IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
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Inception date: No inception date

Local sourcing

The two versions of the defense authorization act for Fiscal Year 2011 currently under consideration in the U.S. Congress would each relax aspects of the Buy-American restrictions for certain goods. The version approved by the House of Representatives would do so for the specialty metals contained in big-ticket items, while the version under consideration in the Senate would make it easier for the Department of Defense to procure abroad certain tools. 
The U.S. House of Representatives approved on May 28, 2010 its version (designated H.R.5136) of the National Defense Authorization Act for Fiscal Year 2011. Section 813 of that bill would relax an existing Buy-American requirement. Under current law the Department of Defense is barred from acquiring aircraft, tanks, weapons systems, etc. that contain specialty metals* unless those specialty metals are melted and produced in the United States. More precisely, the relevant provisions of the existing U.S. law (i.e., 10 USC 2533b) read as follows:
 
(a) Requirement.-Except as provided in subsections (b) through (m), the acquisition by the Department of Defense of the following items is prohibited:
(1)The following types of end items, or components thereof, containing a specialty metal not melted or produced in the United States: aircraft, missile and space systems, ships, tank and automotive items, weapon systems, or ammunition.
(2)A specialty metal that is not melted or produced in the United States and that is to be purchased directly by the Department of Defense or a prime contractor of the Department.
(b) Availability Exception.-
(1)Subsection (a) does not apply to the extent that the Secretary of Defense or the Secretary of the military department concerned determines that compliant specialty metal of satisfactory quality and sufficient quantity, and in the required form, cannot be procured as and when needed. For purposes of the preceding sentence, the term 'compliant specialty metal' means specialty metal melted or produced in the United States.
(2)This subsection applies to prime contracts and subcontracts at any tier under such contracts.
 
The new law would define the broad term "produced" in a way that narrows it down significantly, and in fact makes it virtually a synonym for "melted," by providing that:
 
The term 'produced', as used in subsections (a) and (b), means melted, or processed in a manner that results in physical or chemical property changes that are the equivalent of melting. The term does not include finishing processes such as rolling, heat treatment, quenching, tempering, grinding, or shaving.
 
The effect would thus be to allow the acquisition of these items that contain specialty metals if those metals were subject to various finishing processes (rolling, heat treatment, etc.) in a foreign country.
 
The version of the defense authorization bill that is under consideration in the Senate (S.3455) does not include the language described above, but does have a Buy-American relaxation. It would provide that "hand or measuring tools" are to be included in that category of goods that are otherwise subject to strict Buy-American restrictions but that (as provided in existing law) the requirement can be waived "to the extent that the Secretary of Defense or the Secretary of the military department concerned determines that satisfactory quality and sufficient quantity of any such article or item ... grown, reprocessed, reused, or produced in the United States cannot be procured as and when needed at United States market prices." The change would thus make it easier for these hand or measuring tools to be procured from non-U.S. sources. 
After the Senate approves its version of the bill the two chambers of Congress must reconcile any differences between their two versions in a conference committee. That reconciled bill will then be subject to final approval by the two chambers before it can be sent to President Obama for his approval.
 
 
 
 
 
 
 _____________________
 
 
 
* : Existing law defines "specialty metals" as follows:
 
(1) Steel-
(A)with a maximum alloy content exceeding one or more of the following limits: manganese, 1.65 percent; silicon, 0.60 percent; or copper, 0.60 percent; or
(B)containing more than 0.25 percent of any of the following elements: aluminum, chromium, cobalt, columbium, molybdenum, nickel, titanium, tungsten, or vanadium.
(2)Metal alloys consisting of nickel, iron-nickel, and cobalt base alloys containing a total of other alloying metals (except iron) in excess of 10 percent.
(3)Titanium and titanium alloys.
(4)Zirconium and zirconium base alloys.
 
 
 
 

AFFECTED COUNTRIES

MAP
TABLE
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AFFECTED SECTORS AND PRODUCTS

393 Metal wastes or scraps
8108 Titanium and articles thereof, including waste and scrap.
810830 Waste and scrap
416 Other non-ferrous metals, cerments & articles thereos
8108 Titanium and articles thereof, including waste and scrap.
810820 Unwrought titanium; powders
810890 Other
8109 Zirconium and articles thereof, including waste and scrap.
810920 Unwrought zirconium; powders
810990 Other
429 Other fabricated metal products
8201 Hand tools, the following : spades, shovels, mattocks, picks, hoes, forks and rakes; axes, bill hooks and similar hewing tools; secateurs and pruners of any kind; scythes, sickles, hay knives, hedge shears, timber wedges and other tools of a kind used in
820110 Spades and shovels
820130 Mattocks, picks, hoes and rakes
820140 Axes, bill hooks and similar hewing tools
820150 Secateurs and similar onehanded pruners and shears (including poultry shears)
820160 Hedge shears, twohanded pruning shears and similar twohanded shears
820190 Other hand tools of a kind used in agriculture, horticulture or forestry
8202 Hand saws; blades for saws of all kinds (including slitting, slotting or toothless saw blades).
820210 Hand saws
820220 Band saw blades
820231 With working part of steel
820239 Other, including parts
820240 Chain saw blades
820291 Straight saw blades, for working metal
820299 Other
8203 Files, rasps, pliers (including cutting pliers), pincers, tweezers, metal cutting shears, pipecutters, bolt croppers, perforating punches and similar hand tools.
820310 Files, rasps and similar tools
820320 Pliers (including cutting pliers), pincers, tweezers and similar tools
820330 Metal cutting shears and similar tools
820340 Pipecutters, bolt croppers, perforating punches and similar tools
8204 Handoperated spanners and wrenches (including torque meter wrenches but not including tap wrenches); interchangeable spanner sockets, with or without handles.
820411 Nonadjustable
820412 Adjustable
820420 Interchangeable spanner sockets, with or without handles
8205 Hand tools (including glaziers' diamonds), not elsewhere specified or included; blow lamps; vices, clamps and the like, other than accessories for and parts of, machine tools; anvils; portable forges; hand or pedaloperated grinding wheels with frameworks
820510 Drilling, threading or tapping tools
820520 Hammers and sledge hammers
820530 Planes, chisels, gouges and similar cutting tools for working wood
820540 Screwdrivers
820551 Household tools
820559 Other
820560 Blow lamps
820570 Vices, clamps and the like
8206 Tools of two or more of the headings 82.02 to 82.05, put up in sets for retail sale.
820600 Tools of two or more of the headings 82.02 to 82.05, put up in sets for retail sale.
8207 Interchangeable tools for hand tools, whether or not power operated, or for machinetools (for example, for pressing, stamping, punching, tapping, threading, drilling, boring, broaching, milling, turning or screw driving), including dies for drawing or e
820713 With working part of cermets
820719 Other, including parts
820720 Dies for drawing or extruding metal
820730 Tools for pressing, stamping or punching
820740 Tools for tapping or threading
820750 Tools for drilling, other than for rock drilling
820760 Tools for boring or broaching
820770 Tools for milling
820780 Tools for turning
820790 Other interchangeable tools
8208 Knives and cutting blades, for machines or for mechanical appliances.
820810 For metal working
820820 For wood working
820830 For kitchen appliances or for machines used by the food industry
820840 For agricultural, horticultural or forestry machines
820890 Other
8209 Plates, sticks, tips and the like for tools, unmounted, of cermets.
820900 Plates, sticks, tips and the like for tools, unmounted, of cermets.

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