Discuss the Buy America Act and its connection with local content requirements. Is it fair? Do you agree with it? What might be a better way to get people to buy American? Does it work? Are there other ideas that might get a similar result?
9 Answers | Add Yours
Post 9 brings up an interesting complication to the shape of the "to enforce some modes of protectionism or not to enforce some modes of protectionism" debate.
It seems that this example is quite to the point as well, suggesting a reality that simultaneously creates and responds to international market demands and a logical preference for "shopping local".
Personally, the idea of enforcing some modes of protectionism makes sense to me, especially if some governments are subsidizing industry in their own countries. Free trade relies, to some extent, on the idea of an even playing field and certain tariffs might actually serve to level that playing field.
However, defining the economic and political limits of what constitutes protectionism and how to strategically remain on one side of that line appears to be a rather epic challenge.
It is a difficult issue, because on the one hand, it is important to support national products as opposed to cheaper foreign imports that will negatively impact the British economy. However, as editors above have expressed, trade should be by nature free without protectionism. However, I doubt we are all ready to face the realities of this if we take this to its logical conclusion.
While I see the focus of the Buy American act, I think that the act will (and has been) relatively ignored based upon the fact that consumers can find less expensive products which are made outside of the US. Until products which are American are sold at competitive prices, consumers will simply look elsewhere.
I'm not sure that the choice is as clear as "free trade" or a "slide into autarky." Like many aspects of our economy, some protections for American goods are probably in order in some cases, and perhaps not in others. I think the question must have been referring to the Buy America Act of 1983, and this is quite different than a tariff, the effects of which can sometimes be negative. Rather, it is our government showing a preference for materials manufactured in our country, subject to our taxes, our standards for quality and labor conditions. Pure free trade is probably impossible, and I'm not even sure we should aspire towards it.
First, do you mean the Buy American Act of 1933 that requires government purchased products and materials be American in origin, with some stated exceptions such as those related to trade agreements? Or do you mean the Buy America Act of 1983 (50 years later) that pertains to the Department of Transportation and regulates that the "steel, cement, and manufactured products" used in highway projects be "produced in the United States."
Since these acts are related to government agencies procuring supplies and products for government projects:
Buy America applies solely to grants issued by the Federal Transit Administration and Federal Highway Administration; Buy American may be applied to all direct U.S. federal procurement.
if the government were to suspend its preference for domestic products, thousands or hundreds of thousands of American jobs and businesses would be negatively effected. Governments traditionally determine it to be sound domestic policy to support one's own country's labor and product markets, and this strategy is a logical, conservative (as opposed to risky), and sensible one.
Buy American Act 1933
(a) The Buy American Act—
(1) Restricts the purchase of supplies, that are not domestic end products, for use within the United States. A foreign end product may be purchased if the contracting officer determines that the price of the lowest domestic offer is unreasonable or if another exception applies (see Subpart 25.1);
Buy America Act 1983
provides with exceptions that funds authorized for Federal-aid highway projects may not be obligated unless the steel, cement, and manufactured products used in such projects are produced in the United States.
I agree with Post #3. As long as we are going to have trade, it needs to be free. We have to decide if we are going to pursue free trade or retreat into autarky. The problem is that free trade has diffuse beneficiaries (we all benefit from it, but only a little) and concentrated victims (some few people get hurt a lot). Therefore, there will always be a push towards protectionism.
I agree that protectionism and movements like "buy American" are far from ideal. Trade should be free. The best way for people to buy American products is if American products are superior and sold at a competitive price. To say that we should buy an inferior American product is not good business. In light of this, what we need to do is to make the best product. It is plain and simple from this perspective.
Ideally, trade should be free, without governmental restrictions regarding prices (safety is another matter). However, trade rarely is free, and I can certainly understand why the federal government encourages government agencies to "buy American." It would be interesting to know how many other countries have similar provisions. I suspect that they are common.
We’ve answered 319,632 questions. We can answer yours, too.Ask a question