CPA Conference Day 2: Buy American, The Loopholes Continue

If you’re from Portugal, Jamaica, or Hong Kong and can stitch together an N95 mask, and the Veterans Administration is putting out a $5 million bid to make some for them, well congratulations, you’re now an American company in the eyes of the federal government.

At least that’s what existing Buy American laws on the books now say, and everyone on Wednesday’s panel to discuss the matter believed that those rules will change under the Biden administration.

“There are lots of gaps in our Buy America policy,” said Senator Tammy  Baldwin (D-WI), one of three members of Congress who participated in a panel discussion on Buy America rules on day two of the CPA Annual Conference.

Baldwin was introduced by CPA member and founder of Made in America Again, Inc., James Stuber. He called her a “champion of Buy American” and highlighted her long-standing commitment to supporting domestic manufacturers.

While most CPA members probably know this already, Baldwin gave attendees an important reminder. “People assume that if you do an infrastructure bill and get this infrastructure spending, that it is all going to be U.S. workers, but think of the components that go into this, from your traffic lights to steel. Those things can be imported.”

Jim Stuber speaks with Wisconsin Senator Tammy Baldwin. He calls her a “champion of Buy American.”

She said huge loopholes remain.

“Companies from numerous countries can compete with us as if they are American companies,” she said. That can be changed by a presidential decree. “The President has the authority to issue an emergency exemption to those treaty agreements in order to direct taxpayer dollars to domestic manufacturers and provide incentives to create a pivot to get manufacturers to make things here that they don’t currently make,” she said.

Part of the exclusions to the Buy American Act (BAA) provisions include members of the Generalized Systems of Preferences of the World Trade Organization, which is basically all of rich Europe, and treaties with a number of low-income countries in the Caribbean Basin and Central America.

Some 60 countries right now can bid for lucrative U.S. government contracts and not employ a single U.S. worker or even pay a single penny in U.S. taxes. Baldwin said that “at the very least” Biden should close those loopholes on an emergency basis and then on a longer-term basis, renegotiate those provisions in the BAA.

Greg Owens, CEO and co-founder of Sherrill Manufacturing, owners of the Liberty Tabletop flatware brand, asked Baldwin to give him a pulse reading on reforming Buy American rules in Congress.

She said we “need to get more people educated on this” and that “we are going to have to figure out what the process will be to advance these changes.” But Baldwin noted that many members of Congress support this initiative. “If you support that, speak up now,” she said.

In response, Stuber said he’ll be making phone calls to Washington.

Rep. Claudia Tenney (R-NY), no stranger to Sherrill Manufacturing and the upstate New York manufacturing and farm base that has been in defense mode for at least 20 years, said there is a perverted sense out there that Americans can’t make things anymore. Part of this is because of labor costs. Taxes and strict environmental rules are another.

Tenney, also a panelist during the live stream, is an example of lawmakers taking action to support domestic producers. She got her Support Procurement of Our Nations Stainless Steel Act passed last year, which helped companies like Sherill. “We are looking for enhancements,” she said.

Beyond the Buy American Act law, other matters like labeling country of origin and seller origins, especially on e-commerce sites like Amazon, would go a long way in helping consumers who actually want to support domestic businesses.

We have people who will spend more money on locally grown food in the now well-known farm-to-table movement that started in farm communities out west and in Vermont, to people who will spend more on craft beer than on the big international brands. We know that consumers want to support local enterprises and are not always focused on price. But, if they don’t know where their beef comes from, for example, they’ll tend to buy a cheaper import, often without realizing it.

“I’m a life-long rancher. I’m proud of the product we produce on our ranch and I would happily put it up against any competition,” said Senator Cynthia Lummis (R-WY). She supports a county of origin labeling law, something the World Trade Organization shot down because it deemed that member states Canada and Mexico would be ostracized by the local market, creating unfair competition.

In many supermarkets, fish, for example, has a country of origin label. Ground beef and steaks do not, unless the packaging is from a local farm consumers recognize as being nearby.

Many of these issues seem like easy fixes, but they have been plaguing domestic producers for years.

Here’s some good news, however, from Brad Markell, the executive director at the AFL CIO Industrial Union Council. “This is a bipartisan issue and I feel like we have turned the corner on this,” he said, mirroring what had been said earlier in the day on the labor panel. “It wasn’t too long ago that you had Democrats and Republicans who were free traders and they were not so worried about Buy America loopholes. We have turned the page,” he said. “There is no going back.”

Tenney confirmed that Republicans have moved on free trade, likely after seeing the popularity of this issue in the Trump presidency.

“I’m really grateful for CPA,” Tenney said. “We are emerging out of this pandemic and you are going to be the secret to our success.”

Register for the final two days here.