With many of his cabinet members awaiting confirmation, US President Joe Biden has pushed through numerous executive orders in his first days in office, with the latest aimed at domestic manufacturing. ©AFP/File MANDEL NGAN 

Washington (AFP) – US President Joe Biden will sign an executive order on Monday giving American companies and products priority in contracting with the federal government, as the new administration attempts to spur domestic manufacturing.

The order is aimed at boosting national production and saving industrial jobs by increasing investments in factories and workers, senior White House officials said, and comes after Biden promised on the campaign trail to “build back better” as the US economy struggles through the Covid-19 pandemic.

It also tightens legal loopholes that allow federal agencies to buy products stamped “Made in America” but which are often manufactured by companies that only produce a small portion of their products in the United States.

Washington spends $600 billion each year on contracts, and the administration’s decisions was welcomed by the Alliance for American Manufacturing trade group.

“The law should mean what it says: an American product should be truly Made in America,” its president Scott Paul said.

The announcement drew a cautious reaction from Canada, a major Washington trading partner that is also, along with Mexico, part of a new free trade agreement that took effect last year.

“The United States sells more to Canada than it does to China, Japan and the UK combined. And what we are really going to focus on in our work with the Biden administration is those win-wins,” Deputy Prime Minister Chrystia Freeland said, adding that Prime Minister Justin Trudeau raised the policy in a recent phone call with Biden.

– Avoiding a trade war –

Less than a week after his inauguration, Biden has so far used executive orders to push through his agenda, and this latest order is similar to ones made by his predecessors, particularly former president Donald Trump.

Trump had issued an executive order urging the federal government to purchase more US-made products and also turning tariffs into a weapon against imports — with mixed results.

Biden has said he doesn’t plan to tweak Trump’s trade policies immediately but is also disinclined to double down on the trade combat, instead using the federal government’s massive purchasing power to tighten the “Buy American” rules.

“The dollars the federal government spends… are a powerful tool to support American workers and manufacturers,” an administration official said.

The Buy American Act of 1933, still in force, requires federal agencies to prioritize purchasing goods produced on US soil, but “these preferences have not always been implemented consistently or effectively,” according to the Biden administration.

Biden’s approach seeks to change the structure of the process, by altering the definition of what is considered a US-made product and reducing the possibilities for exemptions.

The administration also wants new companies, including small ones, to have access to tenders.

– Strengthening the supply chain –

During his presidential campaign, Biden promised to strengthen the “Buy American” process with a $400 billion plan for projects using US-made products — including steel, or protective equipment for health care workers battling Covid-19.

After his electoral victory in November, Biden promised that the federal government would buy American cars and inventory.

However, companies have already warned that overly restrictive rules could cause costs to soar, making it more difficult to buy parts made outside the country.

An official said the executive order should be seen as part of “the president’s commitment to invest in American manufacturing, including clean energy and critical supply chains.”

US officials have previously said the pandemic has highlighted the weaknesses of the country’s supply chains, and said they want to avoid being put in a position of depending on countries that do not share US interests in delivering essential materials.

Biden “remains committed to working with partners and allies to modernize international trade rules… to make sure all countries can use their taxpayer dollars to spur investment in their own countries,” an official said.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.