Seth Wu

'Buy American': Playing Both Sides

Here is a GATT Legal and WTO Proof "Buy America Plan" Which is Not a Buy America Plan - Because it is A Wage Hour Content Plan -

Dear Policymaker,

American jobs are being devastated by trade from low wage labor countries.

To be GATT legal and pass WTO muster, the Stimulus Bill, instead of requiring US content, should instead require that all products that are paid for by any benefit of the Stimulus Bill, be certified by their sellers (US manufacturers, importers, wholesellers, retailers, et cetera), that X percent (say 50%, 70%, 90% or whatever) of the labor hour content of their products consisted of labor content that was paid for at Y percent (say 100%, 120%, 150%, 200% or whatever) of the US federal minimum wage base. This can further be fine tuned by product sectors (GATT categories or other product category method) and allocated different wage factor multipliers (but administration and compliance tracking costs may increase.

Such a wage-content criteria should be GATT legal and pass WTO muster because it would not be based on geography, would not be based on domestic versus foreign content, would not be based on tax or customs factors, would not be based on import export distinctions, and so bypass the common tests as to prohibited "domestic preference" laws.

Such a provision would eliminate the labor benefit of low wage countries and be a disincentive to sourcing products from low wage countries. Products from high wage countries would not be affected and they would not be affronted – such products have their own cost disadvantages (such as freight) making them economically non-competitive in the US. Marginally lower wage countries may be benefited by manufacturers incentive to boost their wages to US federal standards.

The problem of "Phantom GDP" where labor content is outsourced to low wage countries and a hollowed out GDP statistic is substituted would also be reduced.

Kindest regards,