March 6, 2009 Volume 110 Number 5

USW celebrates Buy American clause in federal stimulus pact …

And takes campaign to cities and states

By DON McINTOSH, Associate Editor

Buy American is back.

U.S. unions can’t make consumers buy U.S.-made products. But they can demand — when governments spend tax dollars to put Americans back to work — that the money be spent in the United States as much as possible.

Incredibly, that proposal was controversial during the early February debate in the Senate over the American Recovery and Reinvestment Act, the official name of the stimulus package. Sen. John McCain (R-Ariz.) led a fight to get rid of the bill’s Buy American provision, calling it a “protectionist measure.”

“How can you have an $800 billion trade deficit and call us protectionist?” countered Sen. Sherrod Brown (D-Ohio).

The debate started when Rep. Peter Visclosky (D-Ind.) won a “Buy American” amendment to the stimulus bill — in a unanimous 55-0 vote in the U.S. House Appropriations Committee. The amendment required infrastructure projects paid for with stimulus money to use U.S.-made steel and iron. In the Senate version of the bill, the Buy American language was even stronger — covering not just steel, but cement and other manufactured goods. The provision can be waived for products that aren’t made in the United States, or if it adds more than 25 percent to a project’s cost.

But leading voices in corporate America began lobbying against the Buy American clause, arguing that if the federal government favored U.S.-made goods in its stimulus spending, it would provoke a trade war with America’s trading partners. Business groups, including the U.S. Chamber of Commerce, National Association of Manufacturers, and Associated General Contractors, came out against the Buy American provision, as did dozens of major corporations, including Caterpillar, Citibank, Cummins, Intel, and Procter & Gamble. Ambassadors from the European Union and Canada wrote letters critical of it.

And in the Senate, McCain likened it to the Smoot-Hawley Tariff Act of 1930, which placed record-high tariffs on imports of foreign goods.

But Buy American provisions have been part of U.S. procurement policy for more than 70 years, without provoking trade wars or global depressions, argued the Alliance for American Manufacturing, a group formed by the United Steelworkers and several U.S. steel companies. The Department of Defense has had a Buy American provision (The Berry Amendment) since 1941, and the Federal Highway Administration, the Federal Transit Administration, and Federal Railroad Administration all have long-standing Buy America provisions.

McCain’s amendment deleting the Buy American provision was voted down.

But both sides declared victory when an amendment passed making it clear that the Buy American rules will be applied “in a manner consistent with United States obligations under international agreements.”

The United States has bargained away the right of government purchasers to favor domestic producers in a number of trade agreements. Those include the World Trade Organization’s Government Procurement Agreement (GPA), NAFTA, and various bilateral and regional free trade agreements.

Under the World Trade Organization’s Government Procurement Agreement, for example, countries that ratify the agreement can’t discriminate against products, services and suppliers from other signatory countries when they make government purchasing decisions. Of course, that reciprocal ability to bid on government contracts only applies to companies from countries that have signed the agreement — currently 39 nations besides the United States. China, India, and Brazil haven’t signed the GPA, so companies from those countries have no right to compete equally for government contracts in the United States.

Also, in each of the international agreements, the governments bargained over the extent of their obligations, including monetary thresholds, which goods and services are covered, and whether state governments are also subject to the agreement.

For example, the United States has exempted federal spending on mass transit and highway projects from all its international government procurement agreements. State-level procurement was left out of NAFTA, even when states are spending federal funds. And none of the trade agreements constrain local government purchases.

The GPA, meanwhile, covers state purchases, but only when they’re above $532,000 for supplies and services or $7.5 million for construction, and only when states have signed specific commitments to abide by the international treaty. Oregon and Washington are among the 37 states that have done so.

Former Gov. Barbara Roberts signed Oregon on to the GPA, agreeing to open procurement by the Department of Administrative Services to foreign bidders. And Washington opened state executive branch agencies, including general administration, transportation, and state universities — but not for all products: Fuel, paper, boats, ships and vessels are not covered.

So the Buy American language in the stimulus package won’t apply in those cases where it would violate international commitments. But union leaders are still counting the Buy American provision as a major victory. It’s seen as a signal that a trade policy that favors U.S. corporations over U.S. workers has lost favor with U.S. politicians.

Of course, the millions of U.S. jobs lost to offshoring may have shaped public opinion. In a nationwide survey of 1,001 U.S. adults conducted Jan. 29 – Feb. 1 by the Harris polling agency, 84 percent said they favor “Buy American” requirements: 66 percent said they strongly favor the idea, while 18 percent somewhat favor it.

Steelworkers officials say they’ll be watching closely to see that the Buy American provisions are followed, and they’re continuing to wage a nationwide campaign called Make Our Future Work. The campaign seeks to get city, county and state governments to pass their own Buy American resolutions — committing that they’ll use stimulus money to purchase only products and services made or provided in the United States of America, whenever possible.

Locally, the union is seeking to get such resolutions passed by the Oregon and Washington legislatures and by city councils in Albany, Clatskanie, Lebanon, McMinnville, and Wauna, Oregon, and Longview, Ridgefield, and Vancouver in Southwest Washington.

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