WASHINGTON -(Dow Jones)- A group of House Republicans turned up their criticism of the Buy American provisions in the $787 billion economic stimulus package, warning that critical infrastructure projects are being delayed and the U.S. is increasingly at risk of retaliation by its trading partners. The lawmakers, holding a roundtable with like-minded industry groups Thursday, called on the Obama administration to take action to ensure the provisions, designed to spark job creation at home-grown companies, don't have unintended consequences.
"There's a reasonable solution here, which is for the Office of Management and Budget to issue final guidance that exempts states and localities from these onerous provisions," said Rep. Kevin Brady, R-Texas, the ranking member of the House Ways and Means Trade Subcommittee.
The provisions mandate that all iron, steel and manufactured products in projects funded by the Recovery Act be made in the U.S.
While required to comply with the U.S.'s international trade obligations, the provisions have triggered opposition from trading partners, particularly Canada, whose provinces and towns aren't subject to World Trade Organization procurement rules. They have also caused problems for U.S. firms and local governments, which aren't sure how to adhere to the complex new rules.
"The impact this has had on municipalities ... has been overwhelming and extraordinarily burdensome," said Rep. David Dreier, R-Calif. "It's kind of a sad commentary that we are sitting here today ... responding to a crazy provision that was included in that outrageous stimulus bill."
John Murphy, vice president for international affairs at the U.S. Chamber of Commerce, said the job-creating benefits from the Buy American provision will dissipate if other countries adopt similar policies. According to the Chamber, the U.S. could lose nearly 177,000 jobs if "buy national" policies cause U.S. companies to lose 1% of potential stimulus procurement opportunities.
"These buy national rules are spreading like a virus," Murphy warned.
OMB is reviewing its guidelines on the Buy American provisions, and is expected to address the issue soon. U.S. Trade Representative Ron Kirk also is reviewing a Canadian proposal that would exempt Canada from the provision and give U.S. companies access to business with Canadian provinces and municipalities.