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12th February 2021

International trade
USA

Introduction Key Points Key Domestic Government Regulations What does the new PO do? What’s next? Trump Administration Buy American Change May Be In The Balance What Does This Mean For Your Business?

On 25 On January 1, 2021, President Biden signed an Executive Order (EO) to increase spending of the federal government’s $ 600 billion procurement budget on American-made products while revising the existing legal framework

By narrowing the gaps that allow the government to purchase foreign products, increasing government accountability, and directing agencies to find U.S. suppliers, the EO seeks to revitalize domestic manufacturing and create American jobs to support Biden’s plan to drive economic recovery, Build Back, Better (1)

The PO directs the Department of Administration and Budget (OMB) and the Federal Acquisition Regulatory Council (FAR) to help direct and coordinate government-wide procurement regulatory activities:

It is unclear whether the increases will come from the original numbers or the recent Trump EO numbers, which increased domestic content requirements and price preference percentages, while the EO sets general goals for the government, it is not yet clear how this can be will affect eligibility or fill gaps Much Depends on Implementation It is advisable that companies review their qualifications now against the key Made in America regulations to assess the impact on their business when the proposed changes are released p>

The Biden government stepped up this change in government procurement when it passed on Jan. January 2021 published the PO to combat the climate crisis at home and abroad (2)

The Buy American Act (BAA) of 1933, as amended, generally requires federal agencies to purchase domestic end products and use domestic building materials for contracts that exceed the U.S. micro-purchase threshold (usually Jan.000 USD)

The Trade Agreement Act (TAA) of 1979, as amended, allows for the waiver of the BAA and has resulted in eligible products from certain countries being equated with domestic offers if certain federal authorities procure certain goods or services whose value certain amounts of money exceeds thresholds

The “BAA” is the popular name for a group of domestic content restrictions that apply to the granting of funds by the US Department of Transportation and certain other federal agencies

The PO refers to this and other domestic requirements for US content collectively as “Made in America Laws” (Section 2)

Cut down on waivers
The PO aims to reduce exemptions from government procurement rules that allow the purchase of foreign products. It calls for the creation of:

New OMB office for checking exemption regulations
A new senior OMB official (the director of the Made in America office) will be tasked with overseeing all exemptions The Made in America office will develop a review process whereby the agencies will submit proposed exemptions to the OMB to review for compliance with the EO ( Section 4) The OMB will make decisions to the Agency in writing within 15 days of receipt of the submission. Exception requests will also be posted by the General Services Administration on a public website that will be developed in the coming months within five days of the OMB receiving the information The publication Should give US companies the opportunity to use the waiver themselves or possibly to object to it. No formal process has been put in place for the rejection of exemptions that could be directed either to the agency or to the OMB

Consider sources of cost benefit when considering waivers
Before granting a waiver in the public interest, the competent licensing authority examines whether a substantial part of the cost advantage of a product from abroad is due to the use of unloaded steel, iron or industrial goods or to the use of harmful subsidized goods steel, iron or industrial goods ( z B. from materials that are subject to anti-dumping or countervailing duties) (Section 5) The licensing authority can turn to the International Trade Administration for this assessment

Switching to a value-added approach with increased thresholds for domestic content and price preferences
The EO will also change how the percentage of domestic content of products is calculated for the Buy American rules (per BAA) The PO instructs the FAR Council to consider proposing amendments to the applicable FAR provisions (Title 48 of the Code of Federal Regulations) for notice and public comment in order to:

TAA waived
The EO does not explicitly direct changes to TAA waivers The TAA (19 US Code Section 2501 ff) Provides that products and services from a country with which the US has a trade agreement (“Named Countries”) are treated equally with products made in the USA and only the purchase of US-made or designated country end products “Certain Countries” “are:

The Biden government has expressed a desire to work with the signatories on amendments to the WTO Government Procurement Agreement

Revocation of certain presidential and regulatory measures
The PO revokes or replaces multiple previously issued POs in relation to the Buy American Act (Section 14)

The FAR Council will review the PO to identify any proposed policy or regulation changes to implement these steps Regulatory changes would go through the normal process of creating rules for notices and comments and posting them in the federal register. The public will have an opportunity To comment on proposed regulatory changes In addition, the heads of the agencies are reviewing their procurement policies to ensure they are in line with the new PO The PO does not affect government preference programs but could ultimately follow the federal position

Just before former President Trump stepped down, his administration passed a definitive ruling that tightened domestic content requirements for federal projects that require iron and steel on Nov. On January 1st, 2021, the FAR Council issued a final ruling to implement the changes first described in EO 13881, Maximizing the Use of American Made Goods, Products and Materials (84 FR 34257, Jan. July 2019) The rule came into force on Jan. In effect January 22, 2021 The changes would apply to requests received on or after January 22 February 2021, and for resulting contracts

The final rule includes increasing the percentage of Domestic Content required for a product to be American Made from 50% to 95% for iron and steel products and to 55% for other products as well Price valuation preferences increased from 6% to 20% for large companies and from 12% to 30% for small companies Department of Defense (DOD) purchases do not change the 50% DOD

The status of this rule is unclear, however, as the Biden government introduced a regulation freeze instructing the agencies to postpone the date of entry into force of the enacted rules, which did not go into effect for 60 days or up to 20 years March 2021 There are no reports that agencies have postponed the rule Until there is more clarity, companies should treat the higher numbers in the most recent definitive rule as controlling.In addition, the Trump EO (13881) will be replaced by Section 14 of the Biden EO , unless the Trump EO is compatible with the Biden EO.Therefore, these thresholds and price preferences for domestic content may change

Companies selling to federal agencies, including the DOD, are encouraged to review which products are eligible for Buy American and other domestic content regulations and determine the impact of these proposed changes

The new EO has not gone unnoticed by US trading partners, for example, Canada is reportedly seeking exemptions from the Biden government, similar to the 2009 American Recovery and Reinvestment Act (ARRA) These spin-offs were directly related to U.S. procurement projects that were self-funded by ARRA and that have long expired.Other countries may try to adjust their government procurement preference programs in response

These increased requirements may also lead to increased enforcement action by the authorities or to litigation under the False Claims Act in relation to the use of material or products outside the US, including eligibility through a comprehensive TAA transformation analysis The supply chain review that Increasing visibility and developing comprehensive compliance guidelines is more important than ever

For more information on this matter please contact Travis L by phone (1 202 857 6000) or email (Travis) Mullaney, David Salkeld or Birgit Matthiesen in the Arent Fox LLP office in Washington DCmullaney @ arentfoxcom, Davidsalkeld @ arentfoxcom or birgitmatthiesen @ arentfoxcom) Alternatively, you can contact Angela Santos in the New York office of Arent Fox LLP by phone (1 212 484 3900) or by E -Mail (angela) contacting (santos @ arentfoxcom) The Arent Fox LLP website is available at wwwArentfoxcom

(2) Section 205 (Federal Clean Electricity and Vehicle Procurement Strategy) and Section 206 (Procurement Standards) This EO is summarized here

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Source: https://www.internationallawoffice.com/Newsletters/International-Trade/USA/Arent-Fox-LLP/Rethinking-Made-in-America-preferences-Biden-signs-new-executive-order