How Biden’s ‘Buy American’ plan is different from Trump’s
Among the flurry of executive orders President Biden signed in his first few weeks in office, it is easy to overlook his Jan. 25 “Buy American” order, an executive action the president says will help “rebuild the backbone of America: manufacturing, unions, and the middle class.”
While most of Biden’s executive orders have sought to reverse policies of the past four years, this “Buy American” order sounds eerily Trumpian. Indeed, if you’ve followed this issue at all, you know that President Trump had his own Buy American Executive Order – in fact, Trump made at least three such orders in four years — with little or no effect.
Is anything different this time?
To understand how the Biden team is really trying to do something here — and they are candid about this being a long-term project — you need a little background.
Beginning in 1933, our country has had a variety of “Buy American” provisions peppered through federal and state law. The core “Buy American” obligations apply to federal procurements, but these obligations also seep through to state and local government purchases when those purchases are made, in whole or in part, with federal funding.
Not only are these laws complex, but they are widely ignored. For example, in 2016 California’s state auditor found that the California Department of Education had failed to ensure the state’s school districts comply with the Buy American provisions for federal monies received for school lunch programs. Drilling down to the school district level, the auditor concluded that none of the school districts reviewed “had adequate policies and procedures for ensuring compliance with the Buy American requirement.”
More importantly, Buy American obligations in federal procurements have been too easily circumvented by waivers. Waivers can be granted when American goods in the needed category are considered not available or simply when a purchasing agency determines that a preference for American-made goods “would be inconsistent with the public interest.” The last of these is an exception broad enough to fit a container ship.
First and foremost, Biden’s executive order changes all that with organized, long-term White House oversight of these waivers. By itself that should curtail a lot of waiver abuse. President Biden has also ordered that government contracts seeking waivers be posted on a public website where small and medium-sized American businesses can see if they might be able to fulfill those contracts. That kind of transparency — to connect American demand with American supply — makes a lot of sense.
As part of the bureaucratic apparatus built up over the years to help deal with (that is, avoid) Buy American obligations, the U.S. Government actually maintains an official list of “Nonavailable Articles.” If something is on the list, a government procurement officer isn’t completely absolved of her responsibility to look for American-sourced products, but it is a lot easier to buy foreign goods. Many things on the list make sense — bananas and cocoa beans, for example. But you’d be surprised at some things our government says Americans do not produce enough of to meet government purchases: beef extract, canned corned beef, goat skin, olive oil, Alaskan yellow cedar lumber, and “sugars, raw.” Never mind that Alaskan yellow cedar grows only from northern California through Alaska’s Prince William Sound, and that we subsidize domestic sugar production to the tune of about $4 billion annually.
President Biden’s executive order calls for a much-needed review of this “Non-available Articles” list. The list needs to be reviewed not only for what currently meets the “not available” criteria, but also for which American industries might benefit from the nudge of additional government purchases.
The executive order looks to be part of a broader effort by Democrats to “reshore” some production to the United States, including through personal protective equipment (PPE) purchases, electrifying the federal car fleet, and the yet to be unveiled infrastructure plan.
At the same time, the U.S. Government does not have a completely free hand in procurements. Since 1981, the United States has been party to different international deals on government procurement — most recently, the World Trade Organization’s “Government Procurement Agreement” (GPA). Signatories to the GPA have to agree that other countries’ companies can compete on equal footing for government procurements above a certain amount. In the case of the U.S., we committed to give foreign companies an equal shot for general contracts over roughly $190,000 and construction contracts over roughly $7.2 million. For decades, the GPA has been something the U.S. advocated to other countries on behalf of American business; we consistently pushed, in the words of the 2003 U.S.-Singapore Free Trade Agreement, for “international liberalization of government procurement markets in the context of the rules-based international trading system.”
The press release for Biden’s executive order shows that the president’s team understands that the relationship between these international obligations and Buy American requirements is complicated. The press release accompanying the order has language that was exactly the same as we saw in an August 2020 Biden policy paper: that the new Administration will “work with allies to modernize international trade rules and associated domestic regulations regarding government procurement to make sure that the U.S. and allies can use their own taxpayer dollars to spur investment in their own countries.”
Saying you want to “modernize” trade rules is a polite way to say you would like to renegotiate those rules — which is itself a polite way to say you want to violate the existing trade rules. And the new Buy American effort points in that direction, albeit very politely.
In other words, Biden’s executive order is another sign that President Biden — like Trump before him — wants to shift away from some aspects of the neo-liberal international trade order that characterized the Clinton, Bush, and Obama eras. The difference is that the Biden team actually has a plan on how to approach this, and President Biden realizes that constructive reform of the system will take long, hard, quiet, and collaborative work — both within the U.S. Government and with our allies.
Justin Hughes is the Hon. William Matthew Byrne, Jr. Distinguished Professor of Law at Loyola Law School, Loyola Marymount University in Los Angeles, teaching intellectual property and international trade courses.