Buy America DA - Summer

7/31/2019 Buy America DA - Summer

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1NC


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Disadvantage


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1NC Buy America Disadvantage

G-20 summit has created a shift away from protectionist legislation countries are turning outwards towards tradePTI 6/20 (Resist protectionism, keep markets open: G-20 tells nationshttp://zeenews.india.com/business/news/2012-g-20-mexico-summit/resist-protectionism-keep-markets-open-g-20-tells-nations_54075.html)

Los Cabos: In order to boost global demand and achieve sustainable growth, the G-20 leaders haveasked the member nations and other countries to resist protectionism and keep marketsopen. "Resisting protectionism and keeping markets open," said the Los Cabos Growth andJobs Action Plan adopted at the 2-day summit here, which among others was attended by Prime Minister

Manmohan Singh. As the global economic risks and uncertainties have increasedsubstantially, it said, "our collective focus now is to strengthen demand, growth, confidence andfinancial...We have agreed today on a globally coordinated economic plan to achieve those goals through

our framework for strong, sustainable and balanced growth." Besides underlining the need fordecisively dealing with the sovereign debt problem in the Eurozone countries, the ActionPlan calls for "boosting demand and economic growth, and reducing persistently highand rising unemployment in many advanced economies, especially among youngpeople". It also underlined the need for dealing effectively with spike in oil prices in wake of geopoliticalrisks in an environment of limited spare capacity and modest inventories. The priority, it added should beto ensure that emerging markets maintain a strong and sustainable growth path that contributes to theglobal recovery and quality job creation. Calling for "stronger actions" to promote growth and stability,the Action Plan said, "we need to intensify our efforts to reduce both internal and external imbalances"and address problems pertaining to high fiscal deficits. Efforts, it added, should be made to minimiserisks and ensure proper functioning of our financial systems, supported by fiscal and monetary policy

actions. In order to address near term risks, the Action Plan said the Euro Area membersof the G-20 would be taking all necessary measures to safeguard the integrity andstability of the area, improve the functioning of financial markets. The United States, itsaid, will calibrate the pace of its fiscal consolidation by ensuring that its public financesare placed on a sustainable long-run path so that a sharp fiscal contraction in 2013 isavoided. The other developed countries will also be taking similar steps to promote growth in the largerinterest of global recovery. Referring to the issue of exchange rate, the Action Planreaffirmed the commitment of the G-20 leaders to "move more rapidly toward market-determined exchange rate systems and enhance exchange rate flexibility to reflectunderlying fundamentals, avoid persistent exchange rate misalignments, and refrainfrom competitive devaluation of currencies". China, it said, was building on its commitment togradually reduce the pace of reserve accumulation, and to allow market forces to play a larger role indetermining movements of the RMB and to increase the transparency of its exchange rate policy. "We

welcome China?s commitment to continue exchange rate regime reform," it added. Oil-exportingcountries, the Plan said, "will continue to pursue productive public investment and encourage privateinvestment, which will have positive regional and global spillover effects, while ensuring fiscal

sustainability given the volatile nature of revenues." The other important components of the Action Planinclude increased investment in infrastructure sector, labour reforms, stability of real estate sector and

strengthening of social safety nets. The progress of the Plan to combat global problems will bereviewed at the St. Petersburg Summit in 2013.
http://zeenews.india.com/business/news/2012-g-20-mexico-summit/resist-protectionism-keep-markets-open-g-20-tells-nations_54075.htmlhttp://zeenews.india.com/business/news/2012-g-20-mexico-summit/resist-protectionism-keep-markets-open-g-20-tells-nations_54075.htmlhttp://zeenews.india.com/business/news/2012-g-20-mexico-summit/resist-protectionism-keep-markets-open-g-20-tells-nations_54075.htmlhttp://zeenews.india.com/business/news/2012-g-20-mexico-summit/resist-protectionism-keep-markets-open-g-20-tells-nations_54075.html


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Federal transportation investment in the United States requirescontractors to abide by Buy American provisions the plan prohibitscontracting with foreign firmsMorton, 5-10-12 (Peter, Buy America spectre rises again Hamilton Spectator, lexis)Canadian companies hoping to bid on the crumbling road and bridge system in the U.S. may find

themselves behind yet another "Buy America" law that would prohibit them frombidding on any government-funded construction project even if it has the smallestamount of federal funding. U.S. Senator Sherrod Brown, a Democrat from the steel-producing Stateof Ohio, convinced the Senate to endorse a newand onerous Buy America regulation as partof a sweeping transportation funding bill called Moving Ahead for Progress in the 21st century

Act, or MAP-21. Brown's amendment, which was accepted by the Senate in March,would prohibit

state governments from contracting outside the country if any part of the project

receives U.S. government funding. Both the Senate and the House of Representatives are incomplex negotiations to finalize the law, which is also known as the Surface TransportationReauthorization Bill. "The proposed MAP Act includes provisions that represent a significant departurefrom existing 'Buy America' preferences," Amgad Shehata, chair of the Washington-based Canadian

American Business Council, said in a letter to the Senate and the House conferees this week. "Specifically,

if at least one contract for a project receives any federal funding under this act, then allcontracts for a project, regardless of their funding source, would be subject to BuyAmerica preferences," Shehata said. Canada and the U.S. have long butted heads on various BuyAmerica laws dating as far back as 1933. The various Buy America provisions try to create U.S. jobsthrough restrictions on imported construction materials, mostly steel and iron. Canada thought it boughtsome peace in February 2010 when the two governments agreed on reciprocal bidding in each other'scountries on infrastructure projects such as bridges and roads after President Barack Obama brought in a$787-billion economic stimulus bill.

Buy American requirements on transportation infrastructure trigger atrade war that causes global depression and undermines world tradeOppenheimer, Correspondent for the Miami Herald, 9(Andres, February 5, Reject Buy American

clause or risk a trade war Salt Lake City Tribune, lexis)Forget about Iraq, the Middle East or searching for a new White House puppy. President Barack Obama's first keydecision will be whether to support a "Buy American" clause. It is strongly supported by hisDemocratic Party and labor unions, but U.S. allies say it would trigger a trade war like the onethat led to the Great Depression. Which way will Obama go? Will he risk antagonizing Senate MajorityLeader Harry Reid, House Speaker Nancy Pelosi and the AFL-CIO, whose support he badly needs to pass his almost $900 billioneconomic stimulus package? Or will he heed the calls from the European Union, Canada, Brazil and other U.S. trade partners, aswell as key Republicans in Congress? Or, to put it more bluntly, will Obama conclude that he has little choice but to govern with thesolid support of the Democratic majority in Congress or will he risk sacrificing some Democratic votes in exchange for a small

minority of Republicans in hopes of building a bipartisan, centrist, legislative base? The "Buy American" clause,included in the administration's stimulus package that the House passed last week, calls for ensuring that funds forinfrastructure projects such as highways and bridges be only used to buy U.S.-madesteel, iron and other materials. A Senate version of the bill further demands that the

stimulus package's funds for infrastructure projects be used exclu-sively to purchaseU.S.-made manufactured goods, such as shovels or cranes. "It's basic common sense," AFL-CIO policy director TheaLee explained to me. "American taxpayers will spend close to $1 billion to stimulate the U.S. economy and create U.S. jobs. To thelargest extent possible, within our international obligations, we should try to use those dollars to buy American products."

Supporters of the bill reject claims that the "Buy American" clause would violate the spirit --if not the letter -- of U.S. international trade commitments. "There are waivers andexceptions built into our trade obligations that allow us to give a preference to American goods to a certain level," Lee said. "There isno reason why not to take advantage of provisions that we have negotiated into these trade agreements." Leading U.S. trade partners

see it differently. Passage of the "Buy American" clause would lead to "a rush of protectionist


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actions" that could "create a downward spiral like the world experienced in the 1930s,"Canadian Ambassador Michael Wilson said in a letter to congressional leaders earlier this week. Brazilian President Luiz Inacio Lula

da Silva told reporters that "protectionism at this moment will aggravate the crisis." Trade experts saythat Brazil would be among the most hurt by the "Buy American" clause because itexports steel to the United States and -- unlike Canada, Mexico, Chile or Peru -- does not have a free tradeagreement with Washington that would exempt it from many of the measure's provisions. Pro-business groups note that U.S.

exports fell by nearly 25 percent in December, and that other countries are suffering similar drops in trade. "In that context, anyU.S. moves that are seen as protectionist could really give a moral sanctionto governments around the world to raise trade barriers themselves," says JohnMurphy, vice president of the U.S. Chamber of Commerce. Asked by ABC News about his position on the "Buy American" provision,

Obama said Tuesday that he wants to avoid measures that would "signal protectionism," adding that there is "a potentialsource of trade wars that we can't afford at a time when trade is sinking all across theglobe." While critics of the "Buy America" clause cheered Obama's words -- it was the president's first indication of where he'sleaning since Vice President Joe Biden had made comments that appeared to back the measure last week -- they caution that theWhite House may back a watered-down version of the bill that could still be perceived by U.S. trade partners as protectionist. My

opinion: Your statement was right on the mark, Mr. President!What's important is not only the letterof the law, but the signal it sends to the rest of the world. If it gives U.S. tradepartners an excuse to pass their own "Buy national" laws, U.S. exports will plummet

even more and more U.S. jobs will be lost than this provision would help save. Now, pleasemake sure that "Buy American" doesn't turn into "Bye, America."

These trade conflicts culminate in global nuclear war and nuclear terrorismPanzner, Instructor New York Institute of Finance, 8 (Michael J.-, Financial Armageddon: Protecting

Your Future from Four Impending Catastrophes, P. 136-138)

Continuing calls for curbs on the flow of finance and trade will inspire the United States and other nations tospew forth protectionist legislation like the notorious Smoot-Hawley bill. Introduced at the start of the Great Depression,it triggered a series of tit-for-tat economic responses, which many commentators believe helped turn a serious economic downturn

into a prolonged and devastating global disaster. But if history is any guide, those lessons will have been long forgottenduring the next collapse. Eventually, fed bya mood ofdesperation and growing public anger, restrictions ontrade, finance, investment, and immigration will almost certainly intensify. Authorities and ordinary citizens will likelyscrutinize the cross-border movement of Americans and outsiders alike, and lawmakers may even call for a general crackdown on

nonessential travel. Meanwhile, many nations will make transporting or sending funds to other countries exceedingly difficult.Asdesperate officials try to limit the fallout from decades of ill-conceived, corrupt, and reckless policies, theywill introduce controls on foreign exchange. Foreign individuals and companies seeking to acquire certainAmerican infrastructure assets, or trying to buy property and other assets on the cheap thanks to a rapidly depreciating dollar, willbe stymied by limits on investment by non-citizens. Those efforts will cause spasms to ripple across economies and markets,disrupting global payment, settlement, and clearing mechanisms. All of this will, of course, continue to undermine business

confidence and consumer spending. In a world of lockouts and lockdowns, any link that transmitssystemic financial pressures across markets through arbitrage or portfolio-based risk management, or thatallows diseases to be easily spread from one country to the next by tourists and wildlife, or that otherwise facilitates unwelcome

exchanges of any kind will be viewed with suspicion and dealt with accordingly. The rise inisolationism and protectionism will bring about ever more heated arguments anddangerous confrontations over shared sources of oil, gas, and other key commodities as

well as factors of production that must, out of necessity, be acquired from less-than-friendly nations. Whether involving raw materials used in strategic industries or basic necessities such as food, water,and energy, efforts to secure adequate supplies will take increasing precedence in a world wheredemand seems constantly out of kilter with supply. Disputes over the misuse, overuse,and pollution of the environment and natural resources will become morecommonplace. Around the world, such tensions will give rise to full-scale militaryencounters, often with minimal provocation.In some instances, economic conditions will serveas a convenient pretext for conflicts that stem from cultural and religious differences.


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Alternatively, nations may look to divert attention away from domestic problems bychanneling frustration and populist sentiment toward other countries and cultures. Enabledby cheap technology and the waning threat of American retribution, terrorist groups willlikely boost the frequency and scale oftheir horrifying attacks, bringing the threat of random violence to awhole new level. Turbulent conditions will encourage aggressive saber rattling and

interdictions by rogue nations running amok. Age-old clashes will also take on a new,

more heated sense of urgency. China will likely assume an increasingly belligerent posturetoward Taiwan, while Iran may embark on overt colonization ofits neighbors in the Mideast.Israel, for its part, may look to draw a dwindling list of allies from around the world into a growing number of conflicts. Some

observers, like John Mearsheimer, a political scientist at the University of Chicago, have even speculated that an intenseconfrontation between the United States and China is inevitable at some point. More than a fewdisputes will turn out to be almost wholly ideological. Growing cultural and religious differences will betransformed from wars of words to battles soaked in blood. Long-simmering resentments couldalso degenerate quickly, spurring the basest of human instincts and triggering genocidalacts. Terrorists employing biological or nuclear weapons will vie with conventional forces using jets,cruise missiles, and bunker-busting bombs to cause widespread destruction. Many will interpret stepped-upconflicts between Muslims and Western societies as the beginnings of a new world war.


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Counterplans


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1NC Buy America Counterplan

The United States federal government should repeal requirements thatfunds authorized to be appropriated for transportation infrastructureprojects use steel, iron, and manufactured products produced in the UnitedStates. The United States federal government should

Any permutation severs investment in the United States requirescomplying with current Buy American provisions that require investmentto be in domestic US companiesElkins, Inspector-General Environmental Protection Agency, 11 (Arthur, May 4, Stimulus Status:Two Years and Counting Testimony before the House Transportation and Infrastructure Committee,lexis)

Buy American and Davis-Bacon Provisions The Recovery Act includes Buy American and Davis-Bacon provisions. Specifically, section 1605 prohibits the use of Recovery Act funds for a

project unless all of the iron, steel, and manufactured goods used in the project areproduced in the United States. The regulation requires that this prohibition be consistent withU.S. obligations under international agreements, and provides for a waiver under certain circumstances.

A manufactured good that consists in whole or in part of materials from another country may beconsidered domestic if it meets the substantial transformation test. Section 1606 of the Recovery Actrequires all laborers and mechanics employed on projects that are funded in whole or in part by theRecovery Act be paid Davis-Bacon Act rates. These are rates not less than those prevailing on projects of acharacter similar in the locality as determined by the Secretary of Labor.

Federal government has requirements for Buy America provisions thecounterplan eliminates themTurmelle, 6-4-12 (Luther, Rep. Chris Murphy pushes Buy American agenda New Haven Register,lexis)

U.S. Rep. Chris Murphy, a candidate for the U.S. Senate, is urging the leadership of two legislativecommittees crafting the next federal highway bill to strengthen requirements mandating American-madecomponents on transportation projects. Murphy, D-5, sent a letter signed by 47 of his colleagues to thechairs of the House Transportation and Infrastructure Committee and the Senate Environment andPublic Works Committee. The Transportation and Infrastructure Committee is chaired by John Mica, aRepublican congressman from central Florida, while California Sen. Barbara Boxer, a Democrat, is

chairwoman of Senate Environment and Public Works Committee. Existing Buy American

requirements mandate that all steel, iron and manufactured goods used to construct

federal highway projects are produced in the U.S. And although Boxer is one of thecommittee leaders whose opinion Murphy is trying to sway, his letter is openly critical of how her home

state used a loophole in the requirements for federal road and bridge projects. "Currently, state andlocal governments can split infrastructure projects into separate contracts, complying

with Buy America and receiving federal dollars for one portion, and using other sourcesfor the non-Buy America compliant remainder of the project," Murphy said. "The State ofCalifornia used this strategy for its new Bay Bridge, sending hundreds of millions of dollars toChina for work that should have been done by Americans."


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1NC States Counterplan

The 50 State governments, territories, and Washington DC should establishstate infrastructure banks for investment in _______

State funding for transportation infrastructure investment relieves themfrom compliance with Buy American provisionsTurmelle, 6-4-12 (Luther, Rep. Chris Murphy pushes Buy American agenda New Haven Register,lexis)U.S. Rep. Chris Murphy, a candidate for the U.S. Senate, is urging the leadership of two legislativecommittees crafting the next federal highway bill to strengthen requirements mandating American-madecomponents on transportation projects. Murphy, D-5, sent a letter signed by 47 of his colleagues to thechairs of the House Transportation and Infrastructure Committee and the Senate Environment andPublic Works Committee. The Transportation and Infrastructure Committee is chaired by John Mica, aRepublican congressman from central Florida, while California Sen. Barbara Boxer, a Democrat, is




state used a loophole in the requirements for federal road and bridge projects. " Currently, state and

local governments can split infrastructure projects into separate contracts, complyingwith Buy America and receiving federal dollars for one portion, and using other sources

for the non-Buy America compliant remainder of the project," Murphy said. "The State

of California used this strategy for its new Bay Bridge, sending hundreds of millions of dollarsto China for work that should have been done by Americans."


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Uniqueness


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Trade


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Trade High Now

Global trade between developing nations is increasing, trade betweendeveloped nations is still at pre-recession levelsEconomist.com 5/2/2012 (Global trade Worlds apart May 2nd 2012, 10:50 by Buttonwood,http://www.economist.com/blogs/buttonwood/2012/05/global-trade)

SUCH is the daily blizzard of economic data that it is hard to get a good perspective. But a researchnote from Klaus Baader of Societe Generale highlights the amazing shift of economic powerfrom the developed world to the developing, simply by focusing on global trade. Tradecollapsed in 2009, in the wake of the financial crises, in part because it was so hard to get trade finance .There was then a rapid recovery in 2010 before growth began to tail off last year; annualgrowth in 2011 was 5.6% (based on data from the Dutch CPB Bureau for Economic Policy Analysis,

which are well worth a look). The overall trade numbers are now higher than they werebefore the crisis. But when you break the numbers down, you can see that trade in thedeveloped economies has yet to recover its 2008 level; indeed it is back where it was in2006. In contrast, imports in the developing economies are more than 40% higher than

their 2009 low. Go back even further and you can see that imports in Asia, eastern European and thecombined middle-east and Africa region are all between two and three times higher than they were in2000. Of course, much higher commodity prices have boosted the spending power of many countries.Plenty of multinationals have spotted these trends already, of course; and any business worth its salt ispursuing the emerging markets. But is rather sobering that the developed world looks so completelymoribund.

Trade expected to grow within the next 15 yearsBonney 6/27(Joseph, Senior Editor at The Journal of Commerce Online, US Global Trade Forecastto Grow 4.7 Percent,http://www.joc.com/importexport/us-global-trade-forecast-grow-47-percent)

U.S.-based companies imports and exports will rise 4.7 percent annually during thenext 15 years, led by exports to feed consumer demand in emerging markets, a ccording to a new

report by HSBC Commercial Banking. The

HSBC Global Connections Trade Forecast,

produced with Delta Economics, forecasts growth despite global economic difficulties,notably in Europe. During the next five years, U.S. exports are expected to rise fastest toemerging markets led by increases of more than 8 percent annually to Peru, Turkey andBrazil. U.S. exports to China are forecast to outpace U.S. imports from China during thelast five year. China and Germany are expected to leapfrog the U.S. to become theworlds largest importers by 2026, the report said.

Global Trade increasing nowWSJ 6/26 (Wall Street Journal, Global Trade Confidence Stable Despite Worries,http://blogs.wsj.com/economics/2012/06/26/global-trade-confidence-stable-despite-worries/)

HSBCs Trade Confidence Index, a semiannual survey of exporters and importers in 20 countries,

ticked up slightly in the latest reading published Tuesday. The overall reading was 113,little changed from the 112 score last October.A reading below 100 indicates a negative outlook;above 100 indicates a positive view.More than 70% of the companies surveyed expectedtrade volumes to stabilize or grow in the next six months. Businesses are stillcontinuing to trade. They are cautious, but we are still seeing growth, said Noel Quinn,HSBCs regional head of commercial banking, Asia Pacific, where he oversees lending to businesses across17 countries.
http://www.joc.com/importexport/us-global-trade-forecast-grow-47-percenthttp://www.joc.com/importexport/us-global-trade-forecast-grow-47-percenthttp://www.joc.com/importexport/us-global-trade-forecast-grow-47-percenthttp://www.joc.com/importexport/us-global-trade-forecast-grow-47-percent


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Trade increasing slowlyWSJ 6/26 (Wall Street Journal, Global Trade Confidence Stable Despite Worries,http://blogs.wsj.com/economics/2012/06/26/global-trade-confidence-stable-despite-worries/)

And the U.S. economy, while still sluggish, performed somewhat better over the past sixmonths, giving a boost to companies that sell to the U.S. Its not anything like what weexperienced in 2008 and 2009, said Mr. Quinn. Businesses are cautious, but they haventstopped making decisions. He said that businesses are enacting fine-tuning adjustments to

business plans rather than making binary moves to cancel projects and investments, though he added:

Im not trying to say everything is rosy. To cope with slower growth, companies are placingsmaller orders and ordering more frequently to prevent being stuck with inventory theycant sell. In terms of longer-term capital projects such as infrastructure, Mr. Quinncited places such as Bangladesh, Indonesia and Malaysia, wheres theres reasonabledemand for finance and ample supply of liquidity to meet that demand as brightspots.


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Trade Brink

Trade on the brink a new round of massive disputes on Buy American willundermine the entire system

Washington Post, 9(January 28, Trade Test; Why President Obama and his party should resistthe cry to Buy American lexis)

IN THE TWO-PLUS years since he announced his candidacy for president in January 2007, BarackObama has managedto finesse the issue of trade. At times, such as when he suggested that he would renegotiate the North American FreeTrade Agreement, he has veered toward protectionism. At others, such as when he voted for a free-trade pact with Peru, he has

recognized the job-creating power of U.S. exports. Now that he is president, Mr. Obama will have to definehimself more clearly. The fiscal stimulus bill making its way through Congress provides an early opportunity: Mr.Obama should say no to "Buy American" provisions in the $825 billion measure. Ascurrently written, the bill would prohibit the use of imported steel on tens of billions of dollars'worth of infrastructure projects, including work on federal buildings and public schools.(There are a few exceptions for those willing to spend a lot of time and money on paperwork.) This is a dramaticextension of current "Buy American" rules for steel, which apply only to highway construction. "Buy

American" sounds patriotic, but paying more than necessary for steel diverts resources that could create jobs in otherindustries. Worse, it raises the prospect of retaliation against American exporters by U.S.trading partners. The director-general of the European steel industry trade associationalready has threatened to take the United States before the World Trade Organization ifthe steel provision passes. (Notably, European stimulus programs do not bar U.S. steel or other products -- yet.) "Buy American"would violate the Nov. 15 G-20 joint declaration, which committed the United States to "refrain from raising new barriers toinvestment or trade in goods and services" until November 2009. We do not underestimate the plight of the U.S. steel industry andits workers. Just five months ago, steel plants were operating at 91 percent of capacity; today, because of the collapse in automakingand construction, capacity utilization is 43 percent, according to the Iron and Steel Institute. Alas, the same could be said of manyother industries -- including some that, unlike steel, do not stand to benefit from the federal effort to save General Motors andChrysler. Caterpillar, a huge exporter, just laid off 20,000 workers. We can see why U.S. Steel might support a law that puts

Caterpillar's overseas sales at risk. But why is it in the national interest? Once an engine of global growth, tradeis already set to decline by 2 percent in 2009, according to the World Bank. It could collapsealtogether if countries start shutting out one another's goods in a

shortsighted effort to salvage domestic industries. The United States startedone such trade war in 1930, when it enacted a tariff increase that promptedEuropean retaliation -- thus helping turn a bad recession into the GreatDepression. Better to learn from this history than to repeat it.


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Buy America


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Buy America Now

The bill to buy in America is passed the House- it advocates locally madeiron and steel for domestic construction worksThe Public Citizen, 12 (Call Now: Urge Your Senators to Put America Back to Work, DOA:7/14/12, The Public Citizen- Protecting Health, Safety, and Democracy,http://action.citizen.org/campaign.jsp?campaign_KEY=26590&t)KW

On January 28, the House passed a strong stimulus bill that included provisions that gavepreferences to locally made iron and steel in transit projects and school buildings, and tolocally made uniforms for the Transportation Security Administration. The Senate willvote this week on their stimulus package, which expands on some of these provisions. Apack of multinational corporations are trying to get the Buy America provisions strippedfrom the Senate bill. Tell your members of Congress to maintain and expand upon these provisions.


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A2: Loopholes

Loopholes have been closed increased transparency prevents skirtingaround Buy America requirementsPR Newswire, 7-6-12 (USW Applauds Transportation Bill lexis)The bill, which passed both houses of Congress on Friday with bipartisan support, allows for more than$100 billion to be spent on highway, mass transit and other transportation programs through 2014, and

will create or sustain three million jobs while also avoiding a huge rate increase on student loans fornearly 7 million college students. "By signing this bill, President Obama shows that he is continuing tostand up for good, middle-class jobs and affordable education for all Americans," said USW International

President Leo W. Gerard. "Rebuilding our transportation infrastructure means we arecreating jobs, we are supporting manufacturing, and we are keeping pace with our global competitors."The new law also strengthens "Buy America" provisions by adding much-neededtransparency for those seeking to waive the Buy America preferences and also bylimiting a long-time loophole to make sure that highway projects receiving federal fundscan no longer be divided into smaller contracts to end run the application of BuyAmerica, thus ensuring that the transportation projects are completed using American-made iron, steel and manufactured goods. "Especially since we just celebrated our nation's

birthday, we should remember that 'Buy America' laws like this are an investment in Americancompanies, American workers, and the American economy," Gerard said.


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Links


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Federal Government

Federal government has requirements for Buy America provisions statescan opt out if they refuse federal fundingTurmelle, 6-4-12 (Luther, Rep. Chris Murphy pushes Buy American agenda New Haven Register,lexis)U.S. Rep. Chris Murphy, a candidate for the U.S. Senate, is urging the leadership of two legislativecommittees crafting the next federal highway bill to strengthen requirements mandating American-madecomponents on transportation projects. Murphy, D-5, sent a letter signed by 47 of his colleagues to thechairs of the House Transportation and Infrastructure Committee and the Senate Environment andPublic Works Committee. The Transportation and Infrastructure Committee is chaired by John Mica, aRepublican congressman from central Florida, while California Sen. Barbara Boxer, a Democrat, is




state used a loophole in the requirements for federal road and bridge projects. "Currently, state andlocal governments can split infrastructure projects into separate contracts, complyingwith Buy America and receiving federal dollars for one portion, and using other sources

for the non-Buy America compliant remainder of the project," Murphy said. "The State

of California used this strategy for its new Bay Bridge, sending hundreds of millions of dollarsto China for work that should have been done by Americans."

Receiving any amount of federal funding means contractors must abide byBuy American provisionsMorton, 5-10-12 (Peter, Buy America spectre rises again Hamilton Spectator, lexis)Canadian companies hoping to bid on the crumbling road and bridge system in the U.S. may find

themselves behindyet

another "Buy America" law that would prohibit them frombidding on any government-funded construction project even if it has the smallestamount of federal funding. U.S. Senator Sherrod Brown, a Democrat from the steel-producing Stateof Ohio, convinced the Senate to endorse a newand onerous Buy America regulation as partof a sweeping transportation funding bill called Moving Ahead for Progress in the 21st century

Act, or MAP-21. Brown's amendment, which was accepted by the Senate in March,would prohibit

state governments from contracting outside the country if any part of the project

receives U.S. government funding. Both the Senate and the House of Representatives are incomplex negotiations to finalize the law, which is also known as the Surface TransportationReauthorization Bill. "The proposed MAP Act includes provisions that represent a significant departurefrom existing 'Buy America' preferences," Amgad Shehata, chair of the Washington-based Canadian

American Business Council, said in a letter to the Senate and the House conferees this week. "Specifically,

if at least one contract for a project receives any federal funding under this act, then allcontracts for a project, regardless of their funding source, would be subject to BuyAmerica preferences," Shehata said. Canada and the U.S. have long butted heads on various BuyAmerica laws dating as far back as 1933. The various Buy America provisions try to create U.S. jobsthrough restrictions on imported construction materials, mostly steel and iron. Canada thought it boughtsome peace in February 2010 when the two governments agreed on reciprocal bidding in each other'scountries on infrastructure projects such as bridges and roads after President Barack Obama brought in a$787-billion economic stimulus bill.


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States have rejected federal funds for infrastructure projects to avoidcompliance with Buy America requirementsGAO, 11(June 29, Funds Supported Many Water Projects, And Federal And State Monitoring ShowsFew Compliance Problems lexis)

Buy American and Davis-Bacon provisions. State officials identified a fewprojects that did notproceed because potential subrecipients either did not want to meet one or more RecoveryAct requirements, such as the Buy American and Davis-Bacon provisions, or did not want toincrease the cost of their projects. For example, local officials in Alabama withdrew theirapplication for a drinking water project because the project was already contractedwithout Buy American and Davis-Bacon wage requirements, and an addendum to thecontract to meet the regulations would have increased the project`s cost. Similarly,officials in all nine states said that a few communities indicated they preferred to havetheir projects funded from the base program, or chose not to apply for or withdrew fromthe Recovery Act funding process to avoid paperwork or the additional costs associatedwith the act`s Buy American or Davis-Bacon requirements.[Footnote 23] For example,Wyoming officials said that potential subrecipients for three clean water projectsrefused funding, citing time constraints or difficulty meeting Buy American requirements.


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In the United States

Investment in the United StatesElkins, Inspector-General Environmental Protection Agency, 11 (Arthur, May 4, Stimulus Status:Two Years and Counting Testimony before the House Transportation and Infrastructure Committee,

lexis)Buy American and Davis-Bacon Provisions The Recovery Act includes Buy American and Davis-Bacon provisions. Specifically, section 1605 prohibits the use of Recovery Act funds for aproject unless all of the iron, steel, and manufactured goods used in the project areproduced in the United States. The regulation requires that this prohibition be consistent withU.S. obligations under international agreements, and provides for a waiver under certain circumstances.

A manufactured good that consists in whole or in part of materials from another country may beconsidered domestic if it meets the substantial transformation test. Section 1606 of the Recovery Actrequires all laborers and mechanics employed on projects that are funded in whole or in part by theRecovery Act be paid Davis-Bacon Act rates. These are rates not less than those prevailing on projects of acharacter similar in the locality as determined by the Secretary of Labor.


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Transportation Infrastructure Investment

The US prefers domestic companies for transportation infrastructureJudis, 9 (John B, February 4, http://www.tnr.com/print/blog/the-plank/those-who-live-glass-houses-more-buy-america, The New Republic Those Who Live In Glass Houses (more On Buy America)

Officials from Canada and European Union have complained loudly that a provision in the Housestimulus bill that requires American steel and iron for infrastructure projects violates the

World Trade Organization rules. But guess what? They don't. The treaty allowed countries to make

exceptions for government procurement for specific industries. The U.S. stipulated iron and steel.The EU--not to be outdone--stipulated drinking water, transportation, telecommunications,and energy. Canada stipulated steel, motor vehicles, and coal. So these complaints--and thesimilar outcry among corporate lobbyists in Washington--is base hypocrisy. And it's too bad thatPresident Barack Obama is listening to them. Todd Tucker of Public Citizen gives the details in "Eyes onTrade." Read it. Tucker concludes: Translated out of trade lingo, both Canada and EU give their nations'

products much more generous preferences than Congress is even considering giving ours. While currentU.S. laws (merely extended in the stimulus bill) give U.S. iron and steel a leg up over theforeign competition for transit projects, Canada and the EU give their firms a leg up over

American companies and products on EVERY aspect of transit funding, and many other governmentpurchases besides.


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Aviation

FAA requires Buy America for steel and productsDOT no date (http://www.dot.gov/buyamerica/index.html#1605, Federal Aviation Administration(FAA) 49 U.S.C. 50101)

Buy AmericanThe FAA will not obligate any funds authorized to be appropriated for any project unlesssteel and manufactured products used in such projects are produced in the UnitedStates.

WaiversThe Administrator has delegated authority to grant waivers to this requirement to Director of Acquisitionand Contracting; Regional Administrators; and Center Directors upon finding that compliance with the

Act would:

(1) It wouldbe inconsistent with the public interest;

(2) The steel and goods produced in the United States are not produced in a sufficient and reasonablyavailable amount or are not of a satisfactory quality;

(3) When procuring a facility or equipment under the Airport and Airway Improvement Act of 1982:

(A) the cost of components and subcomponents produced in the United States is more than 60 percent ofthe cost of all components of the facility or equipment; and

(B) final assembly of the facility or equipment has occurred in the United States; or

(4) Including domestic material will increase the cost of the overall project by more than25 percent.

OtherLabor costs involved in final assembly are not included in calculating the cost of components.
http://www.dot.gov/buyamerica/index.html#1605http://www.dot.gov/buyamerica/index.html#1605http://www.dot.gov/buyamerica/index.html#1605


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Highways

FHWA requires Buy America for steel, iron, and manufactured productsDOT, no date(http://www.dot.gov/buyamerica/index.html#1605, Federal Highway Administration(FHWA) 23 U.S.C. 313 BuyAmerica; 23 C.F.R. 635.410)

Buy AmericaThe Secretary of Transportation shall not obligate any funds unless steel, iron, andmanufactured products used in such project are produced in the United States.

Applies to iron and steel products and their coatings that are to be permanently incorporated into the

project. The FHWA, in its 1983 rulemaking, determined that Buy America did not apply to rawmaterials and waived its application to manufactured products, although in the statute, basedon the public interest. Lack of adequate domestic supply resulted in a 1995 nationwide waiver foriron ore, pig iron, and reduced/processed/pelletized iron ore. In 1994, a nationwide waiverfor specific ferryboat parts came into effect.

Waivers

The Secretary of Transportation may waive the requirement ifthe Secretary finds that:

(1) It would be inconsistent with the public interest;

(2) Such materials and products are not produced in the United States in sufficient and reasonablyavailable quantities and of a satisfactory quality; or

(3) Inclusion ofdomestic material will increase the cost of the overall project contract bymore than 25 percent (this is a standing waiver codified in regulations when alternate biddingprocedures are used).

OtherLabor costs involved in final assembly are not included in calculating the cost of components.

U.S. international obligations (World Trade Organization Government Procurement Agreement, U.S. FreeTrade Agreements, U.S.-EC Exchange of Letters [May 15, 1995], and Canada-U.S. Agreement onGovernment Procurement) do not apply. Read about international agreement obligations.

All waivers have to be posted in Federal Register. All proposed waivers are first posted on the FHWAswebsite for a 15-day comment period prior to publishing the final decision in the Federal Register.

Highway Reauthorization Bill requires Buy American for all steel used intransportation infrastructureUS House of Representatives, 7-6-12 (Cravaack: Buy America to put economy back ontrack Congressional Documents and Publications, lexis)

Importantly, the Cravaack 'Buy America' steel amendment attached to the recent highwayreauthorization bill will create U.S. jobs, secure U.S. steel production, and ensure that moreAmerican steel is used in federal transportation construction projects. Specifically, theamendment closes the 'segmentation' loophole by ensuring that highway and bridgeprojects receiving federal aid cannot be 'segmented' to evade 'Buy America' preferences."The Congressman's 'Buy America' amendment will create private sector jobs for Minnesota workers. I

believe government projects for highway and bridge construction should use not onlydomestic steel, but all domestic products when available. After all, American-paid tax dollarsare being used for these projects," said Kraig Grivette, Maintenance Reliability Technician at United


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Taconite (Cliffs Natural Resources) and Member of USW Local 6860. Previously, Rep. Cravaack wasforced to defend 'Buy America' from attempts to gut two-thirds of existing 'Buy America' requirementsand kill the jobs of the 3900 people directly employed by iron ore operations on Minnesota's Iron Range.

Watch Rep. Cravaack's defense of 'Buy America' here. "Congressman Cravaack's 'Buy America'amendment will greatly benefit the Iron Range. Closing loopholes to import cheap foreign steel andrequiring that highways and bridges are built with American steel will increase jobs here in Minnesota,and not overseas," said Steve Biondich, Millwright at Arcelormittal Minorca Mine and Treasurer of USWLocal 6115.


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Railways

FRA requires Buy American for steel, iron, and manufactured goodsDOT no date (http://www.dot.gov/buyamerica/index.html#1605, Federal Railroad Administration(FRA)

High Speed Rail Program 49 U.S.C. Chapters 244, 246; 24405)Buy America

The Secretary of Transportation may obligate funds for a project only if the steel, iron, andmanufactured goods used in the project are produced in the United States.

Waivers

The Secretary of Transportation may waive the requirement if the Secretary finds that:

(1) It would be inconsistent with the public interest;

(2) The steel, iron, and goods produced in the United States are not produced in a sufficient andreasonably available amount or are not of a satisfactory quality;

(3) Rolling stock or power train equipment cannot be bought and delivered in the United States within areasonable time; or

(4) Including domestic material will increase the cost of the overall project by more than25 percent.

OtherThe requirements only apply to projects for which the costs exceed $100,000.

Labor costs involved in final assembly are not included in calculating the cost of components.

U.S. international obligations (World Trade Organization Government Procurement Agreement, U.S. FreeTrade Agreements, U.S.-EC Exchange of Letters [May 15, 1995], and Canada-U.S. Agreement onGovernment Procurement) do not apply. Read about international agreement obligations.

National Railroad Passenger Corporation (AMTRAK)49 U.S.C. 24305Domestic Buying Preferences

Amtrak shall buy only:

(A) unmanufactured articles, material, and supplies mined or produced in the UnitedStates; or

(B) manufactured articles, material, and supplies manufactured in the United Statessubstantially from articles, material, and supplies mined, produced, or manufactured inthe United States.

WaiversThe Secretary may exempt Amtrak from this subsection ifthe Secretary decides that:

(A) for particular articles, material, or supplies--


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(i) the requirements are inconsistent with the public interest;

(ii) the cost of imposing those requirements isunreasonable; or

(iii) the articles, material, or supplies, or the articles, material, or supplies from which they aremanufactured, are not mined, produced, or manufactured in the United States in sufficient and

reasonably available commercial quantities and are not of a satisfactory quality; or

(B) rolling stock or power train equipment cannot be bought and delivered in the United States within areasonable time.

OtherThe requirements apply only when the cost of those articles, material, or supplies bought is at least $1million.


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Impacts


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Trade


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Money Shot

Buy American causes retaliatory trade wars escalates globallyXinhua News, 9(February 17, Buy American provision to hurt developing world, trigger trade

war lexis)

The "Buy American" provisions in the 787-billion-U.S. dollar economic stimulus bill, which U.S. President BarackObama signed into law Tuesday, will hurt developing world and trigger a global trade war.According to the legislation, the "Buy American" provision, which prohibits the purchase offoreign iron, steel and manufactured goods for any stimulus-funded infrastructureproject, will be "applied in a manner consistent with U.S. obligations under theinternational agreement." That is further explained in separate report language on the bill to clarify that it requiresthe U.S. to comply with obligations under the WTO's government procurement agreement and under theNorth American FTA and other U.S. free trade accords. European nations, Canada and Mexico signed thetrade deals that guarantee their ability to bid on U.S. government contracts, with theexception of transportation, said David Phelps, executive director of the American Institute for International Steel.However, goods from China, India, Brazil and over 100 developing economies, which

are not members of the government procurement agreement or do not have free tradedeals with the U.S., will be excluded from any stimu-lus-funded infrastructure projects."The thing we know about protectionism is in the end it protects nobody, least of all the poor," warnedBritish Prime Minister Gordon Brown recently at the World Economic Forum in Davos, Switzerland when referring to the "Buy

American" clause. "It would be short-sighted at this time to renege on promises we've made to the poor," he noted. Manyleading U.S. business groups and economists also scolded the "Buy American"provision, warning it would delude the bill's impact and lead to a global trade war. "The'Buy American' provision ...will signal to our trading partners around the worldthat the U.S. is returning to the bad old days of protectionism and economicnationalism," Gary Shapiro, president of the Consumer Electronics Association said in a statement released last week."The promise that the 'Buy American' provisions keep with the letter of WTOcommitments is a meaningless gesture -- it contradicts recent statements byboth PresidentObama and G-20 leaders to avoid protectionism, which exacerbate the global economic crisis," he warned. "Rather thanstimulate the American economy, these provisions will lead to retaliation from abroad and cost pre-cious jobs in the United States,"

he added. Burton G. Malkiel, a professor of economics at the Princeton University, charged that the " Buy American"momentum is "bad economics," andby threatening to destabilize trade and capital flows, "itrisks turning a global recession into a 1930s-style depression." In 1930, just as theworld economy was sinking, the U.S. Congress passed the Smoot-Hawley Tariff Act, which essentially shut off imports into the U.S.,he recalled. "Our trading partners retaliated, and world trade plummeted," said Malkiel. "Most economic historians now concludethat the tariff contributed importantly to the severity of the world-wide Great Depression." "Later, as one of his last acts, PresidentHerbert Hoover made the situation even worse by signing a 'Buy America Act' requiring all federal government projects to use

American materials," said the Princeton professor, the author of "A Random Walk Down Wall Street." "We must avoidrepeating the disastrous mistakes of the past," he warned. Douglas A. Irwin, an economics professor atDartmouth, agreed that the U.S. should learn lessons from the past. "That might sound reasonable, but history has shown that 'BuyAmerican' provisions can raise the cost and diminish the effect of a spending package," said Irwin. In an article published by The

Wall Street Journal, Irwin stated that in rebuilding the San Francisco-Oakland Bay Bridge in the 1990s, the California transitauthority complied with state rules mandating the use of domestic steel unless it was at least 25 percent more expensive thanimported steel. A domestic bid came in at 23 percent above the foreign bid, and so the more expensive American steel had to beused, he stated. "Because of the large amount of steel used in the project, California taxpayers had to pay a whopping 400 milliondollars more for the bridge," he said. "While this is a windfall for a lucky steel company, steel production is capital intensive, and therule makes less money available for other construction projects that can employ many more workers," he stressed. The two

professors' words were also echoed by former U.S. Trade Representative Carla Hills. "I am very disappointed by 'BuyAmerican' provision ... because I think, actually, theydiminish the number of jobs we can create ifour states and counties have to pay more for the steel and other products and they will


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have less money to spend on creating jobs," she told Xinhua. "I am very much against protectionist measures.Already too many countries raised tariffs ... and regulatory re-strictions," said Hills. "This is just the wrong way to go."

Buy American transportation investment violates WTO rules, sparking aglobal trade battle even if it doesnt the perception of protectionismtriggers the impacts

Inside US Trade, 9 (Business Groups Focused on Killing Buy American Rules in Conferencelexis)

Despite changes the Senate made to the Buy American provisions of the stimulus package, major U.S.exporters late this weekvowed they will work to strike these rules completelyin the conferencecommittee. They are not satisfied with the Senate's approval of an amendment co-sponsored by FinanceCommittee Chairman Max Baucus (D-MT) that stipulates that Buy American provisions in the stimuluswill "beapplied in a manner consistent with the United States obligations under international agreements."The amendment was aimed at assuaging fears that the provision may violate U.S. obligations under the World TradeOrganization Government Procurement Agreement or other bilateral agreements. According to Buy American opponents,the remaining Buy American provisions still pose an obstacle to the international tradecooperation that they say is necessary at this time of global economic crisis. They charge that

the provisions run counter to the U.S. commitment to a G20 pledge in November to "refrainfrom raising new barriers" to trade in the face of the economic crisis. But supporters of the BuyAmerican provisions argue that the business efforts to kill these requirements are not fueled by the substance, but is an early effortto exert leverage over the trade policy of the Obama administration. Getting the provisions stripped from the final bill in conferencemay be hard because the Senate by a strong vote of 65-31 rejected an amendment by Sen. John McCain (R-AZ) to strip all BuyAmerican provisions from the bill. Nine Republicans voted against the McCain amendment on Feb. 4. House Transportation andInfrastructure Committee Chairman Jim Oberstar (D-MN) on Feb. 4 threatened to actively work against the stimulus bill if the "BuyAmerica" language is removed. "If it's not in, I'm not supporting it and I'm bringing a lot of votes with me," he said after a Feb. 4session of the House Steel Caucus. The Senate is expected to wrap up work on the stimulus bill no later than today (Feb. 6), andHouse and Senate leaders are expected to decide on Feb. 9 which conferees to appoint. The conferees will likely include House andSenate leaders and members of the Senate Appropriations and Finance and House Appropriations and Ways and Meanscommittees. During a Feb. 3 press conference, House Majority Leader Steny Hoyer (D-MD) said the Buy American provisions debatewould be worked out in the conference committee. The Senate amendment cosponsored by Baucus with Sens. Byron Dorgan (D-ND), Sherrod Brown (D-OH) and Daniel Inouye (D-HI) was introduced after President Barack Obama publicly said he wanted tofind a compromise so that the stimulus bill would not run afoul of U.S. obligations or send a signal that the U.S. was closing itsmarket. Specifically, the amendment strikes the definitions of the types of projects that would be covered by the "Buy American"provision. It replaces it with language stating that the Buy America provisions "shall be applied in a manner consistent with theUnited States obligations under international agreements." The amendment passed by a voice vote on Feb. 4. As originally written,the Buy American section of the Senate stimulus listed several types of projects that fall under the definition of "a public building orpublic work" project that would be required to use U.S.-produced iron, steel and manufactured goods. It said these terms have themeaning they have under section 1 of the Buy American Act and include airports, bridges, canals, dams, dikes, pipelines, railroads,multiline mass transit systems, roads, tunnels, harbors, and piers. Under the amended language, the projects that would fall underthe "Buy American" provisions would simply be defined as "a public building or a public work" without being further defined. Theprovisions in the Senate bill as originally written did not violate U.S. trade obligations since the projects outlined were carved out inthe U.S. obligations in the WTO Government Procurement Agreement (GPA) and President Obama would also have authority towaive the Buy American provisions for countries that are signatories to the GPA or for other reasons that made them inconsistentwith those obligations, sources said. Proponents say the change means little since the "public building or public work" projects thatwould have been covered in the original language will still be covered in the final bill and those projects are already exempted fromU.S. international obligations because of the exemptions that the U.S. took in the GPA. The rhetoric over the "Buy American"provision exploded after the the House passed its $819 billion stimulus on Jan. 28 in a 244-188 vote that included a provision thatwould require the use of iron and steel in infrastructure projects in the package. The Senate version of the stimulus goes further,requiring the use of iron, steel and manufacturing good in those infra-structure projects. The first direct signal from a senioradministration officials was the comments made by Vice President Joe Biden in a Jan. 29 interview with CNBC, where he refuted

claims that the provisions were protectionist. He said he saw nothing wrong with including them since package was focused ongenerating U.S. jobs. But within five days, Obama told ABC News that it would be "a mistake right now" to include provisions in thestimulus package "that are going to be a violation of World Trade Organization agreements and in other ways signal protection-ism."On Feb. 4 White House Press Secretary Robert Gibbs clarified that Obama wants to make sure "that any legislation that passes is

consistent with trade agreements and doesn't signal a change in our overall stance on trade in these economic times." The "BuyAmerican" measures were the most heated topic of discussion at the annual WorldEconomic Forum meeting in Davos, Switzerland over the weekend, several sources said. By early this week,ambassadors of Canada, the European Union and Australia were weighing into thedebate with arguments that the provisions ran counter to the need to keep the U.S.


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market open at a time of economic crisis. Canadian Ambassador Michael Wilson said in a Feb. 2 letter to SenateMajority Leader Harry Reid (D-NV) and Senate Minority Leader Mitch McConnell (R-KY) that the "negative precedentset here in the United States can have repercus-sions around the globe and couldprovoke debilitating beggar-thy-neighbour policies." In a Feb. 4 interview with BBC World, AustralianTrade Minister Simon Crean said the "Buy American" provisions "invites" retaliation from

trading partners. "[W]hat's the point of America saying 'all steel has to be producedhere' if Korea then starts putting bans on U.S. autos, or U.S. beef?" Crean asked. "It's that

retaliation thatwill send the world into a downward spiral , it will worsen the global

crisis that we're already in." These arguments echoed those made by trade associations and corporations lobbyingagainst the provisions letters sent to Congress and in a Feb. 4 letter to Obama signed by 125 companies and business groups. In aFeb. 4 statement, Public Citizen called criticism from EU and Canadian officials over the "Buy American" provisions "hypocritical"since both Canada and the EU have excluded "broader swaths of their procurement activity" from their GPA commitments than theUnited States. For example, Canada has excluded steel, motor vehicles, coal and all construction contracts issued by theDepartments of Transport within their GPA commitments, according to Public Citizen. On Feb. 3, Jack Layton, leader of the NewDemocratic Party, an opposition party in Canada's parliament, argued on the floor of the House of Commons that Canada shouldinclude its own "Buy Canadian" provisions within the country's economic stimulus package, according to Peter Julian, a parliamentmember and the international trade critic in the party's shadow cabinet. Such provisions would be legal under WTO and NAFTA

obligations, Julian said, but Prime Minister Stephen Harper responded that such provisions could spark a tradewar with the U.S.

Buy American provisions undermine domestic economic success andhamper international trade states should be exempt from theseprovisionsStates News Service, 9(US Chamber of Commerce, September 30, The US-Canada Relationshipin Era of Buy American lexis)

Turning Inward? Today, Canadian and American workers and businesses are facing one of theharshest economic storms in nearly a century. These winds have blown away millions ofjobs and have left thousands of shop doors closed. In the eye of this storm, the first instinct is often to turninward and to protect the remaining businesses and jobs. But that's an approach that simply

won't work. In a new, more competitive global economy, we North Americans need to expand our

engagement with the wider world--not shrink it. That world is changing. Today, nearly half theglobal economy is centered in the Asia-Pacific region. Fierce new competitors and markets of greatopportunity--from China to India to Brazil--are rapidly emerging. But in my view, the United States, at least, is notstepping up on the worldwide stage as boldly, as vigorously, or as smartlyas we must. And that has hugeimplications for Canada. Because of our unique relationship and for other reasons, our two countries have a special obligation to

lead, and to lead by example. Together,we must find ways to compete and excel in a changing globaleconomy. The U.S. Chamber is committed to doing so. That's why we work so closely with the AmCham network around theglobe. That's why we are proud to welcome a number of the best Canadian companies as our member. And that's why the U.S.Chamber helps lead the U.S. Section of the North American Competitiveness Council, working in partnership with the Canadian

Council of Chief Executives, which leads the Canadian Section. It only makes sense that we work together toboost competitiveness and prosperityon both sides of the border. From softwood lumber to country of originlabeling to procurement practices, we don't always see eye-to-eye. Most of the time, we are inclined to view that as normal. In fact,it's a testament to the strong ties of friendship between Canadians and Americans that we can speak plainly to each other. But

there is real reason to be concerned, and possibly even to be angry, about the challenge posedto the U.S.-Canada relationship bythis new era of "Buy American." Last week in Pittsburgh, Canada, theUnited States and 18 other major countries pledged anew to fight protectionism and strengthen theglobal trading system. We can start by acknowledging that these commitments are being honored in the breach.Protectionism can come in many forms--in the guise of economic stimulus, in the form of in-country barriers, orplain old tariffs--but it is protectionism nonetheless. The Case for Open Trade Does this impulse to turn inwardmake sense for the United States? Trade is a larger share of the Canadian economy than it is for the United States. And yet, 57

million American workers are already employed by firms that benefit from exports. One in five American factory


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jobs depends on exports, and one in every three acres planted on U.S. farms is forhungry consumers abroad. Last year, the United States was once again the world's largest exporter, with nearly $2trillion in exports. And our manufacturing output has risen more than 80% since the U.S.-Canada Free Trade Agreement entered

into force. The U.S.-Canada relationship is at the heart of the benefits Americans derivefrom trade. Bilateral commerce surpassed $600 billion last year -- that's a staggering $1.5 billion a day in goods. About300,000 people safely cross our borders every day. The New Isolationism and Its Costs Nonetheless, there are those in

the United States who want to turn inward and erect new barriers to our markets. Some doso out of fear, some out of ignorance, and some out of pure self-interest. These voices reside in both political parties, in labor unions

and, yes, in the business community. This new isolationism threatens to eat away at America's

tradition of openness, freedom, and leadership in the world. "Buy American" may

be the best illustration of how such policies can sound good--but, in fact, hurt the veryworkers and industries they are supposed to protect. I'd like to explore this particular

protectionist threat in some depth because it is significant implications for the Canada- U.S.

relationship. Of course, American companies would like to see American consumers buy their products. But ninety-fivepercent of the world's consumers don't live in the United States. They live somewhere else.Wewant them to "Buy American," too, at least some of the time. And the way to do that is throughan open trading system where consumers--not the govern-ment--decide

what they are going to buy. In February, "Buy American" rules were inserted into theeconomic stimulus package, known as the Recovery Act. The Chamber helped get them modified sothey did not violate our international trade agreements. Canada's voice was an important one at thatmoment as well. This amendment resolved many difficulties at the federal level. However, tens of billions of dollars inRecovery Act spending is being channeled to states and municipalities, many of whichare not constrained by those international agreements. Outside of road building, U.S. statesand municipalities have never been forced to comply with "Buy American" rules in the past. Nonetheless, the Office ofManagement and Budget has required states and municipalities to complyfully with the Recovery Act's "Buy American" mandates. This is

unprecedented . Recall the context here of economic crisis and a stimulus package that is intended to spend money and

create jobs quickly. This isn't just nativist and jingoistic. It's self-defeating. It is retardingeconomic recovery. The "Buy American" requirement for U.S.-made steel intransportation infrastructure projects has not been a huge shock to the system becausesimilar rules have been around for 30 years. But to give you a cast study, just look at the $130 billion NorthAmerican water and wastewater sector, where we've got a real mess on our hands. Canadian firms are now being excluded from U. S.municipal contracts. Next month, retaliation by Canadian municipalities could result in billions of dollars in lost business for U.S.

companies. Also, the "Buy American" rules are being interpreted in a way that bars some U.S.-based manufacturers from bidding on projects. That'sbecause many U.S. manufacturersrely on global production chains that integrate components from U.S. and foreign sources. Americanmanufacturers are finding it difficult to comply with "Buy American" rules because it isoften impossible to avoid sourcing at least a portion of their content from othercountries. The Recovery Act included $7 billion in funding for municipal water and wastewater projects. The HouseTransportation and Infrastructure Committee reports that each $1 billion in infrastructure investment creates about 35,000 jobs

and an additional $6 billion in economic activity. Do the math. To borrow a phrase from the White House, this modest portion of theRecovery Act funds could "save or create" more than 200,000 American jobs -- if they weren't tied up in "Buy American" red tape.And more than $40 billion in economic growth to boot -- just in this sector. But when the housing and school construction fundingstarts to move, you can be sure we'll be hearing more about the cost of "Buy American" rules in those sectors. In August, aftermeeting with Prime Minister Harper, President Obama said: "We have not seen some sweeping steps toward protectionism. This hasin no way endangered the billions of dollars of trade taking place between" Canada and the United States. The Chamber's StudyWhile this may be true in general, it is not true of "Buy American." This month, the U.S. Chamber issued a study, entitled Trade

Action - or Inaction: The Cost for American Workers and Companies. The study found thatwhile "Buy American" rulesin the Recovery Act will create a limited number of U.S. jobs, the gains will quicklyevaporate if other countries implement "buy national" policies in their own stimulus


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programs. If foreign governments lock U.S. companies out of just one percent of thistotal spending, the net U.S. job loss could surpass 170,000. That's a big number. Butwhat wouldhappen if retaliation spiraled beyond "just one percent" to five percent? To ten percent? Beyond the coldstatistics, these problems have a human face as well. On the Chamber's website, we have profiles ofsmall businesses such asAquarius Technologies of Wisconsin, and Aqua-Aerobic Systems of Illinois, that are definitely facing a crisis of lost

sales and potentially large layoffs due to "Buy American" rules.Tom Pokorsky, president of

Wisconsin-based Aquarius Technologies, has said: "Buy American has stopped U.S. wastewater work this year. I'm surviving by

selling to Canada." It's Not Too Late It's not too late. The White House Office of Management and Budget -- OMB -- has the authority to fix this mess. The U.S. Chamber and many other voices in the American businesscommunity have submitted comments to OMB urging it to use that authority to lift the unprecedentedburden of "Buy American" mandates from states and municipalities. At some point in the weeksahead, OMB will issue its so called "final guidance" that may reflect that input. It could fix this problem. To press for that outcome,the U.S. Chamber has conducted an intense public affairs and lobbying campaign. I personally have given hundreds of mediainterviews on this topic since January, and the news media has done a better and better job getting the story out about the cost of"Buy American." We've provided technical and legal advice on how to fix the problem. And we're adding our lobbying muscle as well.The Canadian embassy and Canadian business groups have also done an excellent job making the case in Washington for relief from

these counterproductive rules. As you know, Canada has also proposed to the United States that ourtwo nations negotiate a bilateral agreement that would guarantee mutual openness ofour procurement markets at the federal, state and provincial, and municipal levels. TheU.S. Chamber of Commerce has expressed support for this proposal in comments to the Office of the U.S. Trade Representative,though the OMB action I described above is our urgent priority. Such a negotiated agreement could take years, and the U.S. federalsystem makes it challenging. The U.S. federal government lacks the authority to negotiate such an agreement on behalf of states andmunicipalities without their consent, and winning that consent could take months or even years. This is precisely why the Canadiangovernment is seeking this two-step approach -- regulatory action now, and a negotiated agreement later. A Call for Leadership

The solution to the protectionist threat is stronger trade leadership from the new U.S.administration. We believe the Obama administration will be stuck playing defense againstprotectionist proposals such as "Buy American" until it devises a forward-looking tradeagenda of its own. The president has said many of the right things about trade. He has appointed a good man as U.S. TradeRepresentative. But while he has taken on other controversial issues with enthusiasm, his administration seems to be hesitant anduncertain when it comes to trade. Former President Bill Clinton showed that it is possible to be a politically successful Democraticpresident and be pro-trade. It took courage, and it paid off for the country, the American people, and the economy. Ladies and

gentlemen,we cannot let this become an era of protectionism. A trade war wouldfurther destabilize an al-ready shaky world economy. And a constant drip-drip-drip of protectionist measures will slowly but surely erode world tradeand its tremendous benefits. Instead,we must all be forceful advocates for an open androbust world trading sys-tem. Canada and the United States are more than neighbors, more than allies, more thanfriends. At this time of economic hardship for both our nations, one important message I have for you here today is: Do not think weAmericans have forgotten this. Not everyone in the United States, or even in Washington, has lost his head in a nativist fever. Manyof us have heard Ambassador Michael Wilson point out, again and again, that seven million American jobs depend entirely on tradewith Canada. I remain optimistic that we will fix this, and I would ask our Canadian friends to show some patience and forbearance -- but not to sit quietly. Continue to make your voices heard.


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Spirit of the Law

Plan causes retaliatory trade measures by key alliesInside US Trade, 9 (June 12, Trading Partners Continue to Lean on US on Buy AmericanProvisions lexis)

The European Union, Canada, Japan, South Korea and China have all reiteratedcomplaints on the U.S. interim rule that implemented the "Buy American" provisions forfederal procurement in the American Recovery and Reinvestment Act of 2009, accordingto comments released this week. Each of the countries argue, as they have done in the past, that the

rule violates the spirit of a G20 pledge made in April not to create protectionist trade

measures and could lead to retaliatory actions by U.S. trading partners. The countriesalso make new arguments that the rule is too confusing and vague. The provisions on federalprocurement require that nearly all infrastructure projects funded by the ARRA useU.S.-produced iron, steel and manufactured goods as long as doing so does not violateinternational obligations. In their May 29 comments, the European Commission notes that theimplementation instructions are "confusing and complex" and does not clearly identify to federal

procurement officers how to apply the "Buy American" provisions. "This could potentially lead tocontracting officials taking what would appear the easiest manner to comply with thenew provision by de facto excluding foreign suppliers of any procurement funded eithertotally or partially with the ARRA funds," the commission wrote. The commission highlightedthree examples where EU companies have already been impacted by the new provisions: anEU company that claims the Transportation Security Administration has started purchasing from a U.S.supplier over an EU supplier without explanation, some EU companies have been asked to providedocuments not required by the provisions and an EU company that claims it must move into the U.S. orfeels it will be forced out of the market. In its June 1 comments, Canada claims that the provisions "may

cause delays and drive up the cost of projects." "The anticompetitive effects of this shrinkingsupplier base may raise prices for U.S. consumers, decrease product quality, and, insome instances, lead to monopolies and supply bottlenecks in the U.S. market," Canada

wrote. This week, Canadian senior U.S. diplomats met with more than 75 members of Congress in alobbying push to get them to keep "Buy American" provisions out of future legislation. In their comments,Japan requested that the final rule include language similar to the Safe, Accountable, Flexible, Effi-cientTransportation Equity Act: a Legacy for Users (SAFETEA-LU), which allows for a "minimal use" of foreignsteel and iron as long as those materials do not exceed one-tenth of 1 percent of the total contract cost forprojects funded through the stimulus. This, Japan argues, will ensure that the "Buy American" provisionsin the ARRA are not more stringent than similar provisions in the past. Similarly, Korea, in their June 1comments, requested a "minimum threshold on the usage of non-American iron, steel, and manufacturedgoods." Comments are due June 22 on the interim final guidance put out by the Office of Managementand Budget on the local purchasing requirements for state and local government under the "Buy

American" provisions.


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Retaliation Internal Link

Buy American starts a global trade war key trading partners will retaliateMozee, 9(Carla, February 6, What Buy American means for Latin American stocks lexis)A clause in the $900 billion U.S. economic stimulus package, which could be voted on by the SenateFriday afternoon, might mean trouble for some Latin American stocks. The so-called "BuyAmerican" clause, already in the stimulus package passed by the House of Representatives last week, says thegovernment's big infrastructure projects should rely on U.S. steel and iron, and use U.S.-madeequipment. It also calls for government employees uniforms to be made of U.S.-made textiles. The Senate's version also seeks tofavor a broader range of manufactured goods made in the U.S. over those that are made overseas. Should the clause go through as it

stands, one can at least expect "a temporary" pullback in shares of Latin Americanexporters, according to Robb Lutts, chief investment officer at Cabot Money Management. Equity plays The U.S. is keyfor Latin American countries, such as Mexico which sells 84% of its goods to the U.S. In 2007, the U.S. imported morethan $8.6 billion worth of copper, iron and steel from Latin America and the Caribbean, according to U.S. Census Bureau data. Ironand steel imports have more than doubled to $3.92 billion between 2002 and 2007, while imports of copper and related productshave more than tripled to $4.68 billion. Latin American stocks surged back on Dec. 8, when details started to emerge about theincoming Obama administration's plans to launch the biggest infrastructure program in the U.S. since the national highway systemwas created in the 1950s. That day, Mexico's benchmark closed up more than 5%, and Brazil's index shot up more than 8%. Anexchange-traded fund representing the Mexican market (EWW) also jumped by 7.8% as investors poured money into shares ofcompanies poised to earn a cut from the potential bonanza of federal dollars. Among those leading the gains that day, Brazilianintegrated steel producer Gerdau SA (GGB) surged 14%, and Vale (RIO) , the world's largest supplier of steel component iron ore,climbed 10% on their home markets. Mexico's Cemex SAB (CX) soared 27%. Cemex is the largest supplier of cement and ready-mixconcrete to the U.S. Many of these stocks have held onto their December gains so far. It remains unclear whether those companieswould be hit by the "Buy American" restrictions, as they have production plants within the U.S. The restrictions as they stand nowdon't invoke goods made in the U.S. by foreign companies. Cemex, Gerdau, Argentine steel tube producer Tenaris SA (TS) , and

Mexican steel-maker Grupo Simec (SIM) , are among those with extensive production bases in the U.S. But Brazilian steelmakers Companhia Siderurgica Nacional (SID) and Usiminas would be hurt because of U.S. exportrestrictions, according to Raphael Biderman, an analyst who covers the steel, mining, pulp and paper industries at BradescoCorretora in Sao Paulo, And the "Buy American" provisions for textiles could weigh on home-listed shares of Colombian companiesthat export such materials, such as Coltejer SA and Fabricato-Tejicondor SA, said Jairo Agudelo, a textile, commerce and food-sector

analyst at Medellin-based InterBolsa. Trade war? But much more could be at stake should the restrictionslead to a b.A chorus of criticism from U.S. trading partners including Canada, Brazil and

the European Union, was sparked late last month when the House of Representatives first included the rule. "TheU.S. must be fully aware that whatever it does in policy initiatives, and trade policies in particular, theyare likely tobe emulated [on] the world stage," said Guillermo Mondino, head of Latin America Research at Barclays Capital inemailed comments. President Barack Obama earlier this week said that he didn't want to start a U.S. trade war against its partners.The Senate then included a clause stipulating that purchasing provisions will be "applied in a manner consistent with U.S.

obligations under international agreements." The "Buy American" rules wouldn't be good policy for the U.S. as itwould bog down trade activity "if you have all these protection measures," said John Derrick,director of research at mutual-fund company U.S. Global Investors. The firm's U.S. Global MegaTrends fund (MEGAX) , whichfocuses on constructing, engineering and other infrastructure companies, climbed nearly 3% as part of that December rally.

Buy American provisions on transportation infrastructure ignite retaliatorytrade warsDaParma, 9(Ron, March 18, USW Buy American campaign stirs protectionist worries Pittsburgh

Tribune Review, lexis)Rebecca Cooper, a fourth-generation member of the United Steelworkers, is a staunch supporter of agrowing "Buy American" campaign promoted by the union and some domestic manufacturers. But

experts such as veteran steel industry analyst Charles Bradford fear a growing "protectionist"sentiment and efforts to restrict spending of billions in federal stimulus dollars targetedfor infrastructure improvements in Pittsburgh and across the nation. "With the global crisis

we're going through, now more than ever I think we need to take an active first step in safeguardingworking people," said Cooper, of Bloomfield, whose father and grandfather worked for Republic Steel inYoungstown, Ohio. She was among a group of 20 USW members appearing before Pittsburgh City Council


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yesterday, in a show of support for a "Buy American" resolution, saying their aim is to assure thatthousands of American jobs are created and U.S.-made products are purchased with stimulus dollars.More than $1.2 billion is expected to come to Pennsylvania for such things as highway and bridgeimprovements, and Mayor Luke Ravenstahl predicted that stimulus money may create as many as 10,000

jobs in the city. To date, the union has worked to help get the resolution introduced in more than 600

cities, towns and states nationwide, they said. Bradford said such efforts could spark similar

actions in foreign countries -- and even trade wars. Also, they might even hurtsome U.S. companies that rely on materials from other countries to produce theirproducts, he said. "Buy American has been around since the 1980s, and when it happened then, we hadthe same economic problems we have today," he said. Tens of thousands of jobs were lost, with Pittsburghamong the hardest hit in the 1982 recession. "I worry about the downstream consequences," Bradford

said. "So far, China has said they are not going to do anything, but other countries are saying theymay do the same thing." This week, the Mexican government imposed tariffs on 90 U.S.agricultural products and manufactured goods in retaliation for Washington's move toblock Mexican trucks from U.S. highways. Brazilian President Luiz Inacio Lula da Silva warnedthat countries seeking to help their economies should avoid imposing protectionistpolices. There was even a "Buy Indiana" announcement, said Bradford, referring to talk in that stateabout restricting purchases of steel from other states. "This is not about protectionism," said Ike Gittlen of

the USW. He's the union's liaison to the Alliance for American Manufacturing, a partnership that includesthe union and manufacturing companies whose workers are USW represented. "Some people see this asan issue of protectionism, but we see it as seed corn where we get the economy rolling. After that, we doour global buying as we've always done," Gittlen said. "This is strictly an economic common sense thing,that the stimulus is meant to stimulate the American economy and if we spend it offshore, it just doesn'tdo that." "This is ... about using taxpayer dollars to purchase U.S.-made goods," said Christopher J.Masciantonio, director of public policy and government affairs for U.S. Steel Corp. "The language in theresolution will help revitalize the American manufacturing base, which is uniquely capable of creatingfour to five new jobs for each employed manu-facturing worker." City Council yesterday unanimouslyapproved the resolution, which supporters stressed won't violate any existing international trade

agreements. "But the concern I have is that these actions are getting a lot of press and sparkinga great deal of confusion around the world," said David Phelps, executive director of the

American Institute for International Steel, a Washington trade association that represents steel importers.

Stimulus spending will have only a "modest" impact on the domestic steel industry, he said. Nonetheless,concern overseas already has sparked discussion of similar actions in other countries,including Canada.

Buy America triggers protectionism retaliation and tariffsDavis 9 (Bob, January 12, http://online.wsj.com/article/SB123171020324471871.html, Wall StreetJournal , Surge in Protectionism Threatens to Deepen World-Wide Crisis)

A wave of protectionism is swelling around the world that could further damagestruggling economies. Industries are starting to line up in Beijing, Brussels and Washington for import protection. Thathas happened in past downturns, too, but this time the restrictions may bite harder because of the global n

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