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U.S. COMPANIES AND PROCUREMENT AGREEMENTS
"The NAM has heard from its members that the GPA and the government procurements chapters in FTAs, such as the North American Free Trade Agreement (NAFTA), have been highly beneficial in opening foreign procurement markets to U.S. manufacturers ... ."
National Association of Manufacturers
September 18, 2017
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It was just about two years ago - April 18, 2017 - that President Trump issued an executive order declaring "It shall be the policy of the executive branch to buy American and hire American." In response to that initiative and a study emanating from it, the National Association of Manufactures submitted comments to the relevant officials at the Commerce Department and in the Office of the U.S. Trade Association.
The letter of transmittal, dated September 18, 2017, was signed by Linda M. Dempsey, NAM's Vice President for International Economic Affairs. With some 14,000 members (a 2017 figure), NAM is America's largest manufacturing association, and, as the Association's letter to USTR and Commerce explained, NAM's members have an enormous stake in government procurement around the world, not just in the United States. The NAM letter is exceptionally helpful on the issue, in part because it runs through the history of government procurement agreements, from the original, 1981 Code on Government Procurement of the Tokyo Round to the WTO Agreement on Government Procurement of GPA.
Here is more from the same segment of the NAM's comments that we drew from for today's featured quote:
The 61 foreign countries that have opened their procurement to U.S. manufacturers and other suppliers have a combined GDP of more than $41 trillion. Based on typical estimates of the size of government procurement markets, these market openings create a market of $4 to $6.2 trillion, much bigger than annual U.S. government procurement, which was valued at approximately $488 billion in 2016 based on data from the Federal Procurement Data System.
U.S. Companies both large and small, operating in a wide variety of sectors, report new sales as a result of access to foreign procurement markets guaranteed by the GPA, NAFTA and other trade agreements, including procurement administered by foreign state-owned entities (SOEs). NAM members from manufacturers of
water and wastewater [equipment] and other infrastructure equipment,
energy, medical devices, pharmaceuticals, and
chemicals to
information and communications technology and transportation and
capital equipment products have been able to use these agreements to gain access to foreign government procurement in ways that grow manufacturing production and U.S. exports that support good-paying jobs in the United States.
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As we read the NAM's comments, the message to the Administration seemed clear: Don't push Buy American policies to the point where they jeopardize the government procurement opportunities U.S. producers have in foreign markets.
Even a cursory look at the language of the Trump administration's twin executive orders on these issues suggests the administration does want to further tighten or nail down existing buy national policies in the United States. We noted above the crystal-clear language of the Executive Order published in April 2017. In the second such order, the one published on January 31, 2019, there was this:
[I]t is the policy of the executive branch to maximize, consistent with law, the use of goods, products and materials produced in the United States, in Federal procurements and through the terms and conditions of Federal financial assistance awards.
That said, we saw nothing in either order to suggest that the United States is backing away from its commitments under the WTO GPA agreement or other agreements.
Where those other agreements are concerned, however, there are some big questions. Call it a cloud of uncertainty. It hangs over NAFTA, which the U.S., Mexico, and the United States have all agreed to replace with the USMCA, the United States-Mexico-Canada Agreement. The first question is, will the U.S. Congress approve the deal and the related implementing legislation? And if they don't, will NAFTA continue?
We are optimists, and we believe - hope and believe - that, ultimately, the USMCA will get the necessary Congressional nods from the House and the Senate. But that won't answer all the questions. Notably, the government procurement language of the USMCA relates only to procurement as between the United States and Mexico. It pointedly does not speak to the procurement relationship between the United States and Canada.
So how will that be handled? What will happen to those Canadian companies that sell to the U.S. and those Americans who sell to Canadian entities? The answers to those questions may already be clear to the experts and could be quite anodyne, but here at GBD were still in the dark.
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GBD Members will be discussing these and other procurement issues tomorrow, March 8, with former USTR negotiator
Jean Heilman Grier of Djaghe. If you are a GBD member and need further details, please send and mail to
rkmorris@gbdinc.org, and we shall respond as quickly as we can with the relevant details.
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Manufacturers Discuss Procurement is a link to the text of the comments on this subject that the National Association of Manufacturers submitted to USTR and the Commerce Department last September. This was the source for today's featured quote.
Instructions to Departments is a link to the text of the Executive Order on Buy American that President Trump issued on January 31, 2019.
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©2019 The Global Business Dialogue, Inc.
1717 Pennsylvania Ave., NW, Suite 1025
Washington, DC 20006
Tel: (202) 463-5074
R. K. Morris, Editor
Joanne Thornton, Associate Editor
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