goods - Still Made in USA.com, howtobuyamerican.com and usonly.us 

Now, this is not an executive of the State and hence would not amount to a "State measure" which can be challenged at the WTO. However, the intent of making a choice between local and imported goods is clearly there. It is an exhortation to people to be "patriotic" and buy local and shun imported goods. Wonder what the free traders would have to say to this? Is there a middle path here? Local for some products, international for others, perhaps?

Olympics, national dress and "Buy American"

The Olympics is over and the controversy around the U.S. national Olympic dress too silently subsided. I had blogged about it here. However, apart from a Bill being proposed to ensure that the U.S. national parade dress for international events was made in the U.S.A (it was discussed in the IELP blog here), the USOC voluntarily seem to have adopted a "Buy American" policy.

Global Trade Alert, that sound board of protectionism brought to light the amended policy of the USOC on this issue here.

"“All uniforms provided by sponsors, partners, licensees, or suppliers for parade ceremonies shall be ‘Made in the USA’ as defined by the standards of the Federal Trade Commission,” with certain defined exceptions (e.g., when “Obtaining such parade ceremony uniforms would be in violation of U.S. law or would not comply with any applicable trade agreements or treaties to which the United States is a party” or when “Essential materials or parts needed to produce parade ceremony uniforms are not available in the United States”). The USOC also committed to not changing the policy without first consulting with Congress, including the relevant Committees of Jurisdiction in the Senate and the House."

This would start going into effect from 2014. The 2016 Olympics in Brazil will have the U.S. team walking with a national dress "Made in the U.S.A." 

The issue was also inevitably reflected n the IELP blog about whether the measure of USOC (a private entity) would violate WTO law. While a law mandating a "Buy American"would probably not pass the test of international trade rules, a private body's policy may be exempt from WTO rules. However, is USOC exercising "governmental authority" or is the control of Congress on change of the policy indicate "governmental authority" thus making it subject to WTO law?

I had some other queries too, some trivial and some more relevant to the legal issues at hand:

1. This Policy is applicable only for "parade uniforms". I guess the sporting events uniforms are not covered. Thus, sportspersons could continue to use sportswear made anywhere (especially China?) for their sporting events.

2. While the legislation would have been inconsistent with NT principles, will the "USOC policy" which mirrors the legislation be violative of WTO law since the USOC is a "private body"?

3. USOC,in its policy, states that the policy would not be changed "without first consulting the Congress." Does this make it a "State measure" open to challenge?

4. What about the equipment, sports gear and other dress worn by the US team in future Olympics? Will there be pressure now to shift entirely to "Made in the U.S.A."?

Perhaps, the next Olympics and "national pride" will re-engage us with some of these issues.