August 15, 2017
Impacts of Buy American, Hire American
As U.S., foreign and multi-national corporations ponder the impact of the Trump Administration’s Buy American Hire American (BAHA) provision, they are faced with uncertainty stemming from confusing guidelines that will hamper economic growth and fair competition and have a chilling effect on both inbound and outbound products. The act was born out of concern that the U.S. manufacturing industry needed to be enhanced and is the primary law for federal government acquisition.
There is no question that the BAHA provides a clear preference for domestic goods and products.
The Administration is calling for U.S. government agencies to select U.S. company vendors for government supply contracts. Along with this policy directive, we also see Secretary Ross and U.S. Trade Representative, Ambassador Robert Lighthizer, calling for a thorough review of the existing trade laws. They will consider how current agreements may be undercutting the BAHA and how best to revise and strengthen the current laws. The present statutory guidelines call for some exemptions, including a public interest determination, government purchase of a “resale” of a procurement, and high or unreasonable cost factors.
Amb. Lighthizer and Sec. Ross’s investigation into the existing agreements could lead to greater limitations on waivers for foreign corporations that currently serve to supply the U.S. government with important products and services. It also has the potential to limit the ability of government agencies to use discretion.
Changes to the trade laws to enhance the BAHA could also be in direct violation of the current guidelines in the World Trade Organization (WTO) Agreement. More than 50 countries, who produce goods that fall under the trade act established in the late 1970s, and have enjoyed treated not unlike U.S. domestic products, would be at risk.
The intent of the BAHA is sound, as it means to bolster manufacturing here at home. However, will it provide government procurers the very best products, or will it evolve into a license for domestic providers to offer inferior products that are protected? Therein lies a looming threat that derives from a lack of market check and balance. Without it would competition in technology, product superiority and cost – on which the U.S. government has come to rely and use advantageously – evaporate?
The federal government has long been the beneficiary of global insight, changing technology and corporate ingenuity. It has built partnerships through procurement, research, development, and technology transfer from all corners of the globe that have been an important engine driving success in America. The bandage being applied under the BAHA has the potential to hamper our ability to have a free flowing and agile process that historically advances procurement superiority.