Archive for April, 2012

Fostering Bad Legal Analysis

Among the more ill-conceived pieces of legislation to be passed by the Colorado Senate this year is Sen. Joyce Foster’s “Buy American” bill (SB12-004), that would give contractors bidding on government work a credit for using American-made materials.

So let me go back to the discussion when the Governor’s office came in and testified against this bill. They were terribly misinformed. I shared that information with them. And it wasn’t the Governor’s office that’s misinformed, it was these two people who testified that were misinformed.

Yesterday we heard also about a letter than many of us received from Canada. This will do NOTHING. This is part of the trade agreement. We have the trade agreement with Canada. We are doing business with Canada. We are doing business with Qatar and the fields in Qatar. This does NOTHING. And they were misinformed. When I tell you, friends, that I worked with the International Trade Office in 2000-2001, and my goal is to support international trade, I do!

It has NOTHING, it will do NOTHING to ruin our relationship with any other country that is part of the World Trade Organization. NOTHING. Other states, this is, as I said, Illinois put this together back in the 90s.

And I want to make another thing perfectly clear. Most of us are asked by different departments or different organizations or different agencies to come and lobby for them on their legislation, to bring legislation. This is my own legislation. You need to know that. This is my own legislation. My constituents have been coming to me for the last four years. “Joyce, why can’t we do something, why can’t we do something about bringing manufacturing back to the United States?”

Well, at least it’s good to know that Sen. Foster is finally sponsoring legislation that isn’t for the benefit of one or another of her family members.

But her contention that the bill won’t affect trade with countries covered by the WTO or NAFTA is simply incorrect. It’s based on two assertions. First, the fact that NAFTA and the WTO’s General Procurement Agreement (GPA) treat purchases from member nations as though they were domestic. Second, this passage in the bill:

(6) Nothing in this section is intended to contravene any existing treaty, law, agreement, or rule of the United States. No preference shall be granted under this section if the preference would contravene any treaty, law, agreement, or rule of the United States.

Let’s leave aside what the Supreme Court would do to a state that presumed to act otherwise, and to try to abrogate a treaty, and take the sentence at its word.

In fact, it can be completely true, contravene nothing, and still place WTO and NAFTA trading partners at a disavantage with respect to US firms, in several ways.

First, it’s important to understand that both the WTO GPA and NAFTA specifically exclude state-level governments from their procurement restrictions:

NAFTA Chapter 10 Procurement Obligations

Products produced in Canada fall within US government procurement obligations under chapter 10 of the NAFTA and the WTO GPA. Mexico, which is not a GPA signatory, is entitled to NAFTA protection. The essence of the NAFTA and GPA obligations is the same, as are most of the issues discussed above with respect to the GPA. NAFTA coverage applies to:

Goods, services and construction services whose country of origin is determined to be Canada or Mexico;
Federal government procuring agencies and “government entities” identified in the US NAFTA procurement annex (but not state and provincial procuring agencies, which are not covered by NAFTA chapter 10);
Contract values exceeding $50,000 for goods and services and $6.5 million for construction services; and
Contracts not excepted from coverage on grounds of national security or necessary to protect public order, life and health and intellectual property rights.

In point of fact, states have all sorts of restrictions of this sort which disadvantage Canadian companies, and the Canadian government keeps a comprehensive list of them.

NAFTA Chapter 10 coverage on government procurement is limited to the federal level. NAFTA Chapter 10 encourages, but does not require state, provincial or local buyers to provide equal treatment for offerors from outside their jurisdictions. Therefore, U.S. states may apply these preferences, which might disadvantage Canadian firms in their state and local government purchasing.

For reassurance, the US Trade Compliance Center agrees:

State and provincial government entities are not subject to Chapter Ten. The U.S. government encourages states to adopt NAFTA procurement disciplines, but the final decision rests with individual states. The Mexican and Canadian governments are currently working with their state and provincial governments to seek their voluntary, reciprocal participation.

Colorado would be adding to its list of preferences for in-state or American companies, and would, in fact, be further working against Canadian companies. This may or may not be wise policy, but to pretend this isn’t what the state is doing, or that it wouldn’t be allowed to do so under federal law, is simply factually incorrect.

The WTO GPA provisions are a little more complex. Only national governments are expressly included in its general application, but each accessory to the agreement has to file an Appendix 1, Annex 2 of which describes what sub-national organizations will be subject to its provisions, and to what extent. Thirty-seven US states are covered, including Colorado, “Executive Branch Agencies.” (This has since been extended to other US trade obligations, and became an issue when determining the degree to which the US could enforce US preferences under the stimulus package.)

It turns out that the WTO GPA was initially concluded in the mid 1990s under the General Agreement on Tariffs and Trade, an agreement, not a treaty. This means that is does not automatically become “the supreme law of the land,” in accordance with the Constitution. According to a study done by the Washington State legislature:

Under the Foreign Commerce Clause of the U.S. Constitution, Congress shall have the power to “regulate Commerce with foreign Nations, and among the Several States and with the Indian Tribes.”39In adopting the Fast Track legislation, Congress has delegated some of its power, albeit with defined limitations, to the President. However, Congress did not articulate a clear intent to legislate in an area traditionally held by the states’ government procurement.40Indeed, the Congress specifically evidenced the intent to not preempt state law in the case of the Uruguay Round Agreements.41As mentioned above, the failure to articulate such intent can be fatal to a federal attempt to override state law.

40See Bipartisan Trade Promotion Authority Act of 2002, P.L. 107-210.
41 See 19 USCS §3512(b)(2) (1999).

The obvious question is: why only 37 states, and how was their participation decided upon?

According to the National Conference of State Legislatures:

The United States is party to the World Trade Organization’s Agreement on Government Procurement (GPA). When negotiating the GPA, USTR solicited the state governors for permission to include state procurement and to bind state procurement processes to the GPA. USTR asserts that 37 states were voluntarily bound through this process to the GPA. In September 2003, USTR requested state governors to make similar commitments to several free trade agreements (FTAs) being negotiated at the time. NCSL recognizes that consultation with a limited number of governors is simpler than communicating with 7,500 legislators and that USTR has increasingly made these letters available publicly on the Internet. Nonetheless, the federal government must work with state legislatures to ensure that decisions about state procurement practices are made with their consent.

While different states may differ about whether or not the legislature in some way delegated trade authority to the executive, there can’t be much doubt that it hasn’t done so on a permanent and irrevocable basis. That is, the legislature should always, with an affirmative act, be able to modify the terms of a state’s participation in the WTO GPA. In 2005, in fact, Maryland undertook to do exactly that, passing HB514:

This bill prohibits the Governor and any other State official, without explicit consent from the General Assembly, from: (1) binding the State to the government procurement rules of an international trade agreement; or (2) giving consent to the federal government to bind the State to the government procurement rules of an international trade agreement. The bill also declares invalid any consent previously given by the Governor or other State official to bind the State to the government procurement rules of an international trade agreement.

The bill was passed over the governor’s veto, and a fuller exploration of the legal issues involved can be found in a 2005 opinion of the State Attorney General.

When I spoke with Sen. Foster personally about her bill, she couldn’t provide an answer as to how many contracts would be affected, the sum total of contracts affected, or the total cost to the state. It’s now apparent that Sen. Foster was as lazy in researching the law as she was in researching the economics.

Maybe she should stick to lobbyist-drafted legislation, after all.

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An Etch-a-Sketch, or a Clean Slate?

The Romney campaign came out today with its recommendations (called, a “Unity Slate”) for the CD-6 and CD-7 Assemblies.  Naturally, there’s been some grumbling that this represents yet another attempt by the establishment RINOs to dictate party policy or votes, or something, but in fact, it just represents commonsense politics and smart strategy on the part of the campaign.

First, it was the campaign, on the advice of the campaign’s higher-level volunteers, who selected these folks. It doesn’t have anything to do with the party apparatus per se.

Consider the alternative. It’s entirely reasonable for the Romney people to believe that the Ron Paul folks have a slate, but are circulating it among themselves. If the campaign didn’t promote a slate, it’s entirely possible, even likely, that they could have a plurality of the pledged delegates, and walk away with a minority, or even very few, of the delegates to national. Selecting a slate is a perfectly sensible way for the campaign to concentrate its delegates’ votes on a set of reliable delegates whom the party faithful can have confidence in when it comes time to vote in Tampa, and it’s also a way to highlight leaders in the party who can rally support to the candidate.

I’m neither part of the apparatus, nor a high-level volunteer, nor even a candidate for the national convention, and I was hoping the campaign would pick a slate for its delegates to focus on. Any campaign should.  My understanding that those with long service in the party would get the nod over relative newcomers like myself was the reason I didn’t run.

So I would assume that the campaign will also suggest slates for CD-1 and State Assembly this weekend.

Just because the balloting process is open and transparent doesn’t mean that campaigns shouldn’t have strategies, or that they should broadcast them to their opposition.

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A Zombie Bill For Zombie Voters

The Denver Post is reporting that the Colorado Senate Democrats, determined to send mail ballots out to Zombie voters (voters listed as, “inactive, failed to vote”), have found a Zombie  bill for their purposes.  The bill is all the more troubling since the Democrats have blocked virtually all efforts to clean up the voter rolls, ensuring that ballots will be sent out to valid addresses and ineligible or dead voters.

Here’s how they did it.  Watch closely.

First, the players.  The Republicans control the House 33-32.  The Democrats control the Senate, 20-15.  House Bill 1267 would have shortened the window for early voting.  It was passed by the House, and killed by a Senate Committee, 3-2, on a party-line vote.  Senate Bill 109 would send out mail ballots to inactive voters, and it passed the Senate, but was killed in the House Committee on a party-line vote.  However, in the House, it had a Republican sponsor, Rep. Don Coram, which means that had it not been killed in committee, it might well have passed on the House floor.

So the Democrats in the Senate Committee moved to reconsider HB-1267, resurrect the bill, in effect, so they could amend it with the substance of SB-109, the Zombie Voter Bill.  Once passed by the Senate, the re-animated HB-1267, with the form of the old bill but the substance of the new one, would return not to a House committee, but to the House floor, where it would be voted on.  This would at least put Rep. Coram in the uncomfortable position of having to choose between voting against a bill whose substance he had previously supported, or voting for it, an becoming the only Republican to support the Zombie Bill for Zombie Voters.

Last year, when the Senate Democrats began playing these sorts of games, with Senate President Brandon Shaffer killing bills by committee inaction, Republicans essentially shut down the body until they relented.  And that doesn’t even include the spectacle of the Democrats filibustering their own Congressional redistricting map.

A Republican House leadership committed to playing hardball probably has many more choices that I can think of, but two immediately come to mind.  The House Speaker has considerably leeway in when to schedule floor votes.  If Coram is willing to avoid voting for procedural matters, he can probably avoid voting on the substantive matter.

Second, what’s sauce for the goose is sauce for the gander.  House Republicans in committee could do the same thing with any Democrat bill they killed, including SB-109, and replace its language with a favored, popular, but Democrat-hostile bill such as HB-1111, the bill the Senate Democrats just killed to have a statewide referendum on voter photo ID.  This would send that bill back to a floor debate and vote by the entire Senate, where it might not pass, but would put the Democrats in the position of airing their flimsy, fraud-friendly arguments in a more visible forum.


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Who’s Your Abu?

Comes this report from Palestinian Media Watch, that a lecturer at Al-Najah University in Nablus is claiming that Moses led the Muslims out of Egypt.  (No jokes about how if this is true, he’s the last Egyptian to have successfully led his people across Sinai.)

“We must make clear to the world that David in the Hebrew Bible is not connected to David in the Quran, Solomon in the Hebrew Bible is not connected to Solomon in the Quran, and neither is Saul or Joshua son of Nun [of the Bible].  We have a great leader, Saul, [in the Quran] who defeated the nation of giants and killed Goliath. This is a great Muslim victory. The Muslims of the Children of Israel went out of Egypt under the leadership of Moses, and unfortunately, many researchers deny the Exodus of those oppressed people who were liberated by a great leader, like Moses the Muslim, the believing leader, the great Muslim, who was succeeded by Saul, the leader of these Muslims in liberating Palestine.  This was the first Palestinian liberation through armed struggle to liberate Palestine from the nation of giants led by Goliath. This is our logic and this is our culture.”

The Palestinians have a national obsession with delegitimizing not only Israel, but Jews and Judaism, in their effort to uproot Zionism, but you can’t help but laugh at this one.  After all, they’ve tried being descended from Canannites and Jebusites in their efforts to ante-date Jewish claims.  Back in his pre-Camp David days, Anwar Sadat wanted to avenge the killing of Palestinians like Goliath at the hands of shepherds like David.  So it was only a matter of time before one of them decided that Louis Farrakhan had the right idea and that the Jews were actually Palestinians, or the Palestinians were actually Jews, or something.  The Palestinian narrative has been so incoherent for so long, it’s surprising it took them until now to come out with this one.  (I suppose this ancestral confusion was transplanted to my 2008 primary opponent, who was variously born in Jordan, Saudi, Jerusalem, and recently claimed in a interview to be a child of the Levant, which must have come as quite a shock to him.)

Ultimately, of course, none of this matters.  If the Palestinians would leave the Israelis alone long enough to celebrate the Exodus peacefully, the Israelis would by and large be willing to leave the Palestinians alone to their genealogy.  But as long as “this is their logic (sic) and this is their culture,” there’s not much hope for that, I’m afraid.

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Amazon Tax Bites The Dust

In 2010, the Democrats in Colorado, in violation of the state Taxpayers Bill of Rights, passed a variety of tax increases known as the Dirty Dozen.  The state’s highly politicized Supreme Court gave the tax increases a pass around TABOR’s requirement for a citizen vote, but the federal courts are frequently a different matter, and so it has proved with one of the measures, the so-called, “Amazon Tax.”  That tax applied the state sales tax to sales by Amazon affiliates in the state, on the dubious proposition that the presence of a person who either owns a website (which could be hosted anywhere in the world) or who sells web ads constitutes a significant physical presence in the state.

Now, a federal court has decided that the tax violates the US Constitution:

On Friday, the federal court in Denver declared the 2.9 percent tax on purchases unconstitutional on the ground it was tilted unfairly against out-of-state retailers, and that it put an undue burden on retailers to either collect the tax owed by consumers or report consumer purchases to the state.

Judge Robert Blackburn’s ruling noted the legal language of the tax didn’t distinguish between in-state and out-of-state businesses, but the practical effect of the tax did.

“I conclude that the veil provided by the words … is too thin to support the conclusion that the Act and the Regulations regulate in-state and out-of-state retailers even-handedly,” Blackburn wrote.

The court applied what is known as the “negative Commerce Clause,” the notion that if regulation of interstate commerce is explicitly delegated to the Federal government, then it cannot be exercised by state governments.  As Ramesh Ponnuru says in his review of Michael Greve’s The Upside-Down Constitution

Chief among the Court’s stratagems was its deployment of what has come to be known as the “dormant” or “negative” commerce clause: the inference that since the Constitution vests Congress with the power to regulate commerce among the states, it denies that power to states. That inference has long been controversial, not least among originalists, but Greve points out that without it the states would have at hand a ready means to circumvent the specific prohibitions on them that the Constitution spells out.

Ponnuru also notes that, “Several provisions of the Constitution block state governments from taxing economic activity outside their borders.”  Greve makes the case that since the 30s, courts have increasingly presumed that states can regulation out-of-state commerce, rather than placing the burden of proof on the states.  Today’s ruling is a small step back in the other direction.

Now, it remains to be seen if Amazon will restore its Colorado affiliates.

UPDATE: On the likelihood of an appeal, someone involved in the fight against the original measure comments:

The judge ruled that the state had violated the US constitution in two seperate and distinct ways- by violating the dormant commerce clause in discriminating against out of state retailers, and in imposing an undue burden on out of state retailers with the reporting requirements in the bill. Highly unlikely the state would appeal, as they would have to overcome both violations.

Attorney General John Suthers declined to defend the State on this case (which is his prerogative) and the Department of Revenue had to hire their own legal counsel. As such, it would have to be the Governor/ED of the Dept of Revenue that would decide to appeal. Hickenlooper was almost convinced last year to support the repeal bill after the judge had granted a temporary injunction. That failed when the State Senate killed off a bunch of Republican bills in the last few days of the session. Just don’t see Hick taking up this fight – remember this all happened under former Governor Bill Ritter, mainly as a ploy to raise a few dollars to ballance the budget. With the preliminary injunction, the state has never collected a dime on this law. The permanent injunction doesnt mean the state will lose any revenue they counted on-they just simply won’t be able to gain revenue they didnt plan on.

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