My colleague John Schmitt has written an interesting column suggesting the following:
The "Buy Keynesian" clause would let the President thread the political needle. He gets to keep the "Buy American" provision that many taxpayers (and Senators) are demanding. And, when foreign leaders accuse him of protectionism, he can rightly respond that their goods have been excluded not because they are foreign, but because their countries aren't pulling their weight in the international recovery.
This is a great idea, and obviously a great way to reflate the economy. Which of course means that it's WTO illegal. Check this out from the WTO procurement agreement:
(a) that accorded to domestic products, services and suppliers; and
(b) that accorded to products, services and suppliers of any other Party.
And unfortunately, there is no Keynesian exception to the national-treatment and most-favored nation obligation. Yet another reason that I am coming to the point of view that EVERY policy proposal ith any WTO implications should include both the proposed domestic measure, and a proposed sense of Congress that the WTO should be renegotiated to allow policy space for the measure.