Magazine article National Defense

Buy American Restrictions: Bad for Jobs, Bad for Business

Magazine article National Defense

Buy American Restrictions: Bad for Jobs, Bad for Business

Article excerpt

The American Recovery and Reinvestment Act of 2009 set the stage for a heated debate on the importance of global trade as one of the nation's greatest sources of economic strength.

Earlier versions of the legislation contained draconian "Buy American" provisions that required U. S. -made iron, steel and manufactured goods be used in public works funded by the bill. This raised a predictable outcry from our trading partners, particularly the European Union and Canada.

In response to such protests, the bill was modified in the final stages of negotiations to include a requirement that Buy American provisions be implemented consistent with U.S. international agreements. In addition, the legislation allowed for the existing waivers mat are part of the current Buy American law - which has been in place since 1933 - to remain applicable to projects appropriated under the ARRA.

The softening of the language in the final agreement between the House and the Senate was welcome news, but the debate leading up to the compromise is a reminder of why protectionism is bad business in today's global economy.

Efforts to protect U.S. workers end up costing jobs if other countries emulate U.S. policies in retaliation. Protectionism goes against the spirit and letter of binding international commitments mat were codified by the World Trade Organization and other bilateral agreements. Only recendy, the United States was successful in persuading the G-20 to refrain from new trade restrictions.

Millions of American workers rely on global trade for their jobs through exports, foreign direct investment and imports.

The Smoot-Hawley tariffs that followed the stock market crash in 1929 are cited by most historians and economists as contributory to, if not a primary cause, of the Great Depression. If history is any guide, this is the worst possible time to be raising trade barriers.

NDIA has long opposed any additional Buy American restrictions for the defense and security industries. We joined 78 other associations and businesses in a letter to President Obama that summarized several reasons why these mandates would undermine our global responsibilities.

Existing Buy American laws and regulations already require the use of U.S. goods for federal projects except in circumstances where international agreements provide otiierwise - generally agreed to mean that 50 percent of American materials are required. There is bipartisan support for existing law. The original House-proposed legislation would have raised this to 100 percent.

What is not generally appreciated is that global trade has benefited the United States in many ways. …

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