United States of America: Buy American provisions in stimulus package

Measure #0165 | Published 30 Jun 2009 ▲

Description

      Congress included a Buy American requirement in the “American Recovery and Reinvestment Act of 2009” (designated as H.R.1, now Public Law 111-5), an omnibus measure that is better known as the stimulus package. Both houses of Congress approved the stimulus bill in January-February, 2009, which was then signed into law by president Obama on February 17, 2009.
      The $787 billion stimulus bill generally requires that all of the iron, steel, and other manufactured goods used in the program (including $48 billion for transportation projects) be made in the United States. After the House of Representatives attached this amendment to the stimulus package it set off a heated domestic and international debate. In response to the administration’s concerns over sending a protectionist message, the Senate amended the bill to specify that these provisions “shall be applied in a manner consistent with United States obligations under international agreements.” That language remained in the final bill that President Obama signed into law.
      The reference to “obligations under international agreements” alludes to the fact that the United States discriminates in its government procurement practices between trading partners according to the agreements that they have signed. The World Trade Organization’s Government Procurement Agreement (GPA) is a plurilateral undertaking, meaning that only those countries that signed it are subject to its disciplines and entitled to its benefits. The current signatories to the GPA consist primarily of industrialized countries. In addition to the GPA, the United States has also entered into reciprocal commitments with some of its free trade agreement partners; it is also U.S. law and practice to grant exceptions to the Buy American rules to beneficiary countries of the Caribbean Basin Initiative, as well as the least-developed countries. Among the more notable partners that do not enjoy the benefit of one or more of these exemptions are the so-called BRICs (i.e., Brazil, Russia, India, and China), as well as other developing and transition economies that have not signed the GPA nor reached FTAs with the United States.
      The rules have been further elaborated upon by the Office of Management and Budget in its Updated Implementing Guidance for the American Recovery and Reinvestment Act of 2009 (April 3, 2009); by the Department of Defense, General Services Administration, and National Aeronautics and Space Administration in “Federal Acquisition Regulation; FAR Case 2009-008, American Recovery and Reinvestment Act of 2009 (the Recovery Act)--Buy American Requirements for Construction Material,” Federal Register (March 31, 2009); and by the Federal Highway Administration in American Recovery and Reinvestment Act of 2009 Implementing Guidance (April 1, 2009).
      Another and less-noticed provision of the law (section 604) generally requires that “funds appropriated or otherwise available to the Department of Homeland Security may not be used for the procurement of” certain covered items unless “grown, reprocessed, reused, or produced in the United States.” The items covered by this provision include clothing and the materials and components thereof, other than sensors, electronics, or other items added to, and not normally associated with, clothing (and the materials and components thereof); tents, tarpaulins, covers, textile belts, bags, protective equipment (including but not limited to body armor), sleep systems, load carrying equipment (including but not limited to fieldpacks), textile marine equipment, parachutes, or bandages; cotton and other natural fiber products, woven silk or woven silk blends, spun silk yarn for cartridge cloth, synthetic fabric or coated synthetic fabric (including all textile fibers and yarns that are for use in such fabrics), canvas products, or wool (whether in the form of fiber or yarn or contained in fabrics, materials, or manufactured articles); or any item of individual equipment manufactured from or containing such fibers, yarns, fabrics, or materials.
      There were some indications upon the enactment of the stimulus package that at least one of the BRICs might bring a formal challenge to the Buy American provisions in the Dispute Settlement Body of the WTO. That has not yet happened.

Any Evidence-Based Deliberation:

Question Result
Is there anything in the public record to suggest that evidence of the effectiveness of the proposed measure was considered during official deliberations? No
Is there any evidence that alternatives to the proposed measure were considered? No
Is there anything in the public record that suggests that empirical evidence informed the comparison across the alternatives available to government? No
Was such evidence identified? No
Is such evidence publicly available? No
Did the official decision-maker in question provide an explanation as to why a chosen measure was favoured over alternatives? No
Is there any evidence to suggest that potentially affected trading partners were consulted before the measures were taken? No
Is there any evidence that safeguards have been put in place to ensure that implementation of the initiative is transparent and non-discriminatory? No
Did the government state its intention to review the measure within one year of implementation? No

Implementing Jurisdiction:

Affected Trading Partners:


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Measure type:

Affected Sectors:

Affected Tariff Lines:


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Date Discovered:

Implemented: Yes

Date of inception: 17 Feb 2009

GTA Evaluation: Red

Source:

See the hyperlinked items in the description above for the sources.

Government Response:

Glossary of trade terms