Biden to push elusive 'Buy American' goal with new federal contract guidelines (updated)
25/01/2021 19:36
(Adds industry, union, Canadian reaction)
By Andrea Shalal and Timothy Aeppel
WASHINGTON, Jan 25 (Reuters) - President Joe Biden will take
steps on Monday to harness the purchasing power of the U.S.
government, the world's biggest single buyer of goods and
services, to strengthen domestic manufacturing and create
markets for new technologies, a senior administration official
said.
Biden will sign an executive order aimed at closing
loopholes in existing "Buy American" provisions, which structure
the $600 billion in goods and services the federal government
buys each year, making any waivers more transparent, and
creating a senior White House role to oversee the process,
according to the official.
Revitalizing the manufacturing sector, which accounts for
about 12% of the U.S. economy, is a key part of the Democratic
president's broader push to drive up wages, create more union
jobs and strengthen U.S. supply chains, the official said on
condition of anonymity.
"He does not accept the defeatist idea that automation,
globalization mean that we can't have good-paying union jobs
here in America," the official said.
Boosting U.S. manufacturing, however, has proven a vexing
challenge for previous administrations, including that of former
President Donald Trump https://www.reuters.com/article/us-usa-trump-steel/trump-buy-american-edict-may-have-little-impact-on-u-s-steel-idUSKBN17K2OE.
Lower wages and weaker environmental standards have
triggered the exodus of key manufacturing capabilities to China
and other countries in recent decades, including the making of
medical equipment, resulting in critical gaps that have been
laid bare during the COVID-19 pandemic.
China overtook the United States as the world’s top
manufacturer in 2010, and was responsible for 28% of global
output in 2018, according to United Nations data.
Rebuilding critical supply chains and developing new ones is
key to U.S. economic growth, trade experts say.
Major labor unions and some industry groups welcomed the
expected order, which is to be signed by Biden at a White House
ceremony later on Monday.
Kevin Dempsey, president of the American Iron and Steel
Institute trade group, said strong domestic preferences for
federally-funded projects were essential to ensure that taxpayer
dollars were used to buy U.S.-made products.
The AFL-CIO federation of trade unions welcomed Biden's
focus on finally making good longstanding political promises.
"The Trump administration used the right words but never put
in place policies to affect meaningful change. This executive
order will close loopholes that allow agencies to sidestep 'Buy
American' requirements," AFL-CIO President Richard Trumka said.
CANADA CONCERNED
The U.S. trade deficit surged to $68 billion in November,
its highest level in 14 years, as businesses scrambled to fill
shelves with foreign goods and supply domestic factories reliant
on foreign parts, offsetting a rise in exports.
"The U.S. spends about $600 billion a year on contracts, and
that is money that ... can also serve to spur a revitalization
of our industrial strength and help to create markets for new
technologies," the Biden administration official said.
The order directs federal agencies to reevaluate the
threshold used to determine U.S. content, to prevent companies
that sell to the government from importing largely foreign-made
goods and selling them as U.S.-made after making minor tweaks.
It sets a deadline of 180 days for regulators to finalize
the changes once they are proposed, and orders up a new website
to ensure transparency about any waivers granted. The official
gave no new percentages for required U.S. content, saying they
would be determined as a result of the process being launched on
Monday.
The challenge in buying more U.S.-made goods is partly a
reflection of the erosion of many basic industries. Major U.S.
retailers, including Walmart Inc, have launched high-profile
"Made in America" campaigns, only to court foreign manufacturers
afterward to get the goods consumers wanted. In 2015, the
retailer faced a probe by the Federal Trade Commission for
labeling products that were only partly made in the country.
Canada, the second largest U.S. trading partner, is worried
that the Biden administration could end up disrupting one of the
world's largest bilateral trading relationships, with Canadian
companies and workers bearing the brunt of the pain.
"I am concerned. We are always concerned by 'Buy American'
... for sure that is going to be an issue very, very high on our
agenda in our work with the Biden administration," Canadian
Finance Minister Chrystia Freeland told reporters in Ottawa.
urn:newsml:reuters.com:*:nL1N2K01T2
Asked if the order would be seen as protectionist, the Biden
administration official said it was fully consistent with U.S.
commitments under the World Trade Organization, and Washington
would work with trade partners to modernize global rules.
The process beginning on Monday would "make sure that we are
using procurement going forward in a way that actually builds
domestic capacity, particularly in those areas where we have
acute economic or national security needs and vulnerabilities,"
the official said.
U.S. business groups had blasted the Trump administration's
push https://www.reuters.com/article/us-health-coronavirus-usa/u-s-business-groups-warn-buy-america-order-would-harm-pandemic-response-idUSKBN21D1SM
to expand "Buy American" mandates to the medical equipment and
pharmaceutical sectors, warning they could worsen shortages
during the pandemic.
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Trump administration pushes to rip global supply chain from
China - officials https://www.reuters.com/article/us-health-coronavirus-usa-china/trump-administration-pushing-to-rip-global-supply-chains-from-china-officials-idUSKBN22G0BZ
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(Reporting by Andrea Shalal and Timothy Aeppel; Additional
reporting by Nandita Bose in Washington and David Ljunggren in
Ottawa; Editing by Heather Timmons, Jacqueline Wong and Paul
Simao)
((andrea.shalal@tr.com; +1 202-815-7432;))