New Buy American Executive Order

On January 31, President Trump issued a Buy American executive order (EO) that implements a directive in a 2017 order to maximize the use of U.S.-made iron and aluminum and manufactured products in federally funded infrastructure projects. This post examines the new EO, particularly in the context of U.S. obligations under the WTO Government Procurement Agreement (GPA) and free trade agreements.

In the Executive Order on Strengthening Buy-American Preferences for Infrastructure Projects, the president directs the heads of federal departments and agencies that administer programs that provide financial assistance for infrastructure projects to “encourage” recipients of such assistance to use U.S.-produced iron and aluminum and manufactured products “to the greatest extent practicable” in the projects. The new requirement becomes effect at the beginning of May.

The EO covers infrastructure projects in a very broad range of sectors. They include: surface transportation (roadways, bridges, railroads and transit); aviation; ports; water resources; energy production, generation, and storage; electricity transmission; gas, oil and propane storage and transmission; electric, oil, natural gas and propane distribution systems; broadband internet; pipelines; stormwater and sewer infrastructure; drinking water infrastructure; and cybersecurity. The order applies where such infrastructure projects are awarded federal financial assistance. 

The order’s definition of manufactured products is similarly extensive. It goes beyond iron and steel products to include aluminum, plastics, concrete, glass, optical fiber and lumber. Excluded from the new mandate are federal financial assistance programs that are already subject to domestic preferences. These would likely include Department of Transportation programs covering highway, railway and transit projects, which have been subject to “Buy America” requirements, beginning in the 1980s.

Since the central element of the new EO requires agencies to “encourage” – not mandate – the use of American-made products, it should not run afoul of U.S. trade obligations. That could change under another provision in the order that directs the agency heads, within 120 days, to prepare reports on maximizing the use of American-made iron, aluminum and manufactured products in infrastructure projects, including whether the “encouragement” provision should become a mandate.

However, even such a requirement should not affect U.S. international procurement obligations because the EO is not to be “construed to impair or otherwise affect existing rights or obligations under international agreements”. This is similar to the provision in the 2009 stimulus legislation, the American Recovery and Reinvestment Act, that required the use of U.S.-made iron and steel and manufactured goods, but added the caveat that it had to be applied consistent with U.S. international obligations. Such provisions are essential to ensure that the U.S. complies with its obligations under the GPA and FTAs to accord foreign goods the same treatment as American products.

The new EO builds on the policy in the president’s 2017 Buy American, Hire American order, which also directed the Secretary of Commerce to prepare a report with recommendations to strengthen implementation of Buy American laws. That report was due later in 2017 but has not been made public. Perhaps, the latest order was a recommendation in that report.

Jean Heilman Grier

January 31, 2019

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