Wall Street Journal

Michael Schroeder

 

April 20, 2004

Legality of Bills On Outsourcing Is Questioned

 

WASHINGTON -- Moves by U.S. federal and state lawmakers to keep government contract work from being done outside the U.S. may violate the Constitution and federal trade laws, a public-policy group warns.

 

The analysis is one of the first to raise specific questions about the legality of scores of outsourcing bills in three dozen states and Congress. Sponsored by the National Foundation for American Policy, a nonpartisan trade and immigration think tank in Virginia, the study probably will be embraced by business groups working to combat a backlash in Congress and in state legislatures against the loss of U.S. jobs.

 

"International concerns are significant since much of the proposed legislation, if implemented, could invite retaliation by other nations," said Stuart Anderson, executive director of the policy group, which was formed last year.

 

There is debate among legal experts about how much latitude courts have given states in deciding how local tax revenue is spent. Robert Stumberg, a professor at the Georgetown University Law Center in Washington, D.C., disagrees that state proposals to ban offshore outsourcing of public contracts or to give preference to local companies violate the Constitution. Such a sweeping conclusion may be "a way of trying to stifle any type of debate or open discussion of these issues," Mr. Stumberg said. "It may be an overly narrow interpretation."


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