HTML clipboard If you are an exporter you should conduct your transactions with extreme caution as some foreign governments, as well as some foreign purchasers, may give you an exceptionally difficult time over what they perceive as protectionist measures being enacted by the U.S. government. Particularly in Canada, a great deal of animosity has arisen from the "Buy American" provisions in the economic stimulus package that was enacted earlier this year by the Obama Administration.
Various people from all over Canada have voiced their concern and, in some instances, voiced their total disagreement with the "Buy American" provisions. They believe that these provisions could spark an international trade war and are in violation of our obligations to the various trade agreements that are in effect today. Others have insisted that these provisions will have a negative effect on the global economy has a whole.
Earlier this month, the Canadian Broadcasting Corporation (CBC) reported that various city mayors from all across Canada narrowly passed a resolution that could potentially block any American company from bidding on city contacts. This resolution could ultimately mean reduced export sales for U.S. companies. With the narrow passage of this resolution, the federal government of Canada would have approximately four months to lobby the Obama Administration for changes to the "Buy American" provisions before the resolution would take effect.
Although many are considering the "Buy American" provisions simply a protectionist mechanism by the U.S. government, there are actually some caveats to these provisions that many critics may have overlooked:
- Only American made iron, steel and other manufactured goods may be utilized in the construction of public buildings and/or public works that are funded under the stimulus package.
- The "Buy American" provisions do not infringe upon or violate our commitments made under various trade agreements since the Trade Agreement Act provides the President with the authority to waive these provisions along with other discriminatory provisions for eligible products.
- The "Buy American" provisions do not apply in the event that domestic merchandise isn't available in sufficient quantities.
- The "Buy American" provisions also do not apply in the event that domestic merchandise would increase the overall cost of a project by more than 25 %.
Full details pertaining to the "Buy American" provisions are available by referencing Part 25 of the Federal Acquisition Regulations.
Since many view these provisions as purely protectionist measures, anyone who is involved in the exportation of goods from the United States should be prepared for potential difficulties and should do their best to explain what these provisions are truly designed to accomplish: To protect the American economy and promote, not damage, the global economy.
Damaging the global economy further would practically halt any and all legitimate international trade, which would put the United States at a unique disadvantage. Why would we as a nation do such a thing?
