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Steel Caucus Eyes Bill to Modernize, Strengthen U.S. Domestic Content Rules

Inside Trade

The Congressional Steel Caucus is eyeing legislation to update and strengthen domestic content rules in laws on government procurement -- a bipartisan proposal that could mesh with President Trump's calls for revitalizing the U.S. manufacturing base -- following the group's annual Capitol Hill hearing on March 29.

Rep. Dan Lipinski (D-IL), a steel caucus member, introduced the “Buy American Improvement Act of 2017” in February, which is aimed at improving the transparency in domestic content requirements for government procurement at the agency level, according to the bill summary. Lipinski, who pitched the bill to fellow steel caucus members at the hearing, said it “would be applied in a manner consistent with U.S. obligations under international trade agreements.”

The bill had 18 cosponsors as of March 30, including two Republicans, but senior GOP members of the steel caucus indicated they are interested in taking a closer look at it.

Members of the Congressional Steel Caucus, as well as representatives from the steel industry, brought up the need for stronger American-made requirements at the annual steel caucus meeting. The caucus chairman, Rep. Tim Murphy (R-PA), told Inside U.S. Trade that the caucus “as a whole” plans to consider Lipinski's bill “more closely,” saying he believes the bill supports the caucus' primary objectives of bolstering national defense, infrastructure, and energy.

Rep. Joe Wilson (R-SC) told Inside U.S. Trade he thinks the legislation would be a good tool to “back up the steel industry” and that he could be interested in supporting the strong domestic content requirements Lipinski has proposed.

Lipinski's bill would update both the 1933 “Buy American Act” and 1982 “Buy America” provisions. In the summary, Lipinski distinguishes between the two statutes -- noting that the Buy American Act of 1933 “generally applies to direct procurement of end products by federal agencies” whereas Buy America “loosely refers” to a set of domestic content requirements applied to certain Department of Transportation grant programs.

Chris Weld, partner at Wiley Rein, said Lipinski's bill looks "strong."

"It would improve both the Buy American Act and the various Buy America programs that apply across certain federal agencies," Weld told Inside U.S. Trade, adding that such upgrades would likely include limiting or tightening waivers, increasing compliance requirements, and fixing loopholes.

Weld underlined that the legislation would apply Buy America to additional federal agencies, such as the Department of Housing and Urban Development and the Rural Utilities Service. Currently, Buy America applies to agencies within the Department of Transportation and requires all manufacturing processes to occur in the U.S.

According to a Feb. 7 statement from Lipinski's office, the legislation would also require federal agencies to publicly disclose and justify “Buy American” waivers in the Federal Register. Additionally, an annual report would be created that includes statistics on all foreign purchases and the number of waivers granted.

“This transparency will allow American companies to see where there are opportunities to sell to the federal government and put more Americans to work,” Lipinski said.

The issue of waivers is also gaining attention in the Senate. In a March 10 letter, Sens. Tammy Baldwin (D-WI) and Jeff Merkley (D-OR) called on President Trump to honor his campaign pledge by temporarily suspending Buy American waivers for foreign firms until government procurement chapters in U.S. trade agreements are renegotiated. Baldwin and Merkley contend that if Trump does not suspend such waivers for foreign competitors that such inaction would “risk sending hardworking Americans' tax dollars abroad,” the letter states.

A spokesman for Lipinski told Inside U.S. Trade that his bill aims to provide some clarification on the 1933 Buy American Act and Buy America, which he said are “different than Trump's campaign promises to 'Buy American, Hire American.'”

However, the spokesman said Lipinski thinks this will be a “good stand-alone bill” and that he also hopes the legislation will be considered for inclusion in any infrastructure packages that he hopes the Trump administration will pursue.

Lipinski said he has engaged with White House officials on the bill and the spokesman added that his office “will be trying to be in contact with them a lot more.”

Organizations endorsing the bill include the United Steelworkers, AFL-CIO Transportation Trades Department, BlueGreen Alliance, Coalition for a Prosperous America, International Association of Machines and Aerospace Workers, Lake Carriers’ Association, Steel Manufacturers Association, International Brotherhood of Teamsters and the Alliance for American Manufacturing, according to Lipinski's Feb. 7 statement.

“‘Buy America’ preferences create jobs and support U.S. national security. It makes no sense for the government to buy steel from China when workers in Illinois are ready to meet the challenge,” the Alliance for American Manufacturing said in the same statement while adding it will continue to support Lipinski's efforts.

Tom Conway, international vice president of the United Steelworkers, noted that while his organization endorsed Lipinski's legislation, it would make sense to “take a look at where the problems are” in government procurement.

“If Buy American locks out everything -- even the useful markets -- that could be a problem,” he said at the March 29 hearing. Conway said the U.S. should proceed with caution when dealing with products from Canada and instead focus on “more harmful” offenders such as China and Korea.