According to the Wall Street Journal, U.S. President Biden is expected to announce an executive order called “Buy American Goods” on Monday (January 25) local time to make technical repairs to existing federal procurement provisions to increase the procurement of local products and services.
The specific details of the executive order are not clear, but Biden launched a “buy American goods” campaign last year during the campaign, calling for tightening the current procurement rules of the U.S. government, increasing domestic product procurement, and plugging loopholes that are conducive to foreign product bidding.
He also called for an expansion of US government spending of $400 billion over the next four years to purchase products and services made in the United States.
According to the Government Accountability Office (GAO), federal agencies purchased directly in value of 5,860 in fiscal year 2019 (October 1, 2018 to September 30, 2019).
Less than 5% of the goods and services of the billions of dollars are foreign products and services. However, GAO pointed out that considering systemic errors and limitations, the actual amount of foreign products and services purchased by the U.S. government may be higher than this figure.
The analysis points out that the modification of the government procurement terms will benefit the Biden administration’s use of domestic products and services in the United States in the upcoming economic stimulus plan such as clean energy and infrastructure investment.
“If you invest trillions in infrastructure or federal procurement…
plus the tendency to ‘buy American goods,’ it’s expected to help create plant jobs and investments.” Scott Paul, chairman of the Alliance for American Manufacturing, told the Wall Street Journal.
The Biden administration disclosed the details of a new round of economic stimulus plan of $1.9 trillion last week. U.S. media reported that after the rescue plan, Biden expects to launch a new round of spending plans in February this year, focusing on long-term goals such as improving infrastructure, combating climate change and creating jobs.
Traditional U.S. trading partners such as Canada worry that the Biden administration’s “buy American goods” executive order will affect the channels for its products and services to enter the U.S. government’s procurement.
The Wall Street Journal quoted Colin Robertson, a former Canadian diplomat and deputy director of the Canadian Global Affairs Institute, as saying that some Canadian companies I’m afraid it will be excluded from the U.S. government procurement plan.” This is particularly relevant to Canada and the United States, because we are deeply integrated economies. He said.
Gary Hufbauer, a senior researcher at the Peterson Institute for International Economics, a think tank, to the Wall Street Journal. She said that the move to “buy American goods” will be a big test for Biden, because he has sent signals to repair his relationship with allies and strengthen cooperation with allies, both in the campaign and at the beginning of his office.
How to balance “buy American goods” with the interests of trade and alliance partners? The Obama administration provides lessons to learn from. In 2009, the Obama administration launched a $800 billion stimulus package, with its “Buy American” clause requiring the use of American-made steel and manufacturing products in public projects, but the procurement projects covered by the WTO’s Government Procurement Agreement (GPA) were excluded.
The Agreement on Government Procurement (GPA) is a plurilateral agreement of the World Trade Organization (WTO) with the goal of promoting the opening of member parties to the government procurement market and expanding international trade.
The GPA was voluntarily signed by WTO members.
As of 2020, 14 participants, including the United States and the European Union, have signed the agreement in 41 countries and regions. So far, China has not joined the GPA.
Trump also implemented the “buy American goods” policy at the beginning of his administration, but the policy involving U.S. government procurement has not had significant effect.
At the beginning of his administration in January 2017, Trump asked American energy pipeline manufacturers to use American-made steel, but this order was not implemented.
In response to the coronavirus crisis, the U.S. government proposed to the WTO at the end of last year to exempt some essential drugs from the WTO’s government procurement rules, and negotiations are still ongoing.
The day before Trump left office, on January 19, the U.S. government issued a new rule that strengthened preferential policies for domestic products in the United States under the Buy American Act of 1933.
This new regulation requires an increase in the proportion of domestic components required for steel products considered to be made in the United States from 50% to 95%, and the proportion of domestic components for other products from 50% to 55%.
According to the Wall Street Journal, although the details are expected to vary, the Biden administration’s “buy American goods” plan inherits the Trump administration’s “America first” and “buy American goods” policies, which have led to the economic and trade tension between the United States and its trading partners and WT O Reasons for confrontation.
Experts say the Biden administration’s “Buy American” program is expected to comply with WTO trade rules and the terms of the U.S. trade agreement with trading partners.