NCPA - National Center for Policy Analysis

Outsourcing Common Sense

April 19, 2004

Amid this election year's outsourcing clamor, politicians in at least 33 states are busy trying to pass "Buy American" laws. Apart from forcing taxpayers to pay more for services, the laws have another large problem: They violate the U.S. Constitution, according to a new study by the National Foundation for American Policy, a Virginia think tank.

As part of the study, two lawyers examined more than 100 anti-outsourcing bills before Congress and state legislatures and concluded that the laws are dubious on both constitutional grounds and under America's international trade agreements:

  • Most of the proposals would ban government contracts to companies that carry out the work overseas.
  • In the case of state laws, this trespasses on Washington's constitutional prerogative to run foreign affairs and regulate commerce.

Congress can of course commit foreign policy, but the legal problem here is that outsourcing bans will violate global trade pacts that the United States has agreed to, says the Wall Street Journal. The World Trade Organization, for one, requires that foreign companies receive national treatment on government-procurement contracts. So instead of "saving" U.S. jobs, a federal outsourcing ban would only jeopardize them by inviting foreign countries to retaliate against U.S. firms.

For text: Editorial, "The Law of Outsourcing," Wall Street Journal, April 19, 2004.

For WSJ text (subscription required),,SB108232860091486080,00.html


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