CPA is working hard to ensure government procurement dollars go to domestic producers. We’re up against powerful import lobby groups who want us to voluntarily do-away with buy local policies.
Government procurement gets an exemption from the WTO’s National Treatment obligation, which requires that our laws, taxes, and regulations treat imports no less favorably than ‘like’ domestic products. Until we get more freedom over tariff policy, government procurement will continue as one of the most important levers we have for growing domestic production. In addition to government procurement, CPA is focused on the promotion and marketing of consumer-orientated Made-in-USA programs.
To understand the current patchwork of procurement rules for domestic content, visualize three levels of restriction:
- NONE: No general origin rules. Government purchasers are free to buy without much concern for goods’ country of origin.
- MEDIUM: Origin-rules “consistent with international trade obligations”. Government purchasers must consider goods’ country of origin, but pursuant to trade agreements we have, goods from many other countries are eligible for purchase, even if you hear “Buy American” applies.
- STRONG: The government is required to purchase American-made goods, and there is no obligation to treat other nations’ goods as American. However, in practice, this is limited to certain types of manufactured product, and always subject to waivers. These waivers are available to the government purchasers if there would be substantial cost increases (e.g., over 25%), the product is unavailable in sufficient quantities, or it’s otherwise in the public interest.
FYI: “Buy American” vs. “Buy America”
- “Buy American” = the federal government buying things for itself (references 1933 Buy American Act).
- “Buy America” = refers to five laws that apply to different U.S. Dept. of Transportation agencies which distribute federal money to sub-federal purchasers. These Buy America statutes are also limited to iron and steel and goods that are mostly iron and steel.
The following is CPA’s strategy:
- Draw a hard line: federal procurement money should never be used to buy goods from our nation’s adversaries. There’s nothing in the WTO or any of our trade agreements that requires us to treat Made-in-China as Made-in-USA for purposes of procurement. Federal procurement grants should always have at least a ‘medium’ level of domestic content preferences. We should not tolerate leakage beyond what we have committed in certain trade agreements.
- Ensure that waivers of Buy America(n) restrictions are only available when absolutely warranted. Promote transparency and accountability in their use.
- Advocate for withdrawal of international procurement obligations. We believe that all governments should aim to invest taxpayers’ dollars back into their home economies to the extent practical.