WASHINGTON -- A group of 68 House Democrats and one Republican sent a letter to President Barack Obama on Thursday urging him to reconsider an element of the controversial free trade agreement currently being negotiated by the administration. If approved in its current form, the pact would effectively ban "Buy American" policies in government contracting.
Although the deal, known as the Trans-Pacific Partnership, has received relatively little media attention in the United States, it has sparked international friction among consumer groups and environmental activists who worry that terms demanded by the Obama administration will eliminate important public protections. Domestically, however, the deal's primary source of political tension is from a portion that could ban "Buy American" provisions -- a restriction that opponents emphasize would crimp U.S. jobs.
Since the 1930s, the American government has offered preferential treatment to American producers in the awarding of federal contracts. If a domestic producer offers the government a more expensive bid than a foreign producer, it can still be awarded the contract under certain circumstances, but more recent free trade agreements have granted other nations the same negotiating status as domestic firms. The Obama administration is currently pushing to grant the several nations involved in the Trans-Pacific deal the same privileged status, according to the Thursday letter.
"We do not believe this approach is in the best interests of U.S. manufacturers and U.S. workers," the letter reads. "Of special concern is the prospect that firms established in TPP countries, such as the many Chinese firms in Vietnam, could obtain waivers from Buy American policies. This could result in large sums of U.S. tax dollars being invested to strengthen other countries' manufacturing sectors, rather than our own."
The letter from members of Congress to the administration marks a rare glimpse inside the typically secretive trade negotiation process. The terms of the free trade negotiations, including the Trans-Pacific pact, are withheld from the public, even though the governments of all the countries involved have access to them. Many major U.S. corporations have access to the draft negotiation texts through their positions on advisory boards to the Office of the U.S. Trade Representative, the White House agency which negotiates trade deals.
"Buy American" provisions do not help all U.S. firms equally. Corporations headquartered in the U.S. that offshore most of their manufacturing operations do not benefit from the system designed to promote domestic production in the way that companies with actual U.S. manufacturing operations do.
Public interest groups also worry that the same trade policies that could ban Buy American breaks will also prevent the U.S. government from making environmental or public health stipulations in federal contracts. The current language barring preferential treatment for American goods is so broad as to limit government specifications on goods to purely functional aspects. When contracting for paper, for instance, the government could specify that it wants to buy paper of the dimensions 8.5" by 11" -- but it could not require that the paper be composed of recycled materials or use non-toxic dye.
The potential "Buy American" ban also conflicts with a top theme of Obama's re-election campaign -- boosting U.S. manufacturing. In February, the administration proposed fixing a tax loophole that has been exploited by oil and gas companies in order to provide breaks to domestic manufacturers. The tax proposal is not expected to gain any traction during an election year, however, although prospects for the trade agreement are much stronger. Last year, Congress approved three free trade deals initially negotiated by President George W. Bush that Obama had decided to support.
The White House was not immediately available for comment.
USTR spokeswoman Carol Guthrie told HuffPost that the administration is seeking "fair, transparent, predictable and non-discriminatory" contracting rules.
"The U.S. aim in covering government procurement under the TPP is to provide new market opportunities for U.S. goods, services, and suppliers," Guthrie said.
Read the full letter to Obama here.
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Although the deal, known as the Trans-Pacific Partnership, has received relatively little media attention in the United States, it has sparked international friction among consumer groups and environmental activists who worry that terms demanded by the Obama administration will eliminate important public protections. Domestically, however, the deal's primary source of political tension is from a portion that could ban "Buy American" provisions -- a restriction that opponents emphasize would crimp U.S. jobs.
Since the 1930s, the American government has offered preferential treatment to American producers in the awarding of federal contracts. If a domestic producer offers the government a more expensive bid than a foreign producer, it can still be awarded the contract under certain circumstances, but more recent free trade agreements have granted other nations the same negotiating status as domestic firms. The Obama administration is currently pushing to grant the several nations involved in the Trans-Pacific deal the same privileged status, according to the Thursday letter.
"We do not believe this approach is in the best interests of U.S. manufacturers and U.S. workers," the letter reads. "Of special concern is the prospect that firms established in TPP countries, such as the many Chinese firms in Vietnam, could obtain waivers from Buy American policies. This could result in large sums of U.S. tax dollars being invested to strengthen other countries' manufacturing sectors, rather than our own."
The letter from members of Congress to the administration marks a rare glimpse inside the typically secretive trade negotiation process. The terms of the free trade negotiations, including the Trans-Pacific pact, are withheld from the public, even though the governments of all the countries involved have access to them. Many major U.S. corporations have access to the draft negotiation texts through their positions on advisory boards to the Office of the U.S. Trade Representative, the White House agency which negotiates trade deals.
"Buy American" provisions do not help all U.S. firms equally. Corporations headquartered in the U.S. that offshore most of their manufacturing operations do not benefit from the system designed to promote domestic production in the way that companies with actual U.S. manufacturing operations do.
Public interest groups also worry that the same trade policies that could ban Buy American breaks will also prevent the U.S. government from making environmental or public health stipulations in federal contracts. The current language barring preferential treatment for American goods is so broad as to limit government specifications on goods to purely functional aspects. When contracting for paper, for instance, the government could specify that it wants to buy paper of the dimensions 8.5" by 11" -- but it could not require that the paper be composed of recycled materials or use non-toxic dye.
The potential "Buy American" ban also conflicts with a top theme of Obama's re-election campaign -- boosting U.S. manufacturing. In February, the administration proposed fixing a tax loophole that has been exploited by oil and gas companies in order to provide breaks to domestic manufacturers. The tax proposal is not expected to gain any traction during an election year, however, although prospects for the trade agreement are much stronger. Last year, Congress approved three free trade deals initially negotiated by President George W. Bush that Obama had decided to support.
The White House was not immediately available for comment.
USTR spokeswoman Carol Guthrie told HuffPost that the administration is seeking "fair, transparent, predictable and non-discriminatory" contracting rules.
"The U.S. aim in covering government procurement under the TPP is to provide new market opportunities for U.S. goods, services, and suppliers," Guthrie said.
Read the full letter to Obama here.
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