February 13, 2009 / 4:50 PM / 10 years ago

FACTBOX: "Buy American" provision in U.S. stimulus bill

(Reuters) - The U.S. Congress is expected to approve an $787 billion economic stimulus, including a Buy American provision that has aroused concerns among trade partners and some U.S. business groups.

Here are details of the provision:

* The Buy American provision imposes a general requirement that any public building or public works project funded by the new stimulus package use only iron, steel and other manufactured goods produced in the United States.

* The stimulus package includes about $48 billion in transportation projects, roughly $30 billion in infrastructure improvements and additional other spending that could be covered by the Buy American provision.

TRADE PACT COMMITMENT CLAUSE

* The bill stipulates that the Buy American provision be “applied in a manner consistent with United States obligations under international agreements.”

* That is further explained in separate report language on the bill to clarify that it requires the United States to comply with obligations under the World Trade Organization’s government procurement agreement and under the North American Free Trade Agreement and other U.S. free trade accords.

* The report language says products from least-developed countries would be treated in the same manner as countries with which the United States has formal trade commitments.

* The trade compliance language gives members of the WTO’s government pact such as the European Union, Japan, Canada, South Korea and Taiwan comfort they could provide material for a public works project funded by the stimulus bill.

* But countries such as China, Brazil, Russia and India which are not members of the government procurement accord or do not have free trade pacts with the United States are not protected by that clause.

WAIVER AUTHORITY

* The act allows the Buy American mandate to be waived if the federal agency overseeing a particular project deems it would be “inconsistent with the public interest.”

* It can also be waived if iron, steel and the relevant manufactured goods “are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality” or if it would increase the overall cost of a project by more than 25 percent.

* The waivers can apply to a “category of cases” so if a particular product is not made in the United States, contractors would not have to apply over and over again for permission to use it.

Reporting by Doug Palmer; editing by David Storey

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