The Campaign Spot

‘Buy American’ Includes Loophole for EU, Japan, Korea, Canada; BRIC Imports Blocked

Here is the section in the conference bill on “Buy American”:

SEC. 1604. USE OF AMERICAN IRON, STEEL, AND MANUFACTURED GOODS. (a) None of the funds appropriated or otherwise made available by this Act may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron, steel, and manufactured goods used in the project are produced in the United States.

(b) Subsection (a) shall not apply in any case which the head of the Federal department or agency involved finds that—

(1) applying subsection (a) would be inconsistent with the public interest;

(2) iron, steel, and the relevant manufactured goods are not produced in the United States if sufficient and reasonably available quantities and of a satisfactory quality; or

(3) inclusion of iron, steel, and manufactured goods produced in the United States will increase the cost of the overall project by more than 25 percent.

(c ) If the head of the Federal department or agency determines that it is necessary to waive the application of subsection (a) based on a finding under subsection (b), the head of the department or agency shall publish in the Federal Register a detailed written jurisdiction as to why the provision is being waived.

(d) This section shall be applied in a manner consistent with United States obligations under international agreements.

That last sentence, however, would seem to mean that the provision packs much less punch that previously thought, since the relevant World Trade Organization agreement says:

With respect to all laws, regulations, procedures and practices regarding government procurement covered by this Agreement, each Party shall provide immediately and unconditionally to the products, services and suppliers of other Parties offering products or services of the Parties, treatment no less favourable than:
(a)  that accorded to domestic products, services and suppliers; and
(b)  that accorded to products, services and suppliers of any other Party.

In other words, the U.S. cannot restrict the use of iron, steel, and manufactured goods from Canada, 28 EU member states, Hong Kong, Iceland, Israel, Japan, Korea, Liechtenstein, Norway, Singapore, and Switzerland.

It could, however, block the use of those products from the rising exporters, Brazil, Russia, India, and China. Over at Lakeshore Laments, there’s a prediction that “it ought to be a blast to watch this new Presidential Administration get dragged before the World Trade Organization time and time again for violating their word on decades’ old trade agreements.”

UPDATE: Rich’s Trade Guy writes in:

Good catch on the apparent incorporation of the WTO Government Procurement Agreement into the Buy American provisions of the stimulus Bill.  But it gets better. Not only can we discriminate against non-signers (Brazil, China, etc.) but also, certain parts of the Federal and State governments can discriminate against *anyone*.  To see this, you need the U.S. Annnexes to the 1993 agreement, which are here:  

They are mostly a positive list, so any part of the government *not* mentioned is not covered.

This seems to mean that Buy America Stimulus applies to Alabama and Alaska (which don’t have to follow the WTO rules), but not to Arizona or Arkansas (which do).  In some states, it may apply to the executive branch but not the university system. Moreover, all of the 50 states can *already* discriminate against “construction-grade steel, motor vehicles and coal.” Also, any “restrictions attached to Federal funds (for states) for mass transit and highway projects” are carved out of the agreement, as are minority, veterans, gender and disability setasides.  Plus, there is a whole list of stuff that the Department of Defense can already “buy American” without running afoul of the WTO, including buses, certain specialty metals and other stuff it would take a procurement specialist to identify, but which I think include anchor chains.
All this makes me think that Buy American Stimulus may actually change Federal and State procurement either (a) very little, or (b) very little except a lot for some narrowly defined products that only the lawyers know which ones they are.


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