1. Christopher Yukins George Washington University Law School
Buying National: Is Protectionism Patriotic? Global Procurement Conference Sponsored by University of Rome – Tor Vergata Centro Studi Americani, Rome July 4, 2017, 16:30
Christopher Yukins
George Washington University Law School

2. Topics Introductions The Brexit Case Study
The Patriotism of Protectionism
Impact on Long-Term Foreign Policy Goals
Impact on National Security – Europe Defense Fund
Impact on Jobs
Trump Administration Goals

3. Introductions

4. George Washington University Law School
Government Procurement Law Program, Est. 1960

5. Introduction to George Washington University Law School –
Public Procurement Law Program
Steven Schooner
Joshua Schwartz
Karen
Thornton
Jessica Tillipman

6. Celebrating the Fourth of July

7. The Patriotism of Protectionism:
The Brexit Case Study

8. Brexit: Establishment Perspective

9. Another Perspective

10. The Patriotism of Protectionism:
Impact on Long-Term Policy Goals

11. Prewar Protectionism

13. Public
Contracts
Postwar Policy

14. World Trade Organization – Government Procurement Agreement

15. BERLIN — [June 29, 2017] German Chancellor Angela Merkel promised to fight for free trade and press on with multilateral efforts to combat climate change  at the G20 summit next week, challenging the "America First" policies of U.S. President Donald Trump.
In a defiant speech to parliament a week before she will host a summit of the world's top economic powers in Hamburg, the northern port city where she was born, Merkel did not mention Trump by name but said global problems could not be solved with protectionism  and isolation.

16. The Patriotism of Protectionism:
Impact on National Security

17. Background: U.S. Defense Exports
Source: U.S. International Trade Administration, 2016 U.S. Defense Markets Reports

18. Background: Top 10 U.S. Defense Contractors

19. Background: Reciprocal defense procurement agreements

21. DFARS
Defense Federal Acquisition Regulations Supplement (DFARS): “Qualifying” Countries with Reciprocal Defense Procurement Agreements with the United States

22. Sample Reciprocal Defense Procurement Agreement: U.S. - France
Don’t discriminate
Amended to cover both materiel and R&D

23. Potential EU Protectionism

24. BRUSSELS (Reuters) –[June 7, 2017] The European Union's executive is ready to increase support for the bloc's first ever defense research program, offering more funds to develop new military hardware in its earliest stages after years of government cuts, a top EU official said.
Following a 90-million-euro pilot investment from the EU's common budget in , the European Commission is proposing 500 million euros ($563 million) for the period that could rise to 1.5 billion euros a year from 2021, Industry Commissioner Elzbieta Bienkowska told Reuters.
European Defense Fund

25. EU Defense Fund: Macron Manifesto
We will support the creation of a European Defense Fund to finance joint programs such as a European drone.
To continue to innovate in the face of American or Chinese giants, and in the face of increasing costs of armaments programs, a joint effort is key.

26. EU Defense Fund: Status
(REUTERS)

27. European Commission - Press release
A European Defence Fund: €5.5 billion per year to boost Europe's defence capabilities
Research Funding
Priority Areas Agreed by Member States
€500 million per year after 2020
Development and Acquisition
C0-Financing and Commission Support
Members State Collaborative Projects Only
€1 billion per year after 2020
The European Defence Fund has two strands:
Research: The research aspect of the Fund is already delivering. Starting in 2017, the EU will for the first time offer grants for collaborative research in innovative defence technologies and products, fully and directly funded from the EU budget. Projects eligible for EU funding will focus on priority areas previously agreed by Member States, and could typically include electronics, metamaterials, encrypted software or robotics. This will be financed with:
€90 million until the end of 2019, with €25 million allocated for A call for proposals is being launched today for projects in the areas of unmanned systems in a naval environment and soldiers systems. The signature of the first grant agreements is expected by the end of this year.
€500 million per year after 2020. In 2018, the Commission will propose a dedicated EU defence research programme with an estimated annual budget of €500 million making the EU one of the biggest defence research investors in Europe.
Development and acquisition: The Fund will create incentives for Member States to cooperate on joint development and the acquisition of defence equipment and technology through co-financing from the EU budget and practical support from the Commission. Member States may for example jointly invest in developing drone technology or satellite communication, or bulk buy helicopters to reduce costs. Only collaborative projects will be eligible, and a proportion of the overall budget will be earmarked for projects involving cross-border participation of SMEs. The EU will offer co-financing with:
€500 million in total for 2019 and 2020, under a dedicated defence and industrial development programme proposed today.
€1 billion per year after A more substantial programme will be prepared for post-2020, with an estimated annual budget of €1 billion. The programme will leverage national financing with an expected multiplying effect of 5. It could therefore generate a total investment in defence capability development of €5 billion per year after 2020.

28. Unpacking EU Defense Fund: Proposed Regulation
Development and Acquisition
C0-Financing and Commission Support
Members State Collaborative Projects Only
€1 billion per year after 2020
The “objective of the Programme is to support the competitiveness of the Union defence industry “
Acquisition Planning?
“Beneficiaries will be undertakings established in the Union,” and 50%+ controlled by Member States or their nationals – no facilities or resources (including subs’) outside EU Member States
Foreign Subs?
“Control”? Trade Agreements?
Acquisition planning? Preference?
Should be award criteria: support for EU defense objectives, commitment by Member States to fund and procure
Qualification Standards?
Actions by a cooperation of at least 3 undertakings established in at least 2 Member States
Funding limited to 20%; Member States pool rest
Payment Risk?
Proposed regulation:
Precondition: Agreement on common technical standards
Max Havelaar?
European Commission has no intellectual property rights – beneficiaries to negotiate
Competition?
SME preference?
Cross-border participation of SMEs should be goal
Anti-Fraud? Exclusion?
Effective Anti-Fraud and Corruption

29. Domestic Preference Under EU Defense Fund
“As the Programme aims at enhancing the competitiveness of the Union's defence industry, only entities established in the Union and effectively controlled by Member States or their nationals should be eligible for support. Additionally, in order to ensure the protection of essential security interests of the Union and its Member States, the infrastructure, facilities, assets and resources used by the beneficiaries and subcontractors in actions funded under the Programme, shall not be located on the territory of non-Member States.”

30. EU Defense Fund: Limited Caveat
(16) The promotion of innovation and technological development in the Union defence industry should take place in a manner coherent with the security interests of the Union. Accordingly, the action's contribution to those interests and to the defence capability priorities commonly agreed by Member States should serve as an award criterion. Within the Union, common defence capability priorities are identified notably through the Capability Development Plan. Other Union processes such as the Coordinated Annual Review on Defence (CARD) and the Permanent Structured Cooperation will support the implementation of relevant priorities through enhanced cooperation. Where appropriate regional or international cooperative initiatives, such as in the NATO context, and serving the Union security and defence interest, may also be taken into account.

31. U.S. Caveat: Example Section 1605 of the American Recovery & Reinvestment Act (2009)
Sec Use of American Iron, Steel, and Manufactured Goods. (a) None of the funds appropriated or otherwise made available by this Act may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron, steel, and manufactured goods used in the project are produced in the United States. * * * * (d) This section shall be applied in a manner consistent with United States obligations under international agreements.

32. The Patriotism of Protectionism:
Impact on Jobs

33. COPS (Victoria U. (Melbourne)) study: “Scrapping Buy America(n) would induce shifts towards imported inputs by industries in supplying the U.S. government Simulation with USAGE shows that scrapping Buy America(n) would have favorable macroeconomic effects. It would increase total jobs in the U.S. by per cent (about 306 thousand), and GDP by per cent (about $22 billion).”
U.S. Chamber of Commerce study estimated 176,800 jobs lost if only 1% of foreign stimulus work barred in retaliation to Recovery Act’s “Buy American” provision

34. Trump Administration Goals

35. Understanding Economic Nationalism

36. Maximize use of U.S. goods in procurement
Minimize waivers
By September 15, 2017:
Agencies report to OMB/Commerce
Commerce/USTR report on impact of Free Trade Agreements and WTO Government Procurement Agreement on Buy American
By November 24, 2017, report from Commerce/OMB/USTR to President on strengthening Buy American

37. Increasing risk/difficulty
Trump Administration Options:
International Trade and Procurement)
Ignore reciprocal defense agreements
Publicly pressure officials to “Buy American”
Renegotiate coverage under trade agreements
Increasing risk/difficulty
Expand price preference under Buy American Act
“Buy American” requirement in infrastructure legislation
Stall China et al. from joining GPA
Increasing perceived benefits

38. Conclusion