Free trade is defined as the ability for a buyer and seller to conduct business without government interference. So when the government is the buyer why can't it freely choose who to buy from without incumbent sellers claiming interference with free trade?
I have a solution to this loophole-infected quagmire: Scrap protectionist language and simply require sellers to the US, state and local governments to comply with US labor law regardless of where the goods are made.
A recent NY Times Editorial about the "Buy American" bill is a perfect example of how easily the razzle of "Free Trade" can dazzle the journalistic integrity of our last great voice of skepticism.
"Foreign and domestic companies that employ hundreds of workers in this country cannot bid for government projects because they cannot guarantee the American provenance of all the steel, iron and manufactured goods in their supply chain, as the provision requires. Others are scrambling to figure out whether American-made alternatives exist to replace their foreign inputs. The steel company Duferco Farrell, for example, has cut about 600 jobs in Pennsylvania after it lost orders from its biggest customer because some of its goods are partly produced abroad..."
Dear Editor:
You just got played.
If you believe these companies "don't know the provenance" of their steel and iron, I'd love to sell you a bridge. It happens to be made out of steel and iron from some company who has absolutely no idea where the steel and iron came from. The only catch is that your family has to drive over it twice a day for the next forty years.
Do you really believe that companies savvy enough to co-opt both the liberal and conservative media elite to their cause are actually "scrambling to find out **whether** American-Made alternatives exist" -- as if this bill magically sailed through Congress without backing from a trade group that would benefit from its passage?
And why did Duferco choose to layoff 600 workers rather than produce the goods domestically? US steel plants are at half capacity. Isn't this an example of the "Buy American" bill working? I think I just found the 600 jobs that Duferco lost--at the company that got their business by supplying domestic steel. Oh, and look! that company needed another 200 Americans to make the steel. A net gain in employment.
The editorial moved on to the question of retaliation. Will our trading partners will stop buying American if we force our government to buy American?
What "made in America" products are people in other countries buying that they can--or will--stop buying? The grains that we can't give away fast enough but that many countries can't get enough of? Will Chinese teenagers boycott Kanye West because we didn't use chinese iron to build a new airport in Chicago? How about American brands like Nike? If no one buys another Nike shoe, ever, how many American manufacturing jobs will be lost?
I'm not being coy, I really want to know. How about Caterpillar? 60 minutes featured their CEO terrified of how the Buy American act could cost his company business because the Chinese won't buy Caterpillar frontloaders. Caterpillar monster trucks are a commodities? Then why are Asian governments already paying double for a Caterpillar over a Korean frontloader? It's the Free Trade Razzle Dazzle. Whackity Schmackity Doo, Leslie Stahl, you forgot to ask Caterpillar if they were upset that they'd have to spend more to buy domestic steel to use in trucks used in infrastructure projects.
And what about steel? If we can't win bids here without legislative intervention, how are we going to win them overseas? What else are we a net exporter of? Scrap metal? Nuclear technology?
Foreign governments only buy American Made products as a last resort already. If we are not the only, the best, or the cheapest, we are shut out of a market, save for some diplomatic crumbs. The USA is already the victim of protectionism--governments abroad protect their industries by denying workers rights, keeping labor costs low, and subsidize industries to keep American industry out under the guise of "Free Trade".
US Protectionism won't invite retaliation... US PROTECTIONISM IS THE RETALIATION.
Without a Buy American clause a Federal Contractor has a hard time competing with importers. The Federal Acquistion Regulations have hundreds of laws regarding the way contractors treat their employees--unless the supplies are manufactured outside the United States, Puerto Rico, and the U.S. Virgin Islands are, in which case they are always exempt from these regulations. My company has to pay minimum wage, honor collective bargaining agreements, pay time and a half, not employ children, not co-erce labor, give minorities and the disabled equal opportunity, and it goes on.
A competitive factory in Mexico does not have to honor these laws. Guess which contractor is the low bidder?
At a minimum, if we don't want to violate trade agreements, our trading partners should be subject to the same Federal Acquisition Regulations domestic contractors are if they want to do business with the US government. I would take that over a Buy American clause any day.
