VZCZCXRO7394
PP RUEHAG RUEHAP RUEHBI RUEHBZ RUEHCI RUEHCN RUEHDE RUEHDT RUEHGH
RUEHGI RUEHMR RUEHNEH RUEHPA RUEHPB RUEHPOD RUEHRG
DE RUEHC #5625/01 0502356
ZNR UUUUU ZZH
P 192339Z FEB 09
FM SECSTATE WASHDC
TO WORLD TRADE ORGANIZATION COLLECTIVE PRIORITY
INFO RUEHDS/AMEMBASSY ADDIS ABABA PRIORITY 6846
RUEHAP/AMEMBASSY APIA PRIORITY 1318
RUEHAE/AMEMBASSY ASMARA PRIORITY 2448
RUEHDT/AMEMBASSY DILI PRIORITY 5463
RUEHMV/AMEMBASSY MONROVIA PRIORITY 3921
RUEHPU/AMEMBASSY PORT AU PRINCE PRIORITY 7880
RUEHPB/AMEMBASSY PORT MORESBY PRIORITY 1507
RUEHYN/AMEMBASSY SANAA PRIORITY 8706
RUEHVN/AMEMBASSY VIENTIANE PRIORITY 4028
RUEHCN/AMCONSUL CHENGDU PRIORITY 3907
RUEHCG/AMCONSUL CHENNAI PRIORITY 9072
RUEHDE/AMCONSUL DUBAI PRIORITY 8380
RUEHGZ/AMCONSUL GUANGZHOU PRIORITY 0245
RUEHNEH/AMCONSUL HYDERABAD PRIORITY 0026
RUEHIT/AMCONSUL ISTANBUL PRIORITY 2684
RUEHCI/AMCONSUL KOLKATA PRIORITY 3153
RUEHBI/AMCONSUL MUMBAI PRIORITY 2050
RUEHRG/AMCONSUL RECIFE PRIORITY 5257
RUEHRI/AMCONSUL RIO DE JANEIRO PRIORITY 8975
RUEHSO/AMCONSUL SAO PAULO PRIORITY 0044
RUEHGH/AMCONSUL SHANGHAI PRIORITY 3641
RUEHSH/AMCONSUL SHENYANG PRIORITY 8432
RUEHRC/AGRICULTURE DEPT WASHINGTON DC PRIORITY 1985
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RHEFHLC/DEPT OF HOMELAND SECURITY WASHINGTON DC PRIORITY
RHEHNSC/NSC WASHINGTON DC PRIORITY 2633
RUEATRS/TREASURY DEPT WASHINGTON DC PRIORITY 0125
RUEHBS/USEU BRUSSELS PRIORITY
RUCNDT/USMISSION USUN NEW YORK PRIORITY 4926
RUCPDOC/USDOC WASHINGTON DC PRIORITY 4879

UNCLAS SECTION 01 OF 04 STATE 015625 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD PREL WTRO
SUBJECT: ENGAGING FOREIGN AUDIENCES ON "BUY AMERICAN" AND 
PROTECTIONISM 
 
¶1. (U) SUMMARY: Efforts to confront the global economic 
crisis have prompted governments around the world to take 
protectionist trade measures.  President Obama has spoken 
clearly about the need to avoid protectionism even as the 
United States confronts its own crisis.  Secretary Clinton 
has said that rather than enter a contest to erect trade and 
other barriers, we "have to remain committed to open and fair 
trade."  The President signed into law February 17 the 
American Recovery and Reinvestment Act of 2009, known as the 
economic stimulus package.  "Buy American" provisions in the 
stimulus package have sparked international press coverage 
and raised questions by foreign governments.  Posts should 
remain engaged with foreign audiences on the need to avert 
protectionist trade measures.  This cable provides talking 
points, and questions and answers that may be used with 
foreign interlocutors on the subject of protectionism and 
"buy American." (NOTE: Please do not distribute questions and 
answers. END NOTE).  General background on the "buy American" 
provisions can be found in paragraph 4. END SUMMARY. 
 
---------------------- 
Talking Point Guidance 
---------------------- 
 
¶2. (U) Please refer to the following talking points: 
 
-  The President has emphasized the importance of avoiding 
protectionism in responding to the financial crisis. 
 
-  The U.S. economic stimulus legislation will be implemented 
consistent with U.S. obligations under international 
agreements. 
 
-  The United States allows parties to the WTO Government 
Procurement Agreement (GPA) and U.S. free trade agreements 
(FTAs) to compete, with limited exceptions, on an equal basis 
with U.S. suppliers in U.S. government procurement. 
 
-  Congress has said that it does not intend for the "buy 
American" provisions relating to iron, steel, and 
manufactured goods in the legislation to apply to least 
developed countries (LDCs). 
 
------------------------------------------- 
Anticipated Questions and Suggested Answers 
------------------------------------------- 
 
¶3. (U) The following points may be drawn upon to respond to 
questions but are not/not for physical distribution. 
 
-- Q:  Aren't the "buy American" provisions in the stimulus 
legislation a step back from the November G20 pledge against 
protectionism? 
 
-- A:  The G20 leaders pledged last November to refrain from 
raising new barriers to trade in goods and services.  No new 
barriers to trade are being raised, and our approach to 
forging reciprocity in procurement practices over the past 
 
STATE 00015625  002 OF 004 
 
 
decades has not changed.  The "buy American" provisions, as 
signed into law, specifically ensure that many of our trading 
partners, including Canada, Japan, and the EU, will continue 
to have access to procurement under the stimulus package in 
accordance with our agreements - either under the WTO or 
through our FTAs. 
 
-- A:  We are always ready to sit down with other trading 
partners not covered by existing agreements (including China, 
Brazil, and India) to discuss access to our procurement 
markets when they are ready to enter into agreements with 
specific commitments that provide reciprocal opportunities 
for U.S. goods, services and suppliers. 
 
-- A:  The stimulus legislation sends a clear reaffirming 
signal to our trading partners that access to our federal and 
state procurement markets is a matter of coming to the 
negotiating table, with a willingness to provide a 
rules-based framework and a balance of similar access to 
their procurement markets.  Such an approach is not 
"protectionism" by any definition. 
 
-- Q:  Will the United States allow China, Brazil and India 
to participate in procurement covered by the stimulus 
legislation? 
 
-- A: The Trade Agreements Act of 1979 generally prohibits 
U.S. Federal agencies from purchasing from any country that 
has not guaranteed U.S. firms access to their procurement by 
signing on to the WTO Government Procurement Agreement (GPA) 
or a free trade agreement. 
 
-- A:  The United States will continue to apply this 
long-standing law, including to federal procurement funded by 
the stimulus legislation.  When China, Brazil, India or other 
countries become GPA members, they will have the same access 
to U.S. procurement as other GPA parties.  Until then, the 
United States has no obligation to give these countries 
access to U.S. government procurement. 
 
-- Q:  Hasn't China applied for accession to the WTO 
Government Procurement Agreement? 
 
-- A:  Yes, when China became a WTO Member in 2002, it 
committed to join the GPA "as soon as possible."  In 2007, 
China finally began GPA negotiations by tabling an initial 
offer.  However, GPA parties found the offer seriously 
lacking.  Little progress has been made in the negotiations; 
the parties are awaiting an improved offer from China. 
 
-- Q:  Are there any indications that Brazil and India are 
prepared to sign on to the WTO Government Procurement 
Agreement? 
 
-- A:  No, neither country has indicated any interest in 
joining the GPA.  GPA membership is open to any WTO Member. 
Membership only requires that the country ensure transparency 
and fairness in conducting its procurement and treat foreign 
suppliers the same as domestic suppliers. 
 
-- Q:  Are state or local governments required to open up 
their procurement to foreign countries? 
 
 
STATE 00015625  003 OF 004 
 
 
-- A:  States are only obligated to open up their procurement 
to foreign countries if the state has voluntarily agreed to 
such coverage, as part of U.S. negotiations under the GPA or 
an FTA.  Currently 37 states are covered under the GPA. 
Where states have agreed to cover procurement under an 
agreement, they have often specified certain exceptions.  The 
United States has taken no obligations under any trade 
agreement for local procurement, such as cities, towns and 
school districts. 
 
-- A:  States have no obligations to open their procurement 
to China, Brazil, India or any other country that is not a 
party to the GPA or an FTA.  Sub-federal entities in other 
countries also have no such obligations unless they have made 
a commitment under an agreement. 
 
-- Q:  Does the "buy American" provision in the stimulus 
legislation apply to all manufactured products? 
 
-- A:  No.  The "buy American" provision only applies to 
"manufactured products used in a project for the 
construction, alteration, maintenance, or repair of a public 
building or public work that is funded with money 
appropriated or otherwise made available by the Act."  It 
does not apply to all manufactured products. 
 
-- Q:  Are GPA parties and FTA partners the only countries 
that will have non-discriminatory access to U.S. government 
procurement under the economic stimulus package? 
 
-- A:  Congress has indicated that the "buy American" 
provision for iron, steel and manufactured goods is not 
intended to apply to least developed countries (LDCs).  This 
applies to the following LDCs: Afghanistan, Angola, 
Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, 
Central African Republic, Chad, Comoros, Democratic Republic 
of Congo, Djibouti, East Timor, Equatorial Guinea, Eritrea, 
Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, 
Laos, Lesotho, Liberia, Madagascar, Malawi, Maldives, Mali, 
Mauritania, Mozambique, Nepal, Niger, Rwanda, Samoa, Sao Tome 
and Principe, Senegal, Sierra Leone, Solomon Islands, 
Somalia, Tanzania, Togo, Tuvalu, Uganda, Vanuatu, Yemen, and 
Zambia. 
 
-- Q:  Which WTO Members are covered by the GPA? 
 
-- A:  The current signatories to the GPA are Canada, the 
European Communities (and its 27 Member States), Hong Kong 
China, Iceland, Israel, Japan, Korea, Liechtenstein, the 
Netherlands (with respect to Aruba), Norway, Singapore, 
Switzerland, and the United States. 
 
For Posts in China 
------------------ 
 
-- Q:  Hasn't China stated that it will not include "buy 
China" policies in its stimulus package? 
 
-- A:  Chinese Vice Minister of Commerce Jiang Zengwei said 
February 9 that China won't implement "buy China" in its 
stimulus package. His statement is based on China's view that 
"public works" should not be considered government 
procurement.  This is contrary to the approach taken by the 
 
STATE 00015625  004 OF 004 
 
 
United States and all other GPA Parties.  Moreover, China 
already has extensive "buy China" requirements that apply to 
virtually all of its procurement, so it does not need to 
adopt any new measures for procurement conducted under its 
stimulus package.  China's Government Procurement Law 
requires the purchase of domestic goods, services and 
construction unless they are not available in China, cannot 
be purchased on reasonable commercial terms, or are for use 
abroad. 
 
---------- 
Background 
---------- 
 
¶4. (U) On February 17, President Obama signed into law a $787 
billion economic stimulus package.  Included in the 
legislation is a "buy American" provision which requires that 
only U.S.-produced steel, iron and manufactured goods be used 
in those public works funded by the law, subject to certain 
exceptions (public interest, non-availability or unreasonable 
cost).  The stimulus package also requires the Department of 
Homeland Security to procure U.S.-manufactured textile and 
apparel goods, but provides that these provisions be applied 
in a manner consistent with U.S. obligations under 
international agreements.  Further, Congress has indicated 
that the "buy American" provision for iron, steel and 
manufactured goods is not intended to apply to least 
developed countries (LDCs) which have been designated by USTR. 
CLINTON