I know I promised to do a piece on Trump and his potential impact on global trade in 2017. The problem is, everyone beat me to it! No really – I lost count of how many trade compliance law and consulting firms aired web casts and blog posts about “2017, and the impact of a Trump presidency” (or something along those lines) …. To be honest, I feel a little silly just sending out a “me-too” post about what the Trump Presidency will mean for global trade.
With that said, I think the most value I can offer my readers is a closer look at specific issues, and what it will mean to the rank and file involved in trade compliance. Enough talks, posts and presentations have already covered the potential future of NAFTA, TPP and TTIP, but maybe I can offer some more personal insight, for those responsible for compliance with such programs.
The first one I’d like to cover is the big umbrella term of “Buy American”. As anyone involved in US Government procurement knows, there is more than simply one governing piece of legislation, and many relevant regulations, regarding “Buy American”. The key ones I personally encounter most are:
- 48 CFR 225 “Buy American” provisions, enacting 41 U.S.C. 83, found in the Federal Acquisition Regulations
- 49 CFR 661 “Buy America” provisions, enacting 49 U.S.C. 53
- Other US origin procurement rules at the State level
- Municipal procurement funded by the Department of Transportation and as such subject to 49 CFR 661
These programs often differ and have unique requirements, but the consistent theme is an attempt to push publicly funded procurement to solicit US origin goods. Readers quite likely have run into other programs not listed above, but similar in intent.
There is one other key factor to mention, and that’s the Trade Agreements Act. Under the Trade Agreements Act there must be provisions for the sourcing of non-US goods if they are eligible for a signed Free Trade Agreement. For example, there are provisions in the Buy American rules for the acquisition of NAFTA eligible goods. Buy America (49 CFR) does not allow for TAA exemptions, but has a much more limited scope applying to Transportation projects.
With all of the above in mind, what can we expect to see in 2017? Well, a recent tweet from the President elect offers a little clue:
https://twitter.com/realDonaldTrump/status/814484710025994241?lang=en
For those without Twitter the tweet actually only contained a link to an Instagram post, which is the important part:
https://www.instagram.com/p/BOmuafXjnVB/
“Buy American and Hire American”.
If that doesn’t offer you a clue than you’re thinking this through too hard. What exactly can or will his administration change? To be honest: just about anything they want to. The Trade Agreement Act could be scrapped/modified. The core procurement rules themselves can be made stricter. Most importantly, enforcement can be ramped up ensuring that existing rules are enforced 100% of the time. That’s the first thing the executive branch can do, with no help from congress: just enforce existing rules.
Since I mentioned congress, a quick note on that. Anyone thinking that a push for increased protectionism regarding procurement will be blocked by the Democrats, should think again. Here’s why:
Recently the Democrats chose Chuck Schumer as minority leader of the Senate. Senator Schumer is a name I recognize, and the main reason was the following link:
https://www.schumer.senate.gov/newsroom/press-releases/schumer-feds-are-currently-listing-flatware-and-other-products-made-by-companies-as-american-made-when-they-are-actually-produced-overseas-putting-companies-that-manufacture-in-us-like-sherrill-manufacturing-in-central-ny-at-a-disadvantage_senator-pushes-feds-to-review-made-in-america-listings--immediately-remove-companies-that-are-falsely-listed
Have a look at that press release, and ask yourself if it’s likely the Democrats would challenge any effort to strengthen Buy American provisions. Furthermore, remember Bernie Sanders? He is now arguably a very influential force within the Democrats. Here’s what he has to say about working with a Trump administration on trade:
http://www.washingtontimes.com/news/2016/nov/17/bernie-sanders-i-could-work-donald-trump-infrastru/?utm_source=RSS_Feed&utm_medium=RSS
What’s the bottom line? We have an incoming administration that is advocating for more Buy American. We have a Republican majority in both houses which (in theory) will work with the President. We have a loyal opposition that is showing no signs they will oppose Buy American efforts. Sounds like a slam dunk to me. If I were you, and you have any exposure at all to US government procurement and associated protectionism provisions, I would get up to speed fast. I predict 2017 to bring us an increased amount of requests related to Buy American. If there’s any doubt you understand them or are ready to comply, make that a New Year’s Resolution to fix the situation.
Oh, and it may also be worth watching how Canada responds, as this develops….
Happy New Year! And I look forward to sending more posts in the 2017! It's truly an exciting time to be involved in international trade compliance!
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