Senator Al Franken recently sponsored an amendment to proposed legislation approving the Keystone pipeline that would require the pipeline be built with only American steel and other inputs. Specifically, the amendment stated:
"to the maximum extent consistent with the obligations of the United States under international trade agreements, none of the iron, steel, or manufactured goods used in the construction of the Keystone XL Pipeline and facilities approved by this Act may be produced outside of the United States."
(There were exceptions for situations where such goods are not produced in the United States, and where use of domestic goods would increase costs by more than 25 percent.)
The amendment was defeated, but nonetheless it has interesting U.S. law implications that I don't quite understand. It seems pretty clear that a law requiring a private company to use domestic inputs in this way violates GATT Article III:4. So what does it mean, under U.S. law, to qualify such a local content requirement with "to the maximum extent consistent with the obligations of the United States under international trade agreements"? If it is not in any way consistent with international obligations to require domestic content, does the domestic content requirement simply have no effect under U.S. law? How would a U.S. court evaluate whether such a requirement is consistent with international trade agreements?
