• Wed. Oct 26th, 2022

Policy on procurement risks straining relations with key US allies

Jan 25, 2021

US president Joe Biden is set to tighten “buy American” provisions as part of a push to boost domestic manufacturing, in a move that risks straining relations with key US allies.
Mr Biden is on Monday expected to order an increase in domestic content requirements for federal procurement contracts, following a campaign pledge to boost the US manufacturing industry as he aimed to outflank Donald Trump in key swing states.
However, America’s top trading partners and strategic allies, including Canada and a number of European countries, have long complained that buy American measures are a protectionist attempt to shut out their multinationals from the US economy.
Biden administration officials laid out the changes to US federal procurement rules in a call with reporters, saying it marked an effort to rebuild “the backbone of America”.
“[Mr Biden] believes that we can rebuild the vitality of American manufacturing and our industrial strength, and a big piece of that is centred around the idea that when we use taxpayer money to rebuild America we buy American,” said a Biden administration official. “We support American jobs, union jobs.”
Mr Biden is expected to order an increase in domestic content requirements for federal contracts, a $600bn industry, as well as crack down on waivers that are routinely allowed for the use of foreign suppliers.
Administration officials said Mr Biden would also reiterate his support for the Jones Act, which requires goods shipped within the US to be transported on American vessels. They say this could help “invest in building offshore renewable energy and put Americans to work doing it”. US allies in Europe have long pressed Washington to repeal the Jones Act to allow greater competition in the shipping sector.
Mr Biden’s arrival in the White House has been broadly welcomed by America’s western allies and some of his early actions have been cheered. These include the decisions to rejoin the Paris climate accords, halt US withdrawal from the World Health Organization and scrap the entry ban on citizens of several Muslim-majority countries.
One exception was his decision to revoke the permit for the Keystone XL pipeline connecting the US with Canada, which triggered unhappiness north of the US border, particularly in the energy-producing western provinces.
Mr Biden’s early move on procurement is also likely to be criticised in the capitals of several US allies, including Canada, because it will cement concerns that the new administration is not interested in returning to an agenda of liberalisation in trade and investment, after four years of Mr Trump’s trade wars.
Mr Biden and members of his team have frequently said that securing trillions of dollars of new federal investments in the US economy are the priority before new trade deals are considered. In conversations at the weekend with Boris Johnson, the UK prime minister, and Emmanuel Macron, the French president, Mr Biden emphasised his desire for co-operation on issues such as climate change, but there was no mention of trade, according to the White House accounts of the calls.
One Biden administration official said the US administration was “very committed to working with partners and allies to modernise international trade rules to make sure we can use our taxpayer dollars to secure investment in our own countries”.
He also said tighter procurement could help build the resilience of US supply chains, given the weaknesses that emerged during the pandemic, so “we are never put in a position where we are reliant on countries who don’t share our interests to deliver critical materials”.