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As part of his Build Back Better campaign commitment, President Joe Biden has signed an executive order to tighten the restrictions on where the federal government and its contractors can buy goods and services. Historically, there have been two main laws governing the geographic location of federal procurement: the Buy American Act of 1933 and the Trade Agreements Act of 1979. The former provides a price preference for U.S. products, while the latter prohibits procuring products and services from non-designated foreign countries, unless a specific exception has been made. Most U.S. free trade agreements also include provisions on government procurement practices.
Under Biden’s new order, these rules would be significantly narrowed to ensure the government procures a greater share of goods and services produced in the United States.
Yet, as Rob Atkinson writes in Morning Consult, there is usually no free lunch. It’s one thing to focus on providing U.S. companies with assistance so they can more effectively qualify for U.S. government contracts. And indeed, the president’s order rightly charges the National Institute of Standards and Technology’s Manufacturing Extension Partnership to do more to help small manufacturers obtain federal contracts. All to the good.
But the main focus of the order is not to help; it’s to command. Forcing the federal government and contractors to buy more U.S.-made products will either increase prices (and raise taxes) or reduce procurement levels. If the administration is to go down that path, it needs to be sure that cost is worth it.