Implementation of "Buy America" Provisions for Textiles, Apparel Hits Significant Snag

Monday, June 15, 2009

A significant problem has emerged with U.S. government efforts to implement the "Buy America" provision of this year's stimulus bill directly affecting procurement of domestically made apparel and textiles.

As originally provided under terms of the so-called Kissell Amendment, Transportation Safety Administration (TSA) purchases of apparel and uniforms were supposed to be only from domestic sources, however, due to oversights at the Office of the U.S. Trade Representative (USTR), Canada, Mexico, and Chile were not properly notified, so the Kissell Amendment is not apply to apparel imported from these countries. Under WTO rules, member countries can only impose domestic sourcing restrictions on national security grounds. In addition, any countries with which we have a free trade agreement must be notified that certain agencies are being exempted from the agreement. Although the three countries had been notified with regard to TSA, USTR now says they were not properly notified after the creation of the Department of Homeland Security of the intention to exempt TSA from the general procurement rules. Only Mexico, Canada, and Chile are affected by this error. CAFTA and all other FTA countries were properly notified and will not be eligible for TSA contracts.

The net effect is that Canada, Mexico, and Chile may bid on TSA contracts. USTR has admitted that this was a significant miscue and is taking measures to correct it. However, the US will have to pay compensation to Canada, Mexico, and Chile for the loss of any existing or potential business in return for denying them the opportunity to bid on TSA contracts. This will be a negotiated settlement, and it could take months to conclude. Until that time, Canada, Mexico, and Chile are eligible to bid on TSA contracts.

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