The Legal Validity of Anti-Offshoring Laws, Bills, and Policies in the United States and Other Countries

Abstract

The adoption of anti-offshoring legislation by federal governments can potentially violate the commitments made by such governments to the World Trade Organization and other bilateral and regional trade agreements. This motivates examination of the constitutionality and legality of governmental actions in the offshoring arena. The Obama administration has taken several steps to favor performance of tasks in the United States. Over 40 state governments in the US have considered anti-offshoring legislation, and some of these bills have been enacted by the respective legislatures. According to the US Constitution, the federal government possesses exclusive rights over the areas of interstate commerce, foreign affairs, and foreign trade in the US. All these constitutional principles are arguably violated when state governments approve anti-offshoring legislation. Some of the policy directives of the European Union (EU) and other countries also hamper the practice of offshoring. In particular, those relating to protection of privacy of personal data are discriminatory in nature and place foreign suppliers of services at a disadvantage compared to their domestic counterparts. The US and EU are major proponents of free trade; this is a two-way street, and comes with benefits and constraints. These issues are analyzed with respect to the current situation.