TOPLINE
President Joe Biden signed an executive order on Monday that will strengthen the rules surrounding government procurement in a bid to shore up domestic manufacturing and encourage the federal government to buy more products made in the United States.
KEY FACTS
Biden’s “Buy American” plan will make it more difficult for federal agencies to contract with companies overseas to purchase foreign products by reducing loopholes and waivers in existing Buy American rules and changing the definition of an “American-made” good.
The executive order will create a new position in the Office of Management and Budget to oversee Biden’s changes, and it will also direct the federal government to conduct a review of the waiver process that lets some purchases be made outside of the existing rules.
There’s also a provision targeted at small and midsize businesses to give them better access to information about contracting with the federal government.
A senior Biden Administration official said fixing weaknesses in the U.S. supply chain illuminated by the coronavirus pandemic (like the delays in distributing medical supplies and safety equipment) is one of the goals of the new policy, the Wall Street Journal reported.
“As this pandemic has made clear,” Biden said during prepared remarks on Monday, “we can never again be in a position where we have to rely on a foreign country that doesn’t share our interest in order to protect our people during a national emergency.”
CRUCIAL QUOTE
“Under the previous administration, federal government contracts awarded directly to foreign companies went up 30%,” Biden said. “That’s going to change on our watch.”
BIG NUMBER
$600 billion. That’s how much the federal government spends on procurement contracts each year.
SURPRISING FACT
During his prepared remarks on Monday, Biden said the executive order will also replace the fleet of vehicles owned by the federal government with clean electric vehicles produced in the United States.
KEY BACKGROUND
During his tenure, President Trump upended the United States’ trade relationships with the rest of the world in pursuit of an “America First” economic agenda. He instigated an ongoing trade war with China in the interest of protecting American manufacturers, and replaced the North American Free Trade Agreement and replaced it with the United States-Mexico-Canada Agreement, but not before threatening to eliminate NAFTA entirely—with no replacement—after Canada and the United States couldn’t agree on terms. Trump also pulled the United States out of the Trans-Pacific Partnership.
TANGENT
China surpassed the United States to become the largest recipient of foreign direct investment for the first time in 2020, according to a report released Sunday by the United Nations Conference on Trade and Development. As the world struggled to contain the coronavirus crisis, new foreign direct investment in the United States plummeted 49% to $134 billion 2020 while inflows to China rose 4% to $163 billion.
Source: Forbes
