Effects of Buy America on Transportation Infrastructure and U.s. Manufacturing PDF Download

Author: Congressional Research Service
Publisher: Createspace Independent Publishing Platform
ISBN: 9781973754893
Category :
Languages : en
Pages : 26

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Book Description
With the aim of protecting American manufacturing and manufacturing jobs, Congress over the years has passed several domestic content laws. Statements and actions by the Trump Administration about reinvigorating domestic manufacturing and reinvesting in infrastructure have stimulated renewed interest in these laws, including Buy America. The President's "Buy American and Hire American" initiative includes an executive memorandum requiring the Secretary of Commerce to develop a plan for new pipelines in the United States to be made from domestically produced iron and steel, and a separate executive order directing agencies to strictly adhere to Buy America laws. Buy America refers to several similar statutes and regulations that apply to federal funds used to support projects involving highways, public transportation, aviation, and intercity passenger rail, including Amtrak. Unless a nationwide or project-specific waiver is granted, Buy America requires the use of U.S.-made iron and steel and the domestic production and assembly of other manufactured goods. One of the main manufacturing industries this applies to is the production of rolling stock (rail cars and buses) used in federally funded public transportation and Amtrak's intercity passenger rail service. This report examines the effects of Buy America on these two industries, iron and steel manufacturing and rolling stock manufacturing, in the context of industry trends. Buy America dates to passage of the Surface Transportation Assistance Act of 1978 (STAA; P.L. 95-599), and is different from the Buy American Act, enacted in 1933, which applies to direct purchases by the federal government. Although the Buy America provisions have been in place in some form for almost 40 years, it is difficult to know how they have affected steel and rolling stock manufacturing in the United States, whether measured by jobs, output, or any other indicator. Empirical evidence on the economic benefits or costs of domestic content laws is largely lacking, in part because the effects are small compared with macroeconomic forces such as global economic growth and the related growth in demand for steel. Although employment in domestic steel manufacturing has declined sharply, this is largely attributable to higher industry productivity. Buy America has likely promoted the production of rail cars and buses in the United States, but these industries are relatively small, and demand is related strongly to the combined level of federal, state, and local government funding. Buy America could increase the cost of some transportation projects by requiring the purchase of domestic steel, vehicles, and vehicle components when imported products might be cheaper. In some cases, the difficulty of complying with Buy America rules has been blamed for project delays. The cost of imports used in federally supported projects could rise because agencies within the U.S. Department of Transportation (DOT) require some imports be carried on U.S.-flag vessels in compliance with the FY2009 Duncan Hunter National Defense Authorization Act (NDAA; P.L. 110-417, 3511). Requiring transport by U.S.-flag vessels may also contribute to project delays. Lack of information makes claims about project cost and delay difficult to assess. Much of the congressional activity related to Buy America seeks to strengthen its requirements. The Fixing America's Surface Transportation (FAST) Act (P.L. 114-94), enacted in December 2015, increased the share of public transit rolling stock components and subcomponents that must be produced in the United States from 60% in FY2017 to 65% in FY2018 and FY2019, and to 70% for FY2020 onward. Other bills have proposed increasing the share to 100%. Other legislative proposals have called for expanding Buy America to other parts of the transportation system, such as pipelines, and to other sectors, including clean energy manufacturing.