U.S. Laws Limit Procurement Commitments: A Djaghe Reference Paper

A Djaghe reference paper, U.S. Laws Limit Procurement Commitments, examines the relationship between U.S. laws that restrict the purchase of foreign goods and services and U.S. commitments under international trade agreements. The paper generally illustrates how restrictions in various laws limit U.S. procurement commitments and how most Buy American requirements are not affected by international agreements. 

When the U.S. entered its first international agreement with procurement commitments, Congress enacted the Trade Agreements Act of 1979, authorizing the president to waive domestic purchasing requirements but limiting the laws subject to the waiver. As a consequence, in negotiating procurement agreements, the executive branch generally has had to exclude procurement subject to domestic preferences from U.S. commitments or take an exception for the domestic preference. In the 2009 stimulus package and a few other laws with new Buy American requirements, Congress has ensured compliance with procurement agreements by exempting them from application of the domestic purchasing restriction.

The Reference Paper examines U.S. laws that restrict the ability of the federal government, as well as state and local governments, to purchase goods or services of foreign origin. The discussion begins with Congress’s enactment of the 1979 law and the limited scope of its waiver authority. It follows with an assessment of the primary laws that impose domestic preferences or sourcing restrictions on federal agencies. The Paper then considers the Buy American restrictions attached to federal funding of transportation and other infrastructure projects undertaken by state and local governments. A key element of the discussion is the treatment of the restrictions in trade agreements. 

The reference paper is based on posts published in Perspectives on Trade and other publications.

Jean Heilman Grier

April 29, 2020

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