How Overreaching “Trade” Pact Rules Can Undermine Buy American and Other Domestic Preference Procurement Policies

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Today’s “trade” agreements expand far beyond traditional matters, such as cutting tariffs and limiting quotas. One set of “trade” agreement rules even constrain how the public can direct our democratically-elected federal and state governments to spend our tax dollars. These rules set limits on the government procurement policies signatory countries are allowed to implement domestically. Failing to follow these rules can subject a country to trade sanctions under various trade agreements. However, U.S. trade agreement implementing legislation has not altered U.S. procurement law nor required a president to waive Buy American and other preferences. Rather, implementing bills for the North American Free Trade Agreement (NAFTA), the World Trade Organization (WTO) and pacts since refer to a 1974 law that provides presidents discretionary authority to waive domestic procurement preferences. This 1974 law also provides a president with unilateral authority to alter the list of countries that obtain such waivers. While U.S. presidents have wide authority over government procurement policy related to Buy American waivers for foreign goods and contractors, in practice U.S. presidents have systematically added countries to a waiver list. Thus, today, “Buy American” really means that goods and firms from 60 countries obtain the same access to U.S. federal government contracts as U.S. goods and firms.