The first legal analysis of anti-outsourcing bill has been released by National Foundation for American Policy (NFAP). The main concerns are retaliation from other countries and legal implications for violating the U.S. Constitution and international trade agreements. Download the PDF report directly from NFAP.

Quoted from "First Legal Analysis of State and Federal Outsourcing Legislation Shows Such Bills May Violate the U.S. Constitution" by USNewWire.com:

"The proposed legislation is thus subject to challenge on a variety of grounds," notes the report. A complete copy of the study can be found at www.nfap.net. The National Foundation for American Policy's study Exporting the Law: A Legal Analysis of State and Federal Outsourcing Legislation was authored by Shannon Thyme Klinger and Lynn Sykes, attorneys in the Washington, D.C. office of Alston & Bird. This legal analysis of proposed outsourcing legislation -- the first of its kind -- concludes that:

-- Prohibitions on state contract work being performed overseas are the most legally suspect category of proposed outsourcing legislation, since courts would likely find that such measures improperly intrude on the federal foreign affairs power and violate the U.S. Constitution's Foreign Commerce Clause.

-- State laws offering preferential treatment for in-state interests, though not outright prohibitions, also may violate the U.S. Constitution.

-- State and federal measures that restrict or ban sending U.S. consumers' financial, medical, or other related personal information overseas may be unenforceable under the doctrine of preemption. Existing federal laws, including the Fair Credit Reporting Act, the Health Insurance Portability and Accountability Act of 1996, and the Gramm-Leach-Bliley Act of 1999, already address the treatment of certain types of consumer information and permit the sharing of consumer information among affiliated entities without regard to geography and provide mechanisms for recourse against U.S. corporations for failing to take appropriate measures to guard consumer information.

-- The Thomas-Voinovich Amendment, which became law as part of a federal omnibus appropriations act on January 23, 2004, bans certain federal overseas contracts. This law may violate U.S. trade obligations under the World Trade Organization's Government Procurement Agreement because the Government Procurement Agreement prohibits member countries from treating domestic firms less favorably on the basis of "the country of production of the good or service being supplied." At minimum, it appears that the Thomas-Voinovich Amendment, as applied, fails to comply with the non-discrimination and national treatment principles of the Government Procurement Agreement, which may result in an adverse finding by a World Trade Organization dispute settlement body.

-- Various proposed state outsourcing bans as well as other proposed federal legislation, including the Dodd Amendment, which makes the Thomas-Voinovich Amendment permanent, are similarly subject to challenge under the Government Procurement Agreement.

The authors warned that the study does not provide an exhaustive analysis of every potential constitutional or other legal challenge to the myriad state and federal pending or existing legislation that prohibits or restricts outsourcing. Its aim is serve as the beginning of a necessary dialogue that transcends emotion and politics and highlights the core constitutional and legal concerns raised by proposed outsourcing legislation.

States that have introduced legislation to restrict outsourcing include AL, AZ, CA, CO, CT, FL, GA, HI, ID, IL, IN, IA, KS, KY, LA, MD, MI, MN, MS, MO, NE, NJ, NM, NY, NC, OH, PA, RI, SC, SD, TN, VT, VA, WA, WV and WI.