|
‘Buy
American’ law to be waived for trade agreements
By
Frances Allday
The recession and rising unemployment have some
Americans urging consumers to buy products made in the USA in order to
help the economy. A number of websites have emerged that encourage
consumers to order products online from U.S. manufacturers. One site
established in July 2009 is MadeInUSA.com.
Through the use of product searches it directs the consumer to U.S.
manufacturers in order to buy American goods that the website says will
improve the economy and provide jobs.
In fact, the website equates buying U.S. products with
patriotism. “MadeInUSA.com’s goal is to help every American understand
the importance of Patriotic Spending. Dollars spent on American made
products stay in America, and that helps all of us. Patriotic Spending
protects stable, quality jobs for Americans, and the money they earn comes
back to us again when they choose wisely by buying American. When the
combined buying power of the American consumer is used to purchase
American products, those dollars stay within our own system. MadeInUSA.com
calls this ‘Recycling Dollars’ and it’s a concept that can make the
U.S. economy strong again.”
The push to buy American comes from Washington, too.
Section 1605 of the American Recovery and Reinvestment Act (ARRA) of 2009
requires that stimulus funds made available under the Act can be used for
construction or repair of a public building or public work of any kind
only if the materials are produced in the U.S. Waivers are available under
certain circumstances, and the law must be applied consistent with any
U.S. trade agreements.
The ARRA requirement was more of an emphasis on
stimulating the manufacturing sector to create jobs rather than a
groundbreaking initiative. The Buy American Act (BAA) of 1933 is still on
the books, although somewhat altered from its original form. This Act
required that all supplies for public use be at least 50% produced, mined
or manufactured in the U.S. It, too, was intended to stimulate
manufacturing and produce jobs during a time of economic decline during
the Great Depression.
The ARRA “Buy American” requirement does differ from
the original BAA, however. The BAA applied only to procurement by the
federal government, and required that domestic components only exceed 50%
of the cost of all components. The current Act applies to the issuance of
stimulus funds based on the condition that all of the materials are
produced in the U.S.
The Trade Agreement Act of 1979 waived the BAA
restrictions for countries under the General Agreement on Tariffs and
Trade (GATT), and allowed these countries to become eligible for U.S.
procurement of their goods and supplies. But in 1988 an expanding trade
deficit led Congress to add restrictions to the BAA that prohibited U.S.
procurement of goods from GATT countries and other countries that were not
in good standing with the U.S.
The ARRA restrictions on the stimulus funds for
American-only products has drawn criticism from U.S. trading partners.
China accuses the U.S. of trade protectionism and, citing the Great
Depression, says that it will worsen the global economy. Members of NAFTA
and the World Trade Organization at first strongly opposed the
restrictions, but have softened their opposition now that the trade
agreement clause was added to the Act. But they will have to wait until it
is determined how the restrictions will be interpreted and applied.
Some people believe that “Buy American” restrictions
will not stimulate the economy. Trade Policy Analyst Daniella Markheim of
the Heritage Foundation believes that such restrictions “protect the few
at the expense of the many.” “Under these provisions,” she says, “regardless
of whether America protects only steel or a broad swathe of industry,
American families already struggling to make ends meet will have to pay
more for goods and services. U.S. businesses and their employees that
depend on global markets will find it harder to stay afloat, and economic
recovery will take much longer to come to fruition. Economic recovery
depends not only on preserving a competitive, transparent business climate
in the U.S. but on preserving the open markets on which so much of our
prosperity is based, and which even now are helping keep the U.S. from
slipping deeper into recession.”
In the coming months the administration will have to
make decisions on how the “Buy American” provision of the ARRA will be
implemented and how waivers will be granted. Since it is obligated under
international trade agreements, it is speculated that the U.S. will have
to move quickly to issue waivers on the restrictions to countries under
the WTO and free trade agreements. There will also be pressure from
projects receiving stimulus funds from the administration to clarify which
countries receive waivers so that one piece of foreign material does not
stop all construction.
Frances Allday was a specialist in commercial trade
with U.S. Customs and Border Protection for 25 years
|
