You're right, according to this Reuters (gasp) article (which I got off the Forbes website)
http://www.forbes.com/markets/newswire/2003/12/11/rtr1178720.html U.S. braces for legal battle over Iraq contracts
Reuters, 12.11.03, 7:46 PM ET
By Adam Entous
WASHINGTON (Reuters) - In defending its decision to bar France, Germany and Russia from Iraq reconstruction contracts, the Bush administration is asserting that the American-led and funded Coalition Provisional Authority that runs Iraq is not bound by U.S. free trade commitments.
The administration has cast the CPA as a multinational agency -- not a U.S. government entity that signed onto the World Trade Organization's rules. But trade experts say it is unclear whether the WTO would agree since the authority's funding comes almost exclusively from the United States.
European Commission officials say they are studying the 26 contracts at stake to determine whether the restrictions violate the WTO's government procurement agreement.
"International law? I better call my lawyer," Bush joked with reporters when asked about the legal merits.
Bush, who ran for office as a free-trade advocate, defended his decision on Thursday, saying: "It's very simple. Our people risked their lives. Friendly coalition folks risked their lives, and therefore the contracting is going to reflect that, and that's what the U.S. taxpayers expect."
Administration officials have yet to spell out how they would defend against a possible WTO complaint by Europe -- except to say it would not use a national security exemption.
But Deputy Defense Secretary Paul Wolfowitz said in a notice about the contracts: "It is necessary for the protection of the essential security interests of the United States to limit competition for the prime contracts of these procurements to companies from the United States, Iraq, coalition partners and force contributing nations."
U.S. trade officials say they would make the case that the Coalition Provisional Authority is "not covered by the WTO."
Though it is run by American officials and funded by U.S. taxpayers, experts say the administration would assert that the authority is technically not a "U.S. entity" but rather a multilateral organization composed of dozens of member countries -- what Bush famously dubbed a "coalition of the willing."
Whereas the United States agreed to follow the procurement rules, the CPA never did, allowing it to ignore the agreement, which bans governments from discriminating against foreign companies based on their nationality.
If that legal avenue fails, the administration could use loopholes and exemptions in the WTO rules to classify reconstruction contracts as foreign aid. Food aid from the U.S. Agency for International Development is already exempted.
But some trade experts were skeptical the White House would prevail.
"I'm not sure that's a slam dunk argument," said Greg Mastel, chief international trade adviser for Miller and Chevalier, a law firm specializing in trade issues.
Attorney John Howell, a partner with the law firm Dorsey & Whitney, said the administration's case was on the legal "fringe" and would not "be easy to defend" -- both in U.S. court and the WTO.
Other experts said the administration's strategy may pay off. "I don't believe that has ever been litigated," said one leading U.S. trade lawyer who asked not to be identified. "Treaty law is limited to the parties that take on those obligations. Normally those obligations are construed narrowly."
Copyright 2003, Reuters News Service