President Biden recently issued an Executive Order (EO) to harness the federal government’s purchasing power to bolster domestic manufacturing. The “Strengthening Buy American Provisions, Ensuring Future of America is Made in America by All of America’s Workers” intends to support American industry and American workers. Overall, this EO looks to close loopholes in existing “Buy American” policies and elevates the directive government-wide. This EO could have positive implications for U.S. manufacturers, including those in the food, agriculture, and medical products sectors.
The Buy American EO instructs the following procedures for updating domestic preferences to fit the current realities of the American economy, by:
- Closing the current loopholes on how domestic content is measured and by increasing the requirements. It states the existing policy creates a threshold of how much of the product must be made within the U.S. to qualify. This EO will increase that threshold, as well as the price preference, or the difference over which the government can buy a non-US made product;
- Appointing a new senior member to the Executive Office of the President to oversee the policy. The Director of Made-In-America will be charged with implementing the new rules, work with stakeholders, and carry through the vision of the Administration with other agency partners;
- Increasing transparency and accountability by establishing oversight of potential waivers to domestic preference laws and directing the General Services Administration to publish relevant waivers publicly online;
- Connecting new businesses to contracting opportunities through the use of supplier scouting agencies, such as the Manufacturing Extension Partnership, a national network that links small and medium-sized manufacturers in the U.S. and Puerto Rico with new domestic suppliers;
- Emphasizing the President’s support for the Jones Act, which mandates that U.S.-flag vessels carry cargo between US ports; and
- Requiring agencies to report on their implementation of the Made-In-America rules and to make recommendations for furthering its goals on a bi-annual basis.
This EO could have positive implications for U.S. producers, processors, and manufacturers. For example, “Buy American” requirements could be applied to domestic food assistance programs administered by the Food and Nutrition Service (FNS), like the school lunch program. The National Council of Farmer Cooperatives notes that currently, 81% of apple juice served in U.S. schools is imported, and 26 states serve canned peaches to students from China. Safeguarding the American pharmaceutical supply chain by encouraging bringing more manufacturing back to the United States and making it less dependent on foreign suppliers has long been a policy priority for now-Acting FDA Commissioner Dr. Janet Woodcock. (Over 70% of active pharmaceutical ingredients are manufactured outside the U.S.). Encouraging the procurement of domestic-sourced products will support American manufacturers, farmers, ranchers, and other producers.
Additionally, the EO has a strong emphasis on clean energy and critical supply chains, growing good-paying, union jobs, and racial equity. The EO includes provisions that the “federal government should buy from suppliers that are growing the sectors of the future and treating their workers with dignity and respect.” A strong and diverse U.S. manufacturing, food, agriculture sector are vital to economic success. For example, according to a GAO analysis of the 2017 Census of Agriculture, socially disadvantaged farmers and ranchers (SDFRs), defined as groups who have been subject to racial, ethnic, or gender prejudice, account for 41 percent of U.S. producers. On average, their farmers were smaller and brought in less revenue than non-SDFR farms in 2017. With these provisions, this EO could have a positive and direct impact on supporting SDFRs.
OFW will be monitoring the implementation of this EO and how it might impact American producers and manufacturers. Please contact us with any questions.