Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Buy American - Customs Brokers Beware

For the customs brokers, the current cause célèbre is Buy American. When the American Recovery and Reinvestment Act of 2009 (the Stimulus Act) was signed into law, much was made in the trade and general press about how it was WTO compliant as it contained provisions that recognized American obligations under the WTO’s Government Procurement Agreement, but also gave qualifying treatment to foreign inputs from countries with which the U.S. had a free trade agreement, except for the Caribbean FTA which was specifically excluded. Now the general press is full of stories about the complications that have arisen. We hear that Buy American has led to Canadian pipes being pulled out of the ground in Camp Pendleton to be replaced with American-made pipes. An Indiana town is reported to have rejected sewage pumps made in Canada.

The Associated General Contractors of America has come out in opposition to Buy American citing as an example water treatment facilities which involve materials either made only overseas, or which cost considerably less, a common conundrum. Contractors are finding it challenging to obtain certifications from sub-contractors that all inputs are of American origin. Given the current economy, everyone is looking to keep employees on the payroll and busy. However, the circumstances are forcing contractors to chose between accepting stimulus funds, and paying more for domestically-made parts, or opting out of the assistance provided by the Recovery Act. Apparently they do not understand not everything has to be made in the U.S.!

 

For customs brokers, this is a potential minefield. When a customer calls and asks you to qualify their good under a specific FTA, are you doing so and sharing your findings? Are you asking questions about the intended buyer of the product? You want to keep in mind the Buy American (federal) rules are subject to the Stimulus Act. However, there are also Buy America rules, the ones enacted and enforced by the states and localities, and those rules are different, often more restrictive, and so to avoid creating liability for any advice given, it is important to make clear your analysis applies only to sales for federal projects, but even then, the lack of education in this area among contractors and developers is causing all sorts of unintended consequences; and now we hear similar Buy American provisions are in the climate change bill and perhaps others!

Just as forwarders must make sure their SOPs account for differing levels of access for controlled goods, services and technology/data based upon the citizenship of those seeking access, brokers must be careful to not get sucked into giving an opinion without having all the facts. The first question you should ask is do you even want to get involved in rendering opinions about whether or not goods qualify for Buy American? If you decide yes, then make sure you have complete and adequate disclaimers in any opinions you issue. Additionally, it would be wise to make sure you have the correct people at the right level within the company, and with proper and complete training, rendering those opinion letters. Time for an update of your import SOPS?

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