Experts say the plan to require the use of US steel in US pipelines is a textbook case of a local content requirement, inconsistent with Article III Section 4 of the GATT/WTO rules:
“The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favorable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use.”
The United States has a long history of contesting local content requirements. The seminal case was brought by the US against Canada in 1982, which mounted a successful challenge to Canada’s Foreign Investment Review Act. That law made investment approvals conditional on including the purchase of products from domestic sources. Observers note that the Trump administration’s plan to require pipeline constructors to use US-made steel has direct parallels to the Canada GATT case.
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