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FTA Effect on Access to Government Procurement Markets is Focus of ITA/USTR Inquiry

Monday, August 21, 2017
Sandler, Travis & Rosenberg Trade Report

As part of its effort to improve U.S. manufacturers’ and suppliers’ access to domestic and foreign government procurement markets, the Trump administration is seeking public input by Sept. 18 on how that access is affected by the government procurement obligations in U.S. free trade agreements and the World Trade Organization Agreement on Government Procurement.

In April President Trump directed the International Trade Administration and the Office of the U.S. Trade Representative to prepare a report on this issue. An administration official explained that through FTAs and the GPA the U.S. has waived Buy American laws for 59 trading partners “in exchange for so-called reciprocal access to those countries’ markets.” However, “compelling evidence” from a February 2017 Government Accountability Office report “strongly suggests the U.S. may not be getting its fair share of global government procurement” through these concessions.

Officials have said that the ITA/USTR report, which is scheduled to be submitted to the White House by Nov. 24, will serve as a blueprint for additional executive and regulatory actions to further strengthen Buy American laws and guide possible legislative proposals. If the report determines that “America is a net loser” because of the Buy American waivers, officials have said, those waivers “may be properly renegotiated or revoked.”

To aid in the preparation of this report companies are asked to describe their experiences with domestic and foreign government procurement, how their decisions to bid on or supply government contracts are affected by U.S. FTAs and the GPA, and the challenges of bidding on government procurements in covered countries. They are also asked about the average U.S. content of goods supplied to the U.S. or foreign governments and the three main barriers to having 100 percent domestic content in such goods. Other topics of inquiry include how trade agreements with government procurement obligations affect strategic decisions about production and supply chains for both government and private-sector customers and conflicts between Buy American or similar foreign requirements and U.S. FTA or GPA requirements.

In responding to these questions companies are asked to consider issues such as the economic incentives provided by trade agreements and Buy American laws, the impact of trade agreements and Buy American laws or similar foreign requirements on business competitiveness in government procurement opportunities and on companies’ supply chain and sourcing decisions for goods, and the costs of complying with Buy American and similar government procurement policies, including providing or otherwise proving country of origin.

Countries covered by U.S. FTAs or the GPA include Armenia, Aruba, Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, the European Union (which includes Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxemburg, Malta, the Netherlands, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden, and the United Kingdom), Guatemala, Honduras, Hong Kong, Iceland, Israel, Japan, Liechtenstein, Mexico, Moldova, Montenegro, Morocco, New Zealand, Nicaragua, Norway, Oman, Panama, Peru, Singapore, South Korea, Switzerland, Taiwan, and Ukraine.

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