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Published online by Cambridge University Press: 06 March 2019
Investigating the legality? Ha ha ha! That cracks me up. There is no international law that would prohibit this action by the Defense Department, nor is there any international court that France may appeal to. I of course think that this is the correct decision. Those countries who did not help win the war – who did not pay the price in blood – have no claim to the postwar profits. – Mike, Why I'm Right, Internet Forum
During the Reagan administration, I helped negotiate … the “GATT Government Procurement Code”, later incorporated into the World Trade Organization's legal framework. The U.S. was the primary force behind this legal agreement. It was not motivated by altruism, but out of a belief that all signatory governments … and their respective tax payers would benefit from basing practices on economic factors rather than national favoritism. - Gene Tuttle, in response
Infrastructure in Iraq lies in tatters. Unscrupulous exploitation by Saddam Hussein's dictatorial regime, burdensome economic sanctions and massive destruction during the U.S.-led military operation ‘Iraqi Freedom’ have turned Iraq into one of the world's most destitute countries. On the UN Human Poverty Index for 2003, Iraq ranks seventy-first out of ninety-six developing nations. The reconstruction of basic infrastructure is but one first step towards development and economic growth. Rebuilding Iraq's infrastructure, however, involves substantial economic interests. After all, the cake to be distributed for rebuilding Iraq is expected to exceed $100 billion. Some companies see on the horizon one of the most rewarding business opportunities “undertaken in over 50 years” At the same time, there is a growing suspicion that political or even personal biases of the United States' administration have a bigger role to play than economic reason when it comes to sharing the cake. In December 2003, Deputy Secretary of Defense, Paul Wolfowitz, announced that some of America's trading partners, among them Canada, France, Germany and Russia, would be altogether excluded from competition for major reconstruction projects in Iraq. Public opinion in Europe was quick to brand the United States an international law-breaker. Can one State simply reserve to itself the final word on the Iraqi reconstruction money?
2 United Nations Development Programme, Human Development Report 2003, 247; http://www.undp.org/hdr2003/pdf/hdr03_complete.pdf.Google Scholar
3 www.iraqprocurement.de/index.htm advertises for a workshop named “Iraq Procurement – Meet the Buyers,” which is co-sponsored by large multinationals such as Shell.Google Scholar
4 Cf. Hans-Joachim Prieß, Das Übereinkommen über das öffentliche Beschaffungswesen, in WTO-Handbuch 625 (Hans-Joachim Prieß & Georg M. Berrisch eds. München 2003).Google Scholar
5 There is some controversy as to whether a multilateral agreement on government procurement would be desirable. While developed countries point to the economic gains created by a level playing-field, several developing countries oppose such an agreement (see, www.cid.harvard.edu/cidtrade/issues/govpro.html). In their support, Oxfam has argued that, for developing countries “in a world marked by stark inequalities in economic power, technical capabilities and financial strengths, a certain differentiation between national and non-national firms may be necessary precisely in order to bring about a degree of operative equality.” Oxfam International Briefing Paper, The Emperor's New Clothes, available at www.oxfam.org.uk/what_we_do/issues/trade/downloads/bp46_wto.pdf, 15.Google Scholar
6 Currently, only Austria, Belgium, Canada, Denmark, the EC, Finland, France, Germany, Greece, Hong Kong China, Iceland, Ireland, Israel, Italy, Japan, Korea, Liechtenstein, Luxemburg, the Netherlands, the Netherlands with respect to Aruba, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States.Google Scholar
8 Cf. the Statement of the spokesman of the Pentagon, Lawrence Di Rita, on January 20, 2004; www.phoenix.de/ereig/exp/18134. This paper was concluded on January 25, 2004.Google Scholar
9 Determination and Findings, 1.Google Scholar
10 Deputy Secretary of Defense, Paul Wolfowitz, issued the Determination and Findings pursuant to two U.S. laws (41 U.S.C. 253(c)(7); 10 U.S.C. 2304(c)(7)) that permit the restriction of competition in public procurement procedures in the public interest. Under these laws “[t]he head of the executive agency – determines that it is necessary in the public interest to use procedures other than competitive procedures in the particular procurement concerned.” (FAR 6.302-7).Google Scholar
11 Determination and Findings, 1.Google Scholar
12 Republic of Iraq, 2004 Budget, available at www.cpa-iraq.org/budget/NIDmergedfinal-11Oct.pdf.Google Scholar
13 Other States listed in Attachment 2 to the Determination and Findings are not Parties to the GPA.Google Scholar
14 41 U.S.C. 253(c)(7); 10 U.S.C. 2304(c)(7).Google Scholar
15 It is noteworthy at this point that, according to the wording of Article I(1) GPA, the GPA applies to “any law, regulation, procedure or practice” without limitation to certain entities listed in Appendix I. The Appendix is only relevant for determining whether the procurement activity to which the “law, regulation, procedure or practice” relates is covered by the Agreement. Hence, reference must be made to general international law. Article I(1) GPA must be read as covering, in principle, any practice by any entity attributable to the State Party to the GPA regarding procurement by specific entities.Google Scholar
16 Vienna Convention on the Law of Treaties, Art. 31(1).Google Scholar
17 Number 26 of Attachment 1 to the Determination and Findings.Google Scholar
18 Division 51 of the Central Product Classification (CPC); for details, see http://unstats.un.org/unsd/cr.Google Scholar
19 Statement by Mills, Richard, December 10, 2003, Press Release Nr. 20508, available at www.ustr.gov.Google Scholar
20 The Executive Office of the President is made up of White House offices and agencies, including the National Security Council and the Office of Management and Budget.Google Scholar
21 David Palmeter and Niall P. Meagher, by contrast, appear to be of the view that the issue is essentially one of interpreting the term “require”. In substance, however, their brief sketch of the problem does not differ from the approach proposed in this paper; Cf. ASIL Insights: Iraq Reconstruction Contracts, December 2003.Google Scholar
22 Korea – Measures Affecting Government Procurement, Report of the Panel, WT/DS163/R, para. 7.58.Google Scholar
23 Under general international law – and under the other agreements within the WTO framework – a State is responsible for all conduct by any of its entities (Article 4(1) of the draft Articles on State responsibility, Report of the International Law Commission, Fifty-third session (2001), General Assembly Official Records, Fifty-sixth session (A/56/10). International law does not recognize municipal distinctions between branches of government or government agencies. One of the earliest statements of this principle of international law is Umpire Lieber's award in the Moses case, a decision of a Mexico-United States Mixed Claims Commission: “An officer or person in authority represents pro tanto his government, which in an international sense is the aggregate of all officers and men in authority” (Moore, International Arbitrations, vol. III, 3127, 3129 (1871); Cf. later on the rulings: Claims of Italian Nationals Resident in Peru, UNRIAA, vol. XV, 399 (1901) (Chiessa claim); 401 (Sessarego claim); 404 (Sanguinetti claim); 407 (Vercelli claim); 408 (Queirolo claim); 409 (Roggero claim); 411 (Miglia claim); Salvador Commercial Company., vol. XV, 455, 477 (1902); Finnish Shipowners, UNRIAA, vol. III, 1479, 1501 (1934).Google Scholar
24 Articles 4 – 11 of the draft Articles on State responsibility, International Law Commission, Report on the work of its fifty-third session, Official Records of the General Assembly, Fifty-Sixth Session, Supplement No. 10 (A/56/10).Google Scholar
25 9.1(a) of the Agriculture Agreement contains a special prohibition of subsidies, which is lex specialis vis-à-vis the provisions of the SCM Agreement.Google Scholar
26 Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products, Report of the Panel, WT/DS103/R.Google Scholar
27 249/81, 1982 E.C.J. 4005.Google Scholar
28 36/74, 1974 E.C.J. 1405.Google Scholar
29 C-415/93, 1995 E.C.J. I-4921.Google Scholar
30 Article 5 of the draft Articles mutatis mutandis.Google Scholar
31 Article 8 of the draft Articles mutatis mutandis.Google Scholar
32 Korea – Measures Affecting Government Procurement, Report of the Panel, WT/DS163/R, para. 7.53.Google Scholar
33 249/81, 1982 E.C.J. 4005, para. 15.Google Scholar
34 Vienna Convention on the Law of Treaties, Art. 31(1).Google Scholar
35 There is some controversy on the systematic foundation and the actual content of the principle of effective interpretation. Taking the Vienna Convention on the Law of Treaties as a starting points, the effectiveness principle (or the maxim ut res magis valeat quam pereat) are reflected either in the duty to interpret “in the light of [a treaty's] object and purpose” or in the notion of good faith. The notion of good faith seems to be the more convincing solution. For the principle of effective interpretation as understood here precludes a State from frustrating the obligations assumed by invoking a formal circumvention of the conditions under which the norm would apply. Cf., Sir I. Sinclair, The Vienna Convention on the Law of Treaties 115 (Manchester, 2nd ed. 1984); Sir Jennings, R. & Sir Watts, A., Oppenheim's International Law 1280 (London 9th ed. 1992).Google Scholar
36 Korea – Measures Affecting Government Procurement, Report of the Panel, WT/DS163/R, para. 7.57.Google Scholar
37 United States – Procurement of a Sonar Mapping System, Report of the Panel, GPR.DS1/R, para. 4.09 – 4.11. The decision was handed down under the 1979 Agreement, which was negotiated in the context of the Tokyo round.Google Scholar
38 Cf., www.cjtf7.army.mil.Google Scholar
39 Weisman, Steven R., Aftereffects: Postwar Planning; U.S. Set to Name Civilian to Oversee Iraq, New York Times, May 2, 2003.Google Scholar
40 S/Res/1483 (2003), para. 4. Critical of a potentially dominant influence of the Coalition, the Security Council underlines the territorial sovereignty of the Iraqi people, which it deems to be embodied by the Governing Council (S/Res/1511 (2003), para. 4), an Assembly of twenty-five senior representatives of Iraqi population groups.40 As a political guideline, it requests the CPA to “return governing responsibilities and authorities to the people of Iraq as soon as possible” (S/Res/1511 (2003), para. 6).Google Scholar
41 S/Res/1483 (2003), para. 13.Google Scholar
42 S/Res/1483 (2003), para. 16.Google Scholar
43 Coalition Provisional Authority Regulation Number 1, CPA/REG/16May2003/01.Google Scholar
44 Id.Google Scholar
45 Id. emphasis added.Google Scholar
46 For a summary of the Conference Report, http://rpc.senate.gov/_files/ACF1EE.pdf.Google Scholar
47 Republic of Iraq, 2004 Budget, www.cpa-iraq.org/budget/NIDmergedfinal-11Oct.pdf.Google Scholar
48 Accepting the role of the CPA as a factual interim government, it should be noted, is without prejudice to the question of its legitimacy or the legality of the Coalition's occupation of Iraq.Google Scholar
49 This does not preclude that the U.S. may continue to be internationally responsible for the CPA's conduct, Cf., Certain Phosphate Lands in Nauru (Nauru v. Australia), Preliminary Objections, 1992 I.C.J. 240.Google Scholar
50 Korea – Measures Affecting Government Procurement, Report of the Panel, WT/DS163/R, para. 7.59.Google Scholar
51 Whether, in reality, avoiding the GPA was a motivation behind placing the authority to procure in the hands of the CPA, or merely a pleasant side-effect, can only be answered by the U.S. government itself.Google Scholar
52 Vienna Convention on the Law of Treaties, Art. 31(1).Google Scholar
53 Bankovic and others v. Belgium and 16 other contracting States, E.C.H.R., Application Nr. 52207/99, para. 59.Google Scholar
54 The question of exterritorial application is rarely a contentious issue in WTO disputes. The GATT, e.g., is applicable “to the metropolitan customs territories of the contracting parties and to any other customs territories in respect to which this Agreement has been accepted…” (Article XXIV:1 GATT). To take the concrete example of the MFN provision of Article I GATT, a member State is barred from enacting regulations or engaging into practices that lead to preferential treatment of nationals of one member States vis-à-vis nationals of other member States on its customs territory. With the exception of few borderline cases (in the Turkey – Textiles case (Report of the Panel of May 31, 1999, WT/DS34/R), Turkey argued that the imposition of quantitative restrictions was justified because Turkey was working towards acceding to the European Free Trade Area) it is relatively easy to determine whether conduct falls within the territorial scope of GATT or not. Preferential laws normally apply on a State's own territory, and preferential customs practices relate to trade on a State's customs territory.Google Scholar
55 United States – Tax Treatment for “Foreign Sales Corporations”, Report of the Panel, WT/DS108/R, 8 October 1999.Google Scholar
56 The issue in the FSC case was, however, not primarily one of the territorial scope of the SCM Agreement. Rather, the U.S. invoked a 1981 understanding by the GATT council regarding Article XVI:4 GATT, pursuant to which “economic processes (including transactions involving exported goods)… should not be regarded as export activities in terms of GATT Article XVI:4…”, Cf., www.ustr.gov/releases/1998/07/98-67.pdf. The Understanding was intended to clarify primarily that the European practice of territorial taxation was in conformity with the GATT.Google Scholar
57 Naturally, the performance of the procurement contracts will, in most cases, occur on the Party's territory. For only in exceptional cases will an entity listed in one of the Annexes engage in procurement for projects outside the Party's territory.Google Scholar
58 Quoted in Guide to GATT Law and Practice, Vol. II, Analytical Index (1995) 919.Google Scholar
59 Thus trying to reconcile its ruling in Bankovic with the earlier rulings in the Loizidou and Cyprus cases.Google Scholar
60 Bankovic and others v. Belgium and 16 other contracting States, E.C.H.R., Application Nr. 52207/99, para. 60.Google Scholar
61 Moshe Hirsch, ‘Rules of Origin as Trade or Foreign Policy Instruments? The European Union Policy on Products Manufactured in the Settlements in the West Bank and the Gaza Strip', 26 Fordham Int'l. L. J. 572 (2003).Google Scholar
62 David Palmeter and Niall P. Meagher, ASIL Insights: Iraq Reconstruction Contracts, December 2003.Google Scholar
63 ADF Group Inc. v. United States of America, ARB(AF)/00/1, Award of January 9, 2003, para. 170.Google Scholar
64 Id., at para. 173.Google Scholar
65 Id., at para. 173.Google Scholar
66 http://europa.eu.int/eur-lex/en/com/cnc/2002/com2002_0639en01.pdf; cf. also OECD Observer, Policy Brief: “Untying Aid to the least Developed Countries”, July 2001.Google Scholar
67 Cf., Minutes of the Meeting Held on 6 February 2003, GPA/M/20, para. 82.Google Scholar
68 Schoeck, H., Entwicklungshilfe (München 1972).Google Scholar
69 In a paradigm case of development aid, the principal policy decisions regarding the political and economic development would remain in the hands of the assisted State, Iraq. According to the Declaration on the Establishment of a New International Economic Order “[e]very country has the right to adopt the economic and social system that it deems to be the most appropriate for its own development…” (United Nations General Assembly Resolution 3201, May 1, 1974, para. 4(d), reprinted in 68 AJIL 798 (1974)). An all too textual understanding of the term development aid, however, seems inappropriate for the case of Iraq. Since, currently, no Iraqi government can take charge of Iraq's development policy, there will necessarily be an element of outside imposition. Nonetheless, it would appear contradictory to qualify the construction of a water pipe as “aid” only after an Iraqi government has been established.Google Scholar
70 Articles 35 and 36, draft Articles on State responsibility, International Law Commission, Report on the work of its fifty-third session, Official Records of the General Assembly, Fifty-Sixth Session, Supplement No. 10 (A/56/10).Google Scholar
71 Statement by Mills, Richard, December 10, 2003, Press Release Nr. 20508, available at www.ustr.gov.Google Scholar
72 Determination and Findings, para. 3.Google Scholar
73 Case concerning military and paramilitary activities in and against Nicaragua, Merits, 1986 I.C.J.115-116.Google Scholar
74 Id.Google Scholar
75 Cf., the Minutes of Meeting by the GATT Council, cited in Wesley A. Cann, Creating Standards and Accountability for the Use of the WTO Security Exception: Reducing the Role of Power-Based Relations and Establishing a New Balance Between Sovereignty and Multilateralism, 26 Yale J Int'l L 413, note 9 (2001).Google Scholar
76 Lindsay, Peter, The Ambiguity of GATT Article XXI: Subtle Success or Rampant Failure?, 52 Duke L. J. 1277 (2003). The author analyses how diplomatic means have lead to the successful extra-judicial resolution of a number of disputes in which Article XXI GATT was invoked, id. at 1302 – 1310.Google Scholar
77 Cann, , supra note 73, at 414.Google Scholar
78 Id. at 419.Google Scholar
79 Id. at 414.Google Scholar
80 Schloemann, Hannes L. & Ohlhoff, Stefan, “Constitutionalization” and Dispute Settlement in the WTO: National Security as an Issue of Competence, 93 ASIL 424, 444 (1999).Google Scholar
81 Id. at 445.Google Scholar
82 Id. at 448.Google Scholar
83 Berrisch, Georg M., Das allgemeine Zoll- und Handelsabkommen, in WTO-Handbuch 287 (Hans-Joachim Prieß & Georg M. Berrisch eds. München 2003).Google Scholar
84 Cf., Schwartz, Warren F. & Sykes, Alan O, The Economic Structure of Renegotiation and Dispute Resolution in the World Trade Organization, 31 J. Leg. Stud. 179, 193 (2002).Google Scholar
85 Article XX(2) GPA requires the U.S. to provide effective procedures enabling such competitors to directly challenge breaches of the GPA. In addition to individual challenge procedures, Article XXII GPA opens the door to State-to-State Dispute Settlement.Google Scholar
86 Siemens, e.g., was contracted to provide mobile phone technology in Northern Iraq, available at http://www.spiegel.de/wirtschaft/0,1518,druck-282055,00.html.Google Scholar
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