Some simple facts about "Buy America" preferences

Posted by scapozzola on 03/22/2012

•    Buy America has been longstanding U.S. policy for nearly 80 years.  Starting with the Buy American Act of 1933, the federal government has had laws on the books to ensure that hard-earned tax dollars are reinvested in the American economy and that they prioritize job creation in the U.S.
•    Buy America laws were expanded in the 1940s to apply to defense spending. In the early 1980s, President Ronald Reagan signed into law an expansion of Buy America policy for highway and transit projects that are funded by federal grants.
•    The economics of Buy America policy are common sense.  When U.S. tax dollars are spent on American-made components, they help to support good-paying U.S jobs.  When tax dollars are spent on imported goods, the money simply disappears—with no benefit to the U.S. economy.
•    Research conducted in 2009 found that when domestic content is maximized, manufacturing employment gains from infrastructure investment increase by up to 33 percent (PERI, 2009). 
•    Most industrialized countries already utilize their own domestic procurement requirements.  Providing a preference for domestic content is fully within the rights of the United States, and Buy America language typically includes an explicit clause stating that the provision shall be carried out in a manner consistent with America’s trade obligations.
•    The United States government is a leading signatory to the World Trade Organization (WTO) “Government Procurement Agreement” (GPA), which provides participating nations with reciprocal access to procurement contracts. Even with a Buy America preference in place, the reciprocity afforded by the GPA – with some exceptions – ensures that foreign firms can compete for state and federal contracts in the U.S. on an equal footing.  One exception is China, which has not signed onto the GPA.
•    Buy America laws contain waivers to protect taxpayers against “unreasonable cost.”  On the federal level, a 25% “threshold” is used for highway and transit projects.  However, U.S. manufacturers are constantly vying for infrastructure projects, and their competition ensures bids are competitively priced.
•    Buy America preferences help to strengthen U.S. manufacturing, the backbone of the nation’s economy.   American manufacturers are responsible for 70 percent of the research and development performed by industry in the United States; roughly 90 percent of all patents filed come from the manufacturing sector; and, American manufacturers are the leading buyers of new technology in the United States.
•    As national polling shows, Americans not only support America’s manufacturers and their workers, but they also overwhelmingly favor Buy America preferences when their tax dollars are being spent. 

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