'Buy American' Provisions Return for More Congressional Debate

Published June 05, 2005

| FoxNews.com

Not only should consumers show their patriotism by buying products made in the U.S.A., but the federal government's defense and homeland security agencies should too, say some lawmakers hoping to force compliance through legislation.

But opponents say that requirement would hamper U.S. agencies from acquiring the best parts possible at the best rates. In addition, American companies simply can't supply all that's needed in the nation's defense system, according to critics.

"It's a global economy, it's a global world. I think everyone has to accept that fact," said Peter Steffes, vice president for government policy at the National Defense Industrial Association. "You can't just slam the door and say, 'We're only going to do this in the United States,' because we can't do it.'"

Rich Carter, spokesman for Rep. Don Manzullo (search), R-Ill., told FOXNews.com that requiring the government to buy American-made products is good for both the economy and national security.

"What we've found over the years … there's been a crisis in manufacturing in America, we've lost over 3 million jobs and a lot of our critical defense industries are vanishing; they're going overseas," Carter said. "We're going to be fighting a war, we're going to have to be relying on foreign companies to supply us. I don't think you ever want to be in that position."

Manzullo has sponsored legislation reaffirming the "Buy American Act," a law passed during the Great Depression aimed at restoring America's industrial base. The decades-old act says a company must have "substantially all" of a product grown, made or mined in the United States. Federal agencies have generally interpreted "substantially all" to mean 50 percent or more of U.S. content or labor.

Despite the concerns, the Defense Department currently has agreements with 21 countries that waive the 50-percent threshold if complying with the acts is "inconsistent with the public interest." The Defense Department did not respond to specific questions from FOXNews.com regarding those 21 countries and whether agreements with those countries pose security risks.

Last week, Manzullo's amendment preventing such waivers without a vote by Congress was passed by the House and attached to the Defense Department reauthorization act. The amendment also has been attached to the House-passed Department of Homeland Security authorization act, which gives that agency $34.2 billion for fiscal year 2006.

"For years, the Pentagon has flouted the original intent of the Buy American Act (search) by using memoranda of understanding to bypass U.S. manufacturers and spread our taxpayer dollars around the world," Manzullo said in a statement. "This legislation closes the loopholes and ensures more than 50 percent of the Pentagon's purchases must come from within the United States, which will help restore the struggling U.S. industrial base and create jobs for Americans."

Both bills have yet to be passed by the entire Congress; if the Senate passes a bill, differences between the House and Senate versions will be hammered out in conference committees. The Senate may take up the two bills when lawmakers return from recess.

John Ullyot, a spokesman for the Senate Armed Services Committee, would not comment specifically on the Manzullo amendment. But he did say that Committee Chairman John Warner (search), R-Va., is in favor of free trade in ways that supports the nation's defense capabilities.

Free-trade (search) proponents argue that accepting stringent "Buy American" provisions could make the United States appear too protectionist for the liking of the global market. They add that the nation's ability to get the best state-of-the-art defense products is more important than the country in which they were made.

"The problem is that a lot of things we have these days are manufactured overseas or there's parts that are manufactured overseas," Steffes said. "If it's with one of our allies, you would think there shouldn't be a problem in time of war. If that particular item is made by somebody who may be a future enemy of us, certainly you wouldn't do that."

But Manzullo and others say it's not in America's best interest, in terms of security, to depend on foreign countries for vital defense or security parts.

"We're going to be fighting a war, we're going to have to be relying on foreign companies to supply us," Carter said. "I don't think you ever want to be in that position. ... The bottom line is, if we're using U.S. taxpayer dollars, we should try to buy from U.S. companies."

The American Manufacturing Trade Action Coalition supports "Buy American" provisions. Jim Schollaert, director of industry relations for AMTAC, pointed to several instances in history that could be harbingers of things to come.

For example, Swatch Group, AG and its Micro Crystal division in Switzerland refused to send key components used in bomb guidance equipment on the Pentagon's flagship Joint Direct Attack Munition (JDAM) during the Iraq war. That incident sparked a push to force the U.S. government to use more American parts but lawmakers' efforts to do so were defeated.

"U.S. wealth is being drained out of the country. Frankly, I think that's an even greater threat to our long-term security than Al Qaeda," Schollaert said.

Defense groups and others, including the Information Technology Association of America, which represents 380 corporate technology companies, argue that legislation like Manzullo's is simply bad security and economic policy.

"With this purchasing prohibition, I guess DHS will have to learn to do without computers and cell phones," said ITAA President Harris Miller. "I cannot think of a single U.S. manufacturer that could meet this 50 percent threshold for these devices, and I doubt that those charged with protecting our safety here at home can either. … This legislation puts politics in front of common sense in combating terrorist threats ... it sends a signal to our trading partners that protectionism trumps global trade."

ITAA points out that placing restrictions on foreign parts invites outside countries to do the same for American-made products and could hurt U.S. businesses, contributing to the already record deficits.

But "Buy American" supporters still insist the Pentagon isn't doing enough to buy as much as possible from domestic manufacturers and shore up America's home-grown businesses.

"The overall problem, really, is that we're losing our manufacturing base," Schollaert said. "It might make short-term economic sense [to send jobs offshore] ... but it spells disaster for our national security over the long haul unless all countries around the world that we purchase from forever remain our true and dear friends."

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