It is not difficult for the Biden administration to implement “buy American goods” itself, but it is impossible to achieve it to promote the United States to “go falsehood to reality”.
On January 25th local time, U.S. President Biden, who has only been in office for five days, signed the Executive Order on Ensuring that American Workers Make the Future in the United States, which is regarded as issuing an executive order to “buy American goods”.
Strictly speaking, this executive order only deals with procurement at the federal level of the United States. “Federal procurement shall ensure the procurement of ‘Made in the United States’ products”.
The United States federal government “should, where possible, purchase American businessmen at the level that can help American enterprises obtain a strategic competitive advantage and promote the full employment of Americans. Products, products, materials and services”.
Specific bylaws include the establishment of the “Made in America Office” under the Office of Management and Budget (OMB), whose head is appointed by the Director of OMB; the establishment of stricter measures to exclude “exceptional options” to force federal agencies to make it more difficult to circumvent the requirements of the “Buy American Goods” Act; and to ensure that small and medium-sized enterprises in the United States.
The industry can have easier access to the information needed for the federal government to bid for contracts; promote the implementation of “responsible and transparent procurement policies” and so on.
“Promoting federal procurement ‘buy American goods'” is one of the core campaign platforms proposed by Biden’s team and the Democrats.
It is also one of the few major issues that the two parties can reach consensus since the beginning of the “Trump era”.
That’s why Biden launched the executive order in his first week of office to show the new style of “bipartisan solidarity” and the political integrity of “talk to speak”.
However, many experts looked on the sidelines of such a big battle as the Biden administration, believing that it was just “big talk and make small money”.
“Big talk” and “small money”
Market analyst Kimberly Adams pointed out that the Trump administration also issued an executive order “buy American goods” four years ago, and if the “Biden” in the new executive order was replaced by “Trump”, it would find little different.
Scott Miller, a senior adviser to the Center for Strategic and International Studies, commented that a similar executive order was issued almost every four years to show that the new federal government and president are “concerned about the competitiveness of the American product market” and “caring about American employment”.
But what is the real situation? Since the beginning of the 21st century, the total annual procurement of goods and services by the U.S. federal government has been 600 billion US dollars, of which “the proportion is not made in the United States, but only 5%”.
Of the aforementioned 5% “non-made in the United States” procurement ratio, the vast majority are based on the “exemption laws” passed over the years, so that there are no similar products in the United States, or similar products made in the United States are too expensive.
If the insistence is “made in the United States”, the federal government procurement costs will rise sharply. By choosing “not made in the United States”.
It is also said that the Purchase of American Goods Act was introduced and entered into force by Roosevelt Jr.’s administration in 1933, and it has a long history of nearly 90 years of implementation.” What can be implemented has long been implemented, and what has not been implemented can either not be implemented or obviously is cost-effective.
However, including Trump and Biden, successive federal governments and presidents of the United States have tosed a new version of the “buy American goods” executive order in the 21st century, just to prove that they are “most concerned about American manufacturing” and “the most concerned about the United States”. “Job” a federal government and president, that’s all.
The Biden administration has a stricter definition of “Made in America”
It is worth noting that the Biden administration is trying to condemn OMB and the “Made in America Office” to set stricter standards for “what is ‘Made in the United States” more clearly and to exclude “Made in the United States” from federal procurement.
According to the current Federal Trade Commission (FTC) definition of Made in the United States, “Made in the United States” is actually divided into three categories: “Made in America”, “Made in the United States of America” and “Assembled in the United States of America”.
Among them, only products with a total package in the United States and a proportion of raw materials and parts in the United States are not less than 60%, can they be called “made in the United States of America”.
Made in America, as long as the raw materials and parts can be assembled in the United States, Canada and Mexico, the “assembly in the United States of America” only needs to be assembled in the United States, and the raw materials and parts can come from outside the United States.
Biden’s latest executive order will not change the definition of “Made in the United States” or depripe the FTC of the power to formulate, modify and interpret the above definition.
Instead, it authorizes OMB and the “Made in the United States Office” to enforce the principle of “not made in the United States and not purchasing” more strictly.
Specifically, first of all, “Made in America” and “Assembled in the United States of America” products are excluded from federal procurement, and only “Made in the United States of America” products are purchased.
Secondly, screening and screening various permitted “exemption exceptions” will further reduce the proportion of “non-made in the United States” that is only 5% left.
The purpose of the special “Made in the United States Office” under the OMB is to improve the efficiency of screening and avoid interference and constraints from other executive departments within the federal government or Congress.
Can we really use this to achieve “self-improvement of domestic products”?
The question is, how much substantial help does this have to boost the U.S. manufacturing industry, which currently accounts for less than 12% of the GDP of the United States?
Like similar executive orders at the beginning of previous federal governments, this move can only restrict federal procurement, not local government procurement, let alone influence the business behavior of the huge U.S. market and consumers.
Although in the 2020 election year, some American business giants “bring their own scenes” launched stunts such as “revitalizing domestic products”, but they did not trigger widespread agreement at the market level.
As many consumers say on the online social platform, “money is our own, of course we will choose the most cost-effective goods”. Now “Made in the United States” is in the column of “not cost-effective” in many fields.
Previously, it was pointed out that the only way to promote the “self-improvement of domestic products” in the United States is to keep or pull the vast majority of links in the industrial chain back to the United States as much as possible.
Trump used a “hard” approach to this, while Biden seemed to be more inclined to “entice”.
However, whether it is “hard” or “seduction”, it may be a wood to seek fish, because the upstream and downstream of the industrial chain, labor costs, global market strategies, etc.
do not support a large number of multinational enterprises to put so many industrial chain links in the United States.
Today, China has replaced the United States as the world’s largest manufacturing power and the largest trading body, and an increasing number of trading partners are also annoyed with the United States’ trade principle that “just wants to take advantage of, not want to exchange reciprocal”.
“Self-improvement of domestic products” means to continue and strengthen this unilateral trade principle, which is bound to be strongly resisted.
Over the past few days, foreign governments that have contacted Biden’s team, such as Canada and France, have shown obvious vigilance and even dissatisfaction with the Biden administration’s tendency to continue Trump-era policies in the field of trade protectionism.
What’s more headache for the United States is that the “2021 version of the executive order” can be substantially compressed by the 5% contained in the previous “exemption exception”.
These 5% of the “exemption exception” are either not made by the United States itself, or the “made in the United States” quotation is ridiculously expensive.
In a word, it is not difficult for the Biden administration to implement the “2021 Executive Order” itself, but it is impossible to achieve the long-leveraged and hollow American industrial chain to “de-emptiness to reality”.
