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States skirt past federal Buy American bans
Our Buy American Mention of the Week!
by Roger Simmermaker
October 19, 2014

Question: How can you get your government on board to bolster Buy American laws in public procurement contracts and help create more American jobs, profits, and tax revenue?

Answer: Try focusing on your state representatives by asking them to create, sponsor, and advocate enactment of Buy American laws on the state and local level.

Think it's not possible? Consider the following passed or pending Buy American laws pushed by various states that have skirted potential federal Buy American bans:

  • A whopping $1 billion capital investment act passed in Minnesota in May of this year that mandates U.S-made steel be used in projects that receive state funds for the capital investment.
  • Pending legislation in New Jersey says that state contractors are required to use exclusively American-made goods unless those goods are not available in the quantities needed here at home or are available at a domestic cost that is "unreasonable." The current law on the books only enforces this requirement on a select number of public contracts.
  • In Illinois, one proposal made in April, 2014 and passed by the Illinois State House of Representatives would mandate that state agencies can buy only American-assembled cars. I would like to see this bill narrowed a bit and only include American-made cars from American-made companies (GM and Ford), but I'll gladly grant kudos to the bill as it stands now.
  • The Empire State has a proposal on the table titled The New York State Buy American Act, which would mandate that U.S.-made iron, steel, and manufactured goods be used in many state procurement purchases. Unfortunately, the New York bill hinges on compliance with specific exceptions including consistency with various international obligations.

The proposed legislation in New York underscores the exact reason why passing Buy American bills at the state or local level are increasingly more-attractive than at the federal level. The "international obligations" referenced in the New York legislation refer to international trade agreements like the ones with the World Trade Organization (WTO) and it's GPA (government procurement) provisions. GPA provisions make discrimination against foreign-sourced goods illegal for our federal government, but not necessarily for state and local governments.

Each U.S. State was given the choice to have their procurement processes subject to binding GPA provisions, but not all states agreed to do so. Thirty-seven states have made at least limited commitments to the GPA provisions, meaning that every purchase by those states is not necessarily automatically bound to WTO rules. The thirteen states that have not subjected themselves to binding WTO rules, and therefore potential federal Buy American bans, are Alabama, Alaska, Georgia, Indiana, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, South Carolina, Virginia, and West Virginia.

Missing from the above list of states that have not subjected themselves to be under the thumb of the WTO to varying degrees are some of the states listed in the above bullet-point examples of either passed or pending Buy American legislation, such as Illinois, Minnesota, and New York.

The good news for states like these (and American citizens and workers alike) is that foreign companies shunned by state laws favoring U.S.-made products are not provided access to U.S. courts to dispute domestic preferences by those states. Only the U.S. Government can access U.S. courts for this reason, and why would the U.S. Government waste time and money disputing a state's preference for American-made goods in their procurement policies?

In summary, whether your state is listed as one that has subjected themselves to the restrictive WTO rules on domestic goods preferences, we can all put pressure on our state legislators to create, sponsor, and advocate enactment of Buy American laws on the state or local level.

Enactment of more Buy American laws would clearly mean more American jobs, profits, and tax revenue within the borders of the United States. And if you're interested in the furthering the growth of the American economy, that's a good thing.


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