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Congress Revolts On Obama Plan That Would Ban ‘Buy American’

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Reposted from the Huffington Post


Congress Revolts On Obama Plan That Would Ban ‘Buy American’

Zach Carter  |  May 3, 2012  |  Huffington Post

Obama Buy American

A trade agreement currently under negotiation contains language that could potentially ban “Buy American” provisions, crimping American manufacturing.


WASHINGTON — A group of 68 House Democrats and one Republican sent a letter to President Barack Obama on Thursday urging him to reconsider an element of the controversial free trade agreement currently being negotiated by the administration. If approved in its current form, the pact would effectivelyban “Buy American” policies in government contracting.

Although the deal, known as the Trans-Pacific Partnership, has received relatively little media attention in the United States, it has sparked international friction among consumer groups and environmental activists who worry that terms demanded by the Obama administration will eliminate important public protections. Domestically, however, the deal’s primary source of political tension is from a portion that could ban “Buy American” provisions — a restriction that opponents emphasize would crimp U.S. jobs.

Since the 1930s, the American government has offered preferential treatment to American producers in the awarding of federal contracts. If a domestic producer offers the government a more expensive bid than a foreign producer, it can still be awarded the contract under certain circumstances, but more recent free trade agreements have granted other nations the same negotiating status as domestic firms. The Obama administration is currently pushing to grant the several nations involved in the Trans-Pacific deal the same privileged status, according to the Thursday letter.

“We do not believe this approach is in the best interests of U.S. manufacturers and U.S. workers,” the letter reads. “Of special concern is the prospect that firms established in TPP countries, such as the many Chinese firms in Vietnam, could obtain waivers from Buy American policies. This could result in large sums of U.S. tax dollars being invested to strengthen other countries’ manufacturing sectors, rather than our own.”

The letter from members of Congress to the administration marks a rare glimpse inside the typically secretive trade negotiation process. The terms of the free trade negotiations, including the Trans-Pacific pact, are withheld from the public, even though the governments of all the countries involved have access to them. Many major U.S. corporations have access to the draft negotiation texts through their positions on advisory boards to the Office of the U.S. Trade Representative, the White House agency which negotiates trade deals.

“Buy American” provisions do not help all U.S. firms equally. Corporations headquartered in the U.S. that offshore most of their manufacturing operations do not benefit from the system designed to promote domestic production in the way that companies with actual U.S. manufacturing operations do.

Public interest groups also worry that the same trade policies that could ban Buy American breaks will also prevent the U.S. government from making environmental or public health stipulations in federal contracts. The current language barring preferential treatment for American goods is so broad as to limit government specifications on goods to purely functional aspects. When contracting for paper, for instance, the government could specify that it wants to buy paper of the dimensions 8.5″ by 11″ — but it could not require that the paper be composed of recycled materials or use non-toxic dye.

The potential “Buy American” ban also conflicts with a top theme of Obama’s re-election campaign — boosting U.S. manufacturing. In February, the administration proposed fixing a tax loophole that has been exploited by oil and gas companies in order to provide breaks to domestic manufacturers. The tax proposal is not expected to gain any traction during an election year, however, although prospects for the trade agreement are much stronger. Last year, Congress approved three free trade deals initially negotiated by President George W. Bush that Obama had decided to support.

The White House was not immediately available for comment.

USTR spokeswoman Carol Guthrie told HuffPost that the administration is seeking “fair, transparent, predictable and non-discriminatory” contracting rules.

“The U.S. aim in covering government procurement under the TPP is to provide new market opportunities for U.S. goods, services, and suppliers,” Guthrie said.

Read the full letter to Obama here.

This story has been updated to include comment from USTR.

7 Responses to “Congress Revolts On Obama Plan That Would Ban ‘Buy American’”

  1. Mo says:

    Does the agreement call for a ban on other countries implementing buy only in their countries too I wonder? Or is it just the US where once implemented other countries will just use their printing press to create money out of thin air to give to their exporters so that they call sell products below cost putting out of business US domestic firms. Once this happens people in Congress will just say Americans weren’t competitive which would be due to them not having unlimited access to credit created out of thin air from the government’s central bank like foreigner competitors do.

  2. Jack says:

    The two things that stand out about this travesty to me are, 1) that the negotiations are, or were, before the revolt of Democratic Congressmen, being held in secrecy to the American people, and most likely so that 2) Obama could still balance his lie about creating American jobs on the razor’s edge here. Secret dealings with nations outside the U.S., and secret obfuscation that allows him to get away with seeming to be on America’s side. Since even the Democrat Congress now will not countenance his un-American behaviour, why would the voters do so? The answer — because all this was to be done in secret, by our President; hidden from view.

  3. Tom T. says:

    What was he thinking?

    It is good to see some politicians on the ball instead of letting it roll over them.

    When it comes to taxpayer money, ALL spending should be to domestic companies AND NOT GLOBAL ones. If the pres. wants to collect tariffs to pay for foreign goods, then maybe that might be okay but he would still be selling U.S. demand to other nations—what little (comparatively) is left.

    Politicians of all sorts use secrecy to sell out the interests of the the U.S. taxpayer. It is the biggest well known secret of Washington D.C. I would like a little more transparency in these trade negotiations and all major pieces of legislation. There are just WAY TOO MANY special interests getting politicians to sell their responsibility to the public for their own special interests.

    The fed should listen to Mo on what is happening with money and just send China the trillions we owe them in trade certificates that can only be used to buy our goods— not our industries and not our politician’s overspending. A small reserve could be exempt so countries could maintain some reserve currencies. The U.S. has limits on how much money FDIC and other bank insurance covers on bank deposits and we should do the same with foreign reserves of our currency. It would help end some of this mercantilism.

    We just have to stop selling the goose that lays the golden egg. I am afraid we have sold almost a controlling interest in it already.

    Tom T.

  4. China Watcher says:

    As the administration is conducting these negotiations, the TPP is a model of non-transparency and non-reciprocity. THIS is what constitutes a 21st Century trade agreement?1? Everyone should look at the new document hammered out by CPA and add their signature now. Then send a copy to your elected officials and to those who are challenging them. Let’s repudiate this now, before it causes real damage to American interests.

    • D.M.W. says:

      What is it that we need to sign and send to our elected officials? I’m more than ready. I’m Tired of getting whomped on by our government. Now they want to take American tax dollars and buy goods from non-American workers? I don’t think so. It’s past time to get tough.NAFTA has ruined our jobs. Now this is just getting worse and it’s all done in secret? I’ll check back. Let me know I’ll sign.

      • D.M.W. says:

        Right. I figured it out. I found the document and started to read it. Then decided it was a waste of my time, because I’m not a company or organization- so “I” have no say. Well “I” am affected.”I” am an American. My husband has an Associate’s degree in Quality Control and a bachelors in Aviation and Business Management. Because of all the lost manufacturing jobs, he has NEVER worked in his field. In fact he was out of a job for six years after 9/11(Thank you-NAFTA and AL-Qaeda). Now they want to spend our tax dollars in other countries for other countries goods, benefiting other countries, which now have my husband’s job. And we sit here with him working for Wal-Mart (not a livable wage, by the way) and a $40,000.00 school loan we struggle to pay back. I guess it is true America’s government is run by the corporations and their lobbyists-not by the American people. Americas screwed, because the LITTLE PEOPLE have NO SAY! Sorry China Watcher this rant is for whoever wrote the document. I’ll check back to see if they’ve come up with something for the “little people” to sign.

        • DMW: Sorry about the organization/company limitation on the 21st Century Trade Principles, which are linked in the “Action: Sign on to 21st Century Trade Agreement Principles” box on this page. We had good luck with an organization/company signatory effort on currency manipulation in the past, so followed that model. It seems you need tens of thousands of individual person signatures to make a difference, and we’re not sure our readership is enough to generate that volume.


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