President Trump’s April 18, 2017 Executive Order announces that it is “the policy of the executive branch to buy American and hire American.” It demands that federal agencies enforce and comply with all current “Buy American Laws.”
There is nothing remarkable about that. New policy initiatives and statutory changes will come later, presumably with the input of the affected agencies. The Order requires federal agencies to assess and monitor their enforcement and implementation of existing Buy American Laws, including their use of waivers and the impact waivers may have on jobs and manufacturing. Based on the 150-day deadline in the Order, the agency reports are due by September 15, 2017.
The most controversial and most significant changes resulting from President Trump’s Order are likely to come as a result of changes to existing trade agreements. The President’s Order requires the Secretary of Commerce and the United States Trade Representative to assess the impact of all United States free trade agreements and the WTO Government Procurement Agreement. By November 24, 2017, they are to submit a report to the President containing “specific recommendations to strengthen implementation of Buy American Laws.”
Any changes they recommend will likely lead to challenges by U.S. trading partners who have a free trade agreement or who have signed on to the WTO GPA. The United States has more than 19 reciprocal government procurement obligations with other countries, including the 28 Members of the European Union.
In addition to limiting the availability of products and increasing costs inside the United States, any significant modification to U.S. domestic preference laws or free trade agreements could have a direct impact on American companies that export goods and services outside the United States. In particular, such changes could limit the access that American companies now have to government procurement opportunities with U.S. trading partners. Every free trade agreement includes government procurement obligations to “ensure that U.S. goods and services, and suppliers of U.S. goods and services receive national treatment in the government procurement of FTA partners.” These agreements have recently been renewed and expanded. In 2010, the United States entered into a new free trade agreement with Canada to ensure reciprocal commitments under the WTO GPA with respect to provincial, territorial, and state procurement. The WTO GPA was revised in 2014 to ensure that U.S. companies would have the opportunity to participate in central and sub-central government procurement conducted in WTO countries. Retaliation that limits these opportunities won’t be good for many American businesses.