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How ‘Buy American’ could work

‘Policy of our government’

US President Donald Trump speaks on the South Lawn of the White House in Washington, on April 19, during a ceremony where he honored the Super Bowl Champion New England Patriots for their Super Bowl LI victory. (AP)

WASHINGTON, April 20, (AP): When President Donald Trump signed an executive order Tuesday in Kenosha, Wisconsin, he sent a characteristically blunt message. “The policy of our government,” Trump declared, “is to aggressively promote and use American-made goods.” For too long, he complained, American companies that have bid on US government contracts — for work ranging from building roads to supplying computer equipment to federal agencies — have unfairly lost out to foreign competitors. “The result has been countless jobs and countless contracts that have been lost to cheap, subsidized and lowquality foreign goods,” the president argued. “Buy American” requirements that are written into US law “have been gutted,” he said, by loopholes, allowing too many contracts to go to overseas bidders. Countless jobs and contracts that have been lost to cheap, subsidized and low-quality foreign goods, Trump asserted. Under his presidency, Trump assured the crowd, that will change. Here’s a look at how Buy American provisions work, what the White House intends to do and what it all might mean for government contracts and the taxpayers who finance them.

The Buy American Act of 1933 gives US contractors a preference in the awarding of federal contracts. Additionally, the Surface Transportation Act of 1978 requires that Americanmade iron, steel and other manufactured goods be used when federal dollars pay for highway, aviation, rail and other transportation projects.

Government contracting “is a highly complex area, with lots of exceptions and exceptions to exceptions,” says Stephanie Harden, a lawyer specializing in government contracts at Blank Rome LLP. Government agencies can bypass US suppliers, for example, whose bids come in too high or if the required goods and services aren’t available domestically. Under several free-trade deals — including the World Trade Organization’s Agreement on Government Procurement — contractors from 59 countries have the right to be treated the same as US companies when it comes to many federal contracts. But the White House says that such exemptions have gone too far and that US contractors are unjustly losing out. The US Government Accountability Office, a federal watchdog agency, reported in February that under the WTO procurement agreement, foreign companies have gained far more access to US government contracts than American companies have gained to overseas government contracts. “These rules offshore our tax dollars rather than investing them to create jobs and innovation at home,” says Lori Wallach, director of Public Citizen’s Global Trade Watch, a critic of US trade policy.

Not much — at least initially. Trump is ordering government agencies to review the way they award contracts to assess how they affect US jobs and manufacturers and to make sure they “maximize the use of materials produced in the United States.” Commerce Secretary Wilbur Ross and the Office of the US Trade Representative will study whether and how current trade agreements undermine Buy American provisions in US law. By November, they must report their findings and recommend ways to strengthen Buy American requirements.

Not clear. Harden, anticipating a possible crackdown on how contracts are awarded, is telling clients to make doubly sure that they are complying with Buy American requirements. But some analysts note that Trump has already retreated from some earlier vows to toughen America’s trade policies and say they suspect that the Buy American order might not amount to much.

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