Future Implications of the Buy American-Hire American Executive Order and Domestic Preferences on U.S. Government Procurement and Trade Policies

Abstract

This policy paper discusses the Buy American-Hire American Executive Order (Buy American EO) issued by U.S. President Donald Trump, and the predicted immediate and long-term effects of imposing and enforcing greater price preferences with respect to the Federal Government's procurement of goods of domestic origin over those of foreign origin. Global economic ramifications of expanding applicability of the Buy American laws is examined, as is the role of price preferences for domestic sourced goods as a back-door mechanism to restrict stateside competition from foreign manufacturers of goods' manufacturers. Imposition of such restrictions on the ability of foreign firms to compete with U.S. firms for U.S. Government contracts is expected to result in reciprocal trade restrictions imposed on U.S. manufacturers in foreign procurement markets. In addition, this paper examines the comparative impact of increased enforcement of domestic preference requirements prescribed by the Buy American laws. as compared to the increased implementation of anti-dumping and countervailing duties on foreign producers seeking to import goods into the U.S. Is there a benefit to the U.S. increasing its reliance on such tools of trade restraint notwithstanding the position under the GPA,to support and abide by free trade and open competition? Is there an inherent conflict between the U.S.’s stated commitment to free trade and the executive's decision to ramp up enforcement of trade barriers such as, inter alia, greater enforcement of anti-dumpling regulations? This policy paper also examines, in detail, several trade reform options that the Trump Administration could implement to advance U.S. interests in the area of procurement reform.. As of the date of this writing, the Trump Administration has already implemented some of these reforms. Therefore, both the immediate and prospective, future impacts of these implementations are ripe for analysis. Whether President Trump will implement other trade reform options remains to be seen. In addition to the Buy American EO, also addressed herein are the additional implications of the President’s subsequent Executive Order, issued in March 2017 and appropriately titled, Establishing Enhanced Collection of Anti-dumping and Countervailing Duties and Violations of Trade and Customs Laws. Arguments advanced by supporters of the President’s subsequent Executive Order mandating more rigorous enforcement of existing anti-dumping regulations are discussed as well as counter-arguments advanced by opposing stakeholders, some of whom characterize the March 2017 Executive Order as a tool contrived to create more trade barriers for foreign firms aiming to penetrate the government procurement market of the United States.