More boneheaded trade barriers from the US House of Representatives

The US House of Representatives is good at grandstanding, and many of its members aren’t the brightest bulbs in the drawer. More evidence of this arrived yesterday when the House approved a bill requiring federally-funded construction projects to be supplied with US-made iron and steel. As with most of these bills, it’s unclear what the eventual result will be, for at least three reasons:

1. The generally more sensible Senate generally takes a dimmer view of these shenanigans.
2. Such a law almost certainly wouldn’t withstand a World Trade Organization challenge.
3. There are plenty of opportunities for political appointees and bureaucrats to waive the requirements.

Should this provision become law, however, it would have at least two deleterious effects. Either of these are easy to demonstrate with a 101-level understanding of economics:

• China and India lie outside the WTO’s steel regime, so even with a successful (and accepted) challenge before the WTO, low-cost steel from those two countries could be excluded from many projects in the US. For US taxpayers, that’s a bad deal.
• The law would inevitably “increase costs and could cause delays by requiring contractors to legally ensure they are not using foreign steel,” as Reuters reported in a comment by Chris Braddock, director of procurement policy at the US Chamber of Commerce.

Time and money—there it is. At least someone around Washington understands procurement policy.

This sort of thing is potentially ominous for any company doing military contracting business across international borders—which is just about everyone. It’s notable that this sort of protectionism is almost always rejected by US aircraft, space, and armaments manufacturers—they almost all know what’s at stake. So, before this sort of creeping nationalism takes further root beyond just construction projects, some vigorous lobbying is called for.