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One of the defining features of Joe Biden’s 2020 campaign was his pledge to “Build Back Better.” Essentially, Biden advocated a plan to “mobilize” U.S. manufacturing and modernize the nation’s infrastructure.
These are important goals, particularly when U.S. manufacturing has lost millions of jobs in the past 20 years and the nation’s roads and bridges are in urgent need of repair. To maximize the potential benefits of such federal efforts, though, Biden will need to insist on strong Buy American rules while also pursuing significant changes to America’s global trading relationships.
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WTO obstacle
Using American-made inputs is the obvious starting point for Biden’s rebuilding plan. However, the new president will face a major obstacle.
“ The goal, of course, would be to squeeze as much bang for the buck as possible out of taxpayer money—and buy American-made goods whenever they’re available ”
The United States is currently a party to the World Trade Organization’s (WTO) Government Procurement Agreement (GPA). The GPA requires member countries to open all of their government contracts to bidding from overseas companies. That means, if Biden wants to start buying everything from steel and cement to medicines and face masks, he’ll still be encumbered by outdated international trade rules that prevent him from giving preference to U.S. companies and workers.
Instead, his “Build Back Better” initiatives will be obligated to buy from companies in Germany, Japan, or Ukraine whenever their bids are cheaper.
This is problematic since America’s economic recovery from the COVID-19 pandemic is at stake. And voters overwhelmingly want to see their tax dollars spent on American-made products. And so, ironically, America’s generous, longstanding participation in the GPA could end up helping other countries grow their economies at U.S. expense.
Biden has already recognized this problem, however. In the ‘Made in America’ part of his campaign platform, he pledged to “update the trade rules for Buy American” and make sure that “the U.S. and allies can use their own taxpayer dollars to spur investment in their own countries.”
Immediate action
A campaign promise is not enough, though. The incoming administration will need to take immediate action on the GPA in order to start using government funding as an engine for job creation at home rather than overseas.
The solution is for Biden to simply withdraw from the GPA through a letter to the WTO. This would be surprisingly easy since the GPA is merely an optional agreement within the WTO framework. And not all WTO countries are currently part of the GPA.
This is important because buying American-made products can pay dividends for U.S. companies and workers. Last July, the House passed an infrastructure package that included potential investments in renewable energy and electric vehicles. The Coalition for a Prosperous America (CPA) analyzed the legislation and found that adding strict federal Buy American provisions would generate a 33% larger boost for the economy while also creating millions of additional U.S. jobs.
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The goal, of course, would be to squeeze as much bang for the buck as possible out of taxpayer money—and buy American-made goods whenever they’re available. Doing so would support good-paying manufacturing and construction jobs nationwide. But again, the GPA remains a major barrier to achieving these goals.
Industries at risk
Many crucial U.S. industries are at risk unless Biden takes action. Renewable technologies, for example, are dominated by heavily subsidized manufacturers in China. And electric-vehicle production has moved offshore as well. Government procurement that focuses on supporting U.S. producers of solar panels and electric vehicles could certainly help to bring these industries back.
President Donald Trump has already notified the WTO that goods related to pandemics and other emergencies will be excluded from America’s commitments in the GPA. But the EU and others are challenging that action. The Biden administration should defend the U.S. position, though. Otherwise, the United States will remain excessively reliant on China, India, and other countries for essential medicines and personal protective equipment.
The Biden administration can help America economically recover from COVID by withdrawing from the GPA—and start allocating federal contracts to America’s hardworking manufacturers rather than overseas companies.
Other countries already prioritize their own domestic manufacturing sectors when spending public funds. It’s time for Washington to start doing the same for America’s manufacturers.
Michael Stumo is CEO of the Coalition for a Prosperous America, a nonprofit bipartisan coalition of farmers, ranchers, manufacturers, and labor organizations that make and grow things in the United States. Follow him at @michael_stumo
