Forgot your account information?  |  Create a CME account

Recent Buy American provisions: What you need to know

Published by Derek Lothian on November 09, 2011

By Birgit Matthiesen
Special Advisor to the President & CEO, US Government Relations, CME

In 2009, with a Democrat-controlled House and Senate, President Obama signed the American Recovery and Reinvestment Act – one of his first significant domestic initiatives aimed at reducing a chronic nine-per-cent-plus national unemployment rate. The ARRA contained a Buy American provision that iron, steel and manufactured goods used in infrastructure projects funded by ARRA were required to be made in America (with certain waiver conditions). It is important to note that there are longstanding Buy American provisions in other US legislation, particularly those involved with transit and highway spending. The ARRA Buy American provisions:

  1. Expanded upon those previous requirements to not only include all iron and steel to be made in America but all manufactured goods; and,
  2. Applied only to those projects specifically funded by the ARRA.

In 2010, Canada and the United States signed the Canada-US Procurement Agreement, which provided limited relief and access to some ARRA projects for Canadian goods. The same accord also brought Canada and all provinces under the (international) WTO Government Procurement Agreement, which the United States and thirteen of its states have already entered some years ago. The WTO GPA mandates that member countries provide reciprocal access to federal procurement projects and, in some cases, at the sub-federal level (i.e. states, provinces and cities).

While ARRA projects were funded by federal tax dollars, the overwhelming majority of infrastructure spending by the ARRA occurred at the state, county and sometime city level. Most if not all ARRA projects have now been contracted and monies allocated.

Today, with a GOP controlled House, a tenuous Democratic majority in the Senate, a bruising Presidential election in 2012 and a stubbornly persistent unemployment rate, the President and Congressional leaders are at battle to create jobs and return American manufacturing prowess.

So.

In October 2011, the President went before Congress in a nationally televised speech in which he laid out his second "jobs proposal." A few days later, the American Jobs Act was introduced in the US Senate and included the same Buy American constraints as the ARRA in 2009. The AJA was designed as a comprehensive injection of a new round of federal dollars in infrastructure projects – $30 billion in schools and other government buildings; $50 billion in immediate investments for highway, highway safety, transit, passenger rail, and aviation activities; $10 billion for a National Infrastructure Bank proposal; and, $15 billion to leverage private capital and expertise to rehabilitate homes and properties in communities across the country.

The AJA did not make it out of the Senate Chamber and is now considered legislatively dead. In response, the White House has decided to break up the AJA and re-introduce it as standalone bills. The first bill would have provided $35 billion to pay the salaries of teachers and first responders, but it, too, went down in defeat. The second and most significant to CME members was the Rebuild American Jobs Act that would have provided $60 billion for transportation infrastructure projects and the creation of a National Infrastructure Bank. This bill contained the same Buy American constraints as did the ARRA and original AJA. The bill was defeated on November 3 when Senate Democrats came up nine votes short of the 60 needed to advance the bill past a key procedural hurdle. A competing GOP highway spending bill, S1786, the Highway and Infrastructure improvement plan, did not contain a Buy American provision, but it, too, failed on a procedural (read political) motion.

What could be next?

It remains unclear what legislative strategy the White House will now adopt on infrastructure spending as a means to boost job numbers. The President has since announced he will act by regulatory authority as well as his use of Executive Orders, but we do not know yet what specific decisions he has in mind that would not require a role by Congress.

However, there is a number of other must-pass legislation before Congress that could include Buy American provisions – most notably: appropriation bills to fund the government through 2012 and beyond. For instance, in October, Senator Merkely, the junior Democrat Senator from Oregon, proposed a Buy American amendment to a US Department of Agriculture appropriation bill. The amendment was defeated, but there remain 12 pending appropriation bills before Congress.

Nor can we ignore State Houses. Newly elected Governor Brown of California signed a bill that allows California public transit systems to set their own requirements for the minimum percentage of American-made content and components in federally funded buses and rail cars. When the law takes effect in 2012, California agencies can impose a higher US content minimum, in addition to the federal requirement of 60 per cent.

As of today, the only federal legislation "on the books" which contain the controversial Buy American provision is the 2009 ARRA and, as noted above, most if not all of those projects are underway or completed. That being said, there remains in the US supply and distribution chain great confusion about what is or is not subject to Buy American requirements.

And remember 2012 is an election year. Some of the key "swing" states already identified are Michigan, Pennsylvania and Ohio – states with above national unemployment levels and critical business relations for CME members, but which are also home to "rusting" manufacturing plants.

CME, through its office in Washington, continues to work closely with our embassy, as well as US business associations, to oppose Buy American in each and every legislative proposal.

 

 

Found in: news

National Office

Alberta British Columbia
Manitoba New Brunswick
Newfoundland & Labrador Nova Scotia
Ontario Québec
Prince Edward Island Saskatchewan