The Office of Management and Budget (OMB) posted a “Report on the Impact of Free Trade Agreements on Buy American Laws” (Report) on its website, dated February 2024. The Report was in response to a directive in the infrastructure Investment and Jobs Act (IIJA) that OMB, the Secretary of Commerce, and US Trade Representative assess the impact of US free trade agreements (FTAs), the WTO Government Procurement Agreement (GPA), and federal permitting processes on the operation of Buy American laws, including on domestic preferences. The resulting assessment focused on the procurement of manufactured goods. While it noted the federal government lacks the ability to make an accurate or complete assessment of the impact of the procurement of foreign goods, it concluded from available data that less than 1% of all federal contracts open to competition under trade agreements were awarded to foreign goods. This post highlights the Report’s findings.
The 16-page report was posted on the Made in America website (in its “About” section) without any public announcement. Its February 2024 date was nearly two years after the date set in the IIJA. Nonetheless, it was made publicly available, incontrast with a similar report mandated by the former president, which was never made public (if it was prepared). [The Report did not address “federal permitting processes” (as required by the IIJA) because OMB had published “Implementation Guidance for the Biden-Harris Permitting Action Plan” in March 2023.]
The Report outlines the major laws relating to domestic preferences and the procurement the United States covers under the GPA and FTAs, as well as procurement it excludes from its commitments. It measured the monetary impact of US trade obligations on Buy American laws and domestic preferences by comparing the total value of federal procurement to the portion of that procurement open to foreign trading partners under the GPA. This is the type of statistics the US reports to the WTO procurement committee.
The focus of the Report was on federal procurement in the three most recent fiscal years (FY) for which complete data was available (FY2013 to FY2015), providing averages of the three years. During that period, total annual federal procurement of goods and services averaged $450 billion. Only about one-third ($155 billion or 34%) of that procurement was open to foreign suppliers under the GPA and FTAs.
While manufactured goods constituted $164 billion or 37% of all federal procurement, they comprised 12% of goods covered under trade agreements. Moreover, on average, the federal government spent only $9.4 billion (6%) of its total procurement on foreign manufactured goods as the result of Buy American Act waivers, including for trade agreements.
The most frequently used waiver was for goods used outside the US, constituting 78% ($7.3 billion) of federal procurement. That was followed by waivers for non-availability of domestic goods (8%) and trade agreement waivers (6%). The fourth largest waiver category was for the Department of Defense’s procurement of goods from qualifying countries (countries that are parties to Reciprocal Defense Procurement Agreements), which averaged 6% of US procurement of foreign goods.
The Report acknowledged concerns with the accuracy and lack of detail of the information available for procurement awarded under trade agreements. With that caveat, it provided data on the award of contracts in procurement of foreign manufactured products covered by the GPA for FY2015. Of the $162.5 billion of US procurement of goods and services for which trade agreement suppliers were eligible, goods accounted for $62 billion. Of that $62 billion, the Report identified only 0.7% or $0.4 billion as procurement covered by trade agreements. That represented only 0.3% of all federal procurement of manufactured goods.
The top five sources of foreign manufactured products were Germany – $127 million, Mexico – $62 million, Canada – $55 million, France – $40 million, and Japan – $31 million. Others included the United Kingdom, Spain, Australia, and Israel. The top agencies purchasing foreign manufactured goods were the Departments of Defense, Veterans Affairs, and Homeland Security. The largest category of foreign manufactured goods was medical, dental, and veterinary equipment and supplies, totaling 24% of all procurement open to trade agreement partners.
Supporting concerns with the accuracy of the data was the fact that 5% ($21.7 million) of procurements for foreign manufactured goods identified as covered by trade agreements was from countries that are not covered by the GPA or an FTA, such as the United Arab Emirates, China, Gabon, Turkey, Zimbabwe, and Malaysia.
With respect to the statistical shortcomings of federal procurement data, the Report found that available statistics “fall short of providing a complete analysis” of the value of procurement awarded to products manufactured in countries covered by trade agreements. A more accurate or complete assessment of the impact of trade agreements on Buy American laws would require additional reporting on the country of origin. However, the Report suggested that the burden and additional paperwork necessary to collect such data “could limit the ability or desire of some domestic suppliers to compete for Federal contracts.” The administration is evaluating whether these burdens would outweigh the value of additional information collection.
A 2019 report by the US Government Accountability Office, which also used FY2015 data found that US foreign purchases represented only a very small percentage of its total procurement (about 4% of its $291 billion in contracts in FY2015) and much of that was for defense purposes.
The Office of Management and Budget (OMB) posted a “Report on the Impact of Free Trade Agreements on Buy American Laws” (Report) on its website, dated February 2024. The Report was in response to a directive in the infrastructure Investment and Jobs Act (IIJA) that OMB, the Secretary of Commerce, and US Trade Representative assess the impact of US free trade agreements (FTAs), the WTO Government Procurement Agreement (GPA), and federal permitting processes on the operation of Buy American laws, including on domestic preferences. The resulting assessment focused on the procurement of manufactured goods. While it noted the federal government lacks the ability to make an accurate or complete assessment of the impact of the procurement of foreign goods, it concluded from available data that less than 1% of all federal contracts open to competition under trade agreements were awarded to foreign goods. This post highlights the Report’s findings.
The 16-page report was posted on the Made in America website (in its “About” section) without any public announcement. Its February 2024 date was nearly two years after the date set in the IIJA. Nonetheless, it was made publicly available, incontrast with a similar report mandated by the former president, which was never made public (if it was prepared). [The Report did not address “federal permitting processes” (as required by the IIJA) because OMB had published “Implementation Guidance for the Biden-Harris Permitting Action Plan” in March 2023.]
The Report outlines the major laws relating to domestic preferences and the procurement the United States covers under the GPA and FTAs, as well as procurement it excludes from its commitments. It measured the monetary impact of US trade obligations on Buy American laws and domestic preferences by comparing the total value of federal procurement to the portion of that procurement open to foreign trading partners under the GPA. This is the type of statistics the US reports to the WTO procurement committee.
The focus of the Report was on federal procurement in the three most recent fiscal years (FY) for which complete data was available (FY2013 to FY2015), providing averages of the three years. During that period, total annual federal procurement of goods and services averaged $450 billion. Only about one-third ($155 billion or 34%) of that procurement was open to foreign suppliers under the GPA and FTAs.
While manufactured goods constituted $164 billion or 37% of all federal procurement, they comprised 12% of goods covered under trade agreements. Moreover, on average, the federal government spent only $9.4 billion (6%) of its total procurement on foreign manufactured goods as the result of Buy American Act waivers, including for trade agreements.
The most frequently used waiver was for goods used outside the US, constituting 78% ($7.3 billion) of federal procurement. That was followed by waivers for non-availability of domestic goods (8%) and trade agreement waivers (6%). The fourth largest waiver category was for the Department of Defense’s procurement of goods from qualifying countries (countries that are parties to Reciprocal Defense Procurement Agreements), which averaged 6% of US procurement of foreign goods.
The Report acknowledged concerns with the accuracy and lack of detail of the information available for procurement awarded under trade agreements. With that caveat, it provided data on the award of contracts in procurement of foreign manufactured products covered by the GPA for FY2015. Of the $162.5 billion of US procurement of goods and services for which trade agreement suppliers were eligible, goods accounted for $62 billion. Of that $62 billion, the Report identified only 0.7% or $0.4 billion as procurement covered by trade agreements. That represented only 0.3% of all federal procurement of manufactured goods.
The top five sources of foreign manufactured products were Germany - $127 million, Mexico - $62 million, Canada - $55 million, France - $40 million, and Japan - $31 million. Others included the United Kingdom, Spain, Australia, and Israel. The top agencies purchasing foreign manufactured goods were the Departments of Defense, Veterans Affairs, and Homeland Security. The largest category of foreign manufactured goods was medical, dental, and veterinary equipment and supplies, totaling 24% of all procurement open to trade agreement partners.
Supporting concerns with the accuracy of the data was the fact that 5% ($21.7 million) of procurements for foreign manufactured goods identified as covered by trade agreements was from countries that are not covered by the GPA or an FTA, such as the United Arab Emirates, China, Gabon, Turkey, Zimbabwe, and Malaysia.
With respect to the statistical shortcomings of federal procurement data, the Report found that available statistics “fall short of providing a complete analysis” of the value of procurement awarded to products manufactured in countries covered by trade agreements. A more accurate or complete assessment of the impact of trade agreements on Buy American laws would require additional reporting on the country of origin. However, the Report suggested that the burden and additional paperwork necessary to collect such data “could limit the ability or desire of some domestic suppliers to compete for Federal contracts.” The administration is evaluating whether these burdens would outweigh the value of additional information collection.
A 2019 report by the US Government Accountability Office, which also used FY2015 data found that US foreign purchases represented only a very small percentage of its total procurement (about 4% of its $291 billion in contracts in FY2015) and much of that was for defense purposes.
