Trump courts WTO reprisals with move to ‘Buy American’ steel

24 January 2017. By Ira Teinowitz.

President Trump's push to boost American manufacturing through 'Buy American' policies bears a strong resemblance to a past move that led to a trade complaint with the World Trade Organization.

On Tuesday, just four days after Trump in his inauguration speech said he will "follow two simple rules: Buy American and Hire American," he signed an executive order requiring his Secretary of Commerce within six months to develop a plan to ensure that pipelines built or repaired in the US use US-made steel or iron (see here).

The order says that the mandate should be "to the maximum extent permitted by law" and doesn't specify whether any requirement would apply generally or only to pipelines constructed using public funds.

Presidential Press Secretary Sean Spicer, at a White House briefing in which he discussed the executive order and others allowing construction of the Keystone XL and Dakota Access pipelines, said it was the administration's hope that any new requirements would apply to the building of those pipelines.

"We are going to rebuild our infrastructure. We are going to do it with American workers and American resources," Spicer said.

Similar Buy American legislation has been controversial, bringing objections in Congress and at least one WTO complaint against the US.

Canada goes to WTO

Canada in 2014 took a complaint to the WTO about US Buy American legislation included in an Obama administration water and sewer resources bill.

Canada's target was nearly identical to the provision Trump sought — a Congressional requirement that any bidders for the projects funded under the $25 billion program use US-made iron and steel and mostly US parts.

The US' Buy American legislation has also drawn concerns from the European Union, which demanded better access to US public procurements as part of talks on the Transatlantic Trade and Investment Partnership.

At the WTO, the US has defended its own Buy American laws even while pursuing its own complaint about similar Indian localization requirements. Ultimately, House Speaker Paul Ryan helped remove Buy American provisions from the Water Resources Development Act legislation.

Canada, as part of a 2016 settlement of the complaint, won an agreement guaranteeing Canadian companies the ability to bid on major local and state projects funded through the federal monies as long as Canadian provinces offered similar bidding access to US companies.

Democrats on board

However, Senator Sherrod Brown of Ohio is among Democrats fighting to add Buy American provisions to any taxpayer funded US infrastructure repair legislation. Last week, Brown urged Trump in a letter to include the Buy American provisions in any infrastructure legislative proposal.

"American tax dollars should go toward American-made products that support American jobs. Period," Brown said.

On Tuesday, Senate Democrats unveiled their own infrastructure proposal, including Buy American provisions.