TTIP and “Buy America” Requirements

EU business seeks removal of “buy America” requirements in TTIP negotiations.

BUSINESSEUROPE, a leading business organization in the European Union (EU), cited removal of U.S. domestic preferences as one of its primary goals in the procurement negotiations under the U.S.-EU Transatlantic Trade and Investment Partnership (TTIP).  Its other goals include greater access to federal, state and local procurement and more uniformity in procurement procedures in the United States.  The EU business group, whose members are national business federations of the EU Member States, described its TTIP interests in a December 2013 position paper on government procurement in the TTIP.

The business group recognized that U.S. procurement “may be more open” than is indicated by U.S. commitments under the WTO Government Procurement Agreement (GPA), which will serve as starting point for the TTIP procurement negotiations.  Nonetheless, European companies believe they could benefit from broader coverage of procurement under the TTIP.

BUSINESSEUROPE laid out the areas in which it is seeking broader and deeper coverage of federal and sub-central entities.  The U.S already covers most of the federal entities in which it expressed a strong interest.  Those that are not covered are:  the National Railroad Passenger Corporation (AMTRAK), the Federal Aviation Administration and the Government Printing Office, as well as the American Water Works Association, a non-profit organization.

EU businesses echoed the objectives of the European Commission for coverage of the 13 states not covered by the GPA and the elimination of existing restrictions by the 37 states that are covered by the GPA.  They also expressed interest in the reduction of thresholds applied by states under the GPA.  (States open procurement of goods and services above $558,000.)  Challenges of adding states to procurement obligations were outlined in an earlier posting on Challenges of Covering State Procurement in TPP and TTIP.

The EU organization is also seeking the further opening of the procurement of large cities, including Atlanta, Boston, Charlotte, Chicago, Dallas, Denver, Houston, Los Angeles, Miami, New York, San Francisco, Seattle and Washington.  Three of those cities (Boston, Chicago and Dallas) already have committed under a 1995 U.S.-EU Exchange of Letters to provide EU suppliers with best of out-of-city treatment when the city considers out-of-city suppliers in a procurement.

Among its highest priorities at the state and local levels, BUSINESSEUROPE cited access to public transportation agencies and energy efficiency/security/fire contracts.  Its interests are focused on state departments of transportation and a broad range of transit agencies, such as the Chicago Transit Authority, the L.A. County Metropolitan Transportation Authority and the Washington Metropolitan Area Transit Authority.  It also wants to participate in the procurement of a number of rail agencies, including METRA (Chicago area), Metrolink (southern California), BART (San Francisco Bay Area) and SoundTransit (Central Puget Sound).

European business interest in the public transportation agencies ties into its request for removal of domestic content requirements that are attached to federal funds given to state and local governments for highway, railway and transit projects.  These requirements are found in several laws, which are often collectively referred to as the “Buy America” Act (to be distinguished from the Buy American Act of 1933, which applies to federal procurement).  These require the use of U.S.-produced iron, steel and manufactured goods in federally funded projects administered by the Federal Highway Administration, Federal Transit Administration and the Federal Railroad Administration for the High Speed Rail Program.   European firms want to be able to participate in the projects without having to meet the “buy America” requirements.  The U.S. has never waived these domestic content requirements in any trade agreement.

BUSINESSEUROPE also cites the obstacles posed by two other laws that impose domestic content requirements.  One is the Berry Amendment, which mandates that the U.S. Department of Defense purchase clothing and apparel from U.S. sources.  The US excludes all goods covered by the Berry Amendment from its GPA commitments.  The second law is the “Jones Act.”  EU businesses further complain that this law prevents them from participating in U.S. procurement of maritime services.  This law is one of the reasons that the U.S. excludes transportation services from its procurement commitments.

In addition to obstacles posed by domestic content requirements, BUSINESSEUROPE points to procedural obstacles, in particular the lack of nation-wide procurement procedures.  Its call for a central website for all procurement opportunities may be, at least partially, addressed by the recent development by the Office of the U.S. Trade Representative of a link on its website to the procurement opportunities of all states covered by the GPA.  This responded to a requirement of the recently revised GPA to provide a single portal for procurement notices by sub-central entities covered under the GPA.

BUSINESSEUROPE presents an important perspective on the business community’s interests in the TTIP procurement negotiations.  One of its most practical recommendations may be that the TTIP establish an expedited consultation process on public procurement to address concerns and future developments.

Jean Heilman Grier

February 24, 2014

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WTO Government Procurement Agreement: Background

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