The Senate passed their $550 billion infrastructure bill on Tuesday and with more political maneuvering yet to go on this one, CPA believes that the heart of the bill – mainly investments in bridges and roads and airports – will remain unscathed. The best part of this legislation is both parties agreed to making the bulk of this for domestic manufacturers, rather than a free-for-all for global firms outsourcing federal funds to the world.
The bill can be seen here.
Division G of the bill, Title IX – Build America, Buy America is a standout for CPA members. This is mostly the Rob Portman (R-OH) and Sharrod Brown (D-OH) legislation that consolidates three separate Buy America ideas into one.
Traditional Buy America only applied to government procurement contracts. It didn’t apply to Federal Financial Assistance. Title IX changes that and extends Buy America to federal infrastructure grants.
The catch is that for grants there’s still the qualification of “consistent with international obligations”, which mainly means U.S. commitments under the World Trade Organization’s Government Procurement Agreement (GPA). The U.S. is a part of the GPA, along with more than 40 nations, mostly all of them in the EU, and one in China – Hong Kong. The GPA will still apply, except for Department of Transportation orders, which are excluded from GPA.
The infrastructure bill also includes the Make PPE In America Act. This portion of the bill recognizes what CPA has been advocating for in regard to those who have been making specialized face masks, as well as other medical garments since the government called on companies to quickly retool to make those things, at the time almost totally hoarded by China, and now being dumped into the U.S. by Chinese companies.
The bill states that “In order to foster a domestic PPE supply chain, U.S. industry needs a strong and consistent demand signal from the Federal Government providing the necessary certainty to expand production capacity investment in the United States. In order to effectively incentive investment in the U.S. and the reshoring of manufacturing, long-term contracts must be no shorter than three years in duration.”
CPA supports this measure.
For other Buy American measures related to hard, physical infrastructure, the Senate bill says that no later than 180 days after the date of enactment of this Act, the head of each Federal agency must ensure that none of the funds made available for a Federal financial assistance program for infrastructure be used on a physical project unless all of the iron, steel, manufactured products, and construction materials used in the project are produced in the United States.
“All” seems almost too good to be true. CPA is still reviewing the bill.
For physical infrastructure subject to Buy American provisions, projects involving roads and bridge; public transportation; dams, ports, harbors, and other maritime facilities; intercity passenger and freight railroads; freight and intermodal facilities; airports; water systems, including drinking water and wastewater systems; electrical transmission facilities and systems; utilities; broadband infrastructure; and buildings and real property.
For CPA, “electrical transmission facilities” as well as “utilities” should include solar and wind-powered facilities that power the grid. Any government project funding the purchase of solar and wind needs to be buying majority American-made goods, not Chinese, not European. This will support continued investment in green energy infrastructure, manufacturing, innovation, and labor required to make solar cells, solar panels, wind turbines and blades. As it is now, the U.S. is still mostly reliant on Asian solar cells to make solar panels. The only U.S. wind turbine company GE Renewable Energy, which is headquartered in France.
Lastly, Section 70934 calls for the surprising assessment of the impact of free trade agreements.
See CPA’s Economic Model of the US-UK Free Trade Agreement
This stands in stark contrast to the U.S. Innovation and Competition Act, where the provision known as the Trade Act of 2021 calls for faster exemption of tariffs against Chinese goods, as well as full payment of tariffs paid to Treasury for companies who filed for exemption but were not granted one due to exemption filing dates expiring.
Last month, the U.S. International Trade Commission produced what CPA views as a lackluster report on free trade agreements. The report showed that it mostly benefited large multinationals who were able to put the squeeze on their local suppliers, then forced to compete with cheaper labor, lower taxes, and weaker environmental regulations abroad.
In that section of the bill, the Senate calls for the Secretary of Commerce, the Director of the Office of Management and Budget, and the US Trade Representative to “assess the impacts in a publicly available report of all U.S. free trade agreements, the WTO agreement on government procurement, and Federal permitting processes on the operation of Buy American laws.”
CPA believes that there is no way the U.S. can promote true Buy American provisions in government contract work with the GPA enforced. While U.S. companies also benefit from winning German or Portuguese contract work, the U.S. is clearly a larger market for this type of work and – at the very least – strict Buy American rules should be in place for goods deemed a supply chain risk, or of national security concern.
Of note, Celeste Drake’s position as Director of the newly created Made in America Office — which was created by a President Biden Executive Order, will be codified in this bill.