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TPP Would Gut Buy American: Happy July 4th!

Red, white and sounds unbelievable. But, indeed, as Americans celebrate July 4th this year, U.S. trade negotiators are locked behind closed doors at a Trans-Pacific Partnership (TPP) negotiating round in Ottawa gutting Buy American policies.

The Buy American Act requires that most federal government procurement contracts go to American firms unless a product is not made here or the U.S. products are much more expensive. From the workers who manufacture the materials to upgrade America's bridges and highways to those who build the cars driven by our government officials, Buy American creates U.S. jobs by recycling U.S. tax dollars back into our economy.

That's why Buy American is supported by four out of five voters -- Republicans, Democrats and independents alike.

But Buy American would be gutted, and American jobs lost, under the TPP, the sweeping "trade" deal that President Obama says he wants to sign this year with 11 Pacific Rim nations. The TPP would require a waiver of the original Buy American preferences in place since 1933 as well as additional Buy American preference programs established more recently.

Public Citizen recently analyzed Internal Revenue Service data on how U.S. tax dollars from all 50 states are used in the federal procurement system, and the numbers are eye-opening. Here's a small sample of what we found:

  • Massachusetts residents pay $3,184 each in taxes every year that go to support federal procurement, amassing a state total of $17.6 billion.
  • If you live in Illinois, your average annual federal tax of $2,657 gives U.S. government buyers $26.7 billion of their annual spending power.
  • Each Texas taxpayer provides an estimated $2,645 annually in support of federal procurement, resulting in a statewide total of approximately $48.7 billion.
  • Tennesseans' average $2,441 paid in federal taxes per year supplies $10.5 billion of the federal procurement system's revenue.
  • Each year, taxpayers in California finance approximately $65.2 billion in federal procurement, or an estimated $2,280 per California taxpayer.
  • Annual U.S. government procurement is funded with approximately $11.7 billion contributed by people in Washington state, which translates to $2,132 per taxpayer on average.
  • The $1,694 in taxes that the average Floridian pays annually translates into $27.5 billion in spending power for the federal procurement system.

Much of that money is currently funneled back into American jobs thanks to Buy American. But the TPP would break this virtuous cycle, offshoring billions of the tax dollars paid by U.S. residents to create jobs elsewhere.

How could this be? The TPP's procurement chapter would require that all firms operating in any TPP country be provided the same access as American firms to U.S. government procurement contracts over a set de minimis value. For example, the many Chinese-government-owned firms in Vietnam would be empowered to undercut American businesses to get contracts for goods bought by the U.S. government, paid for by American taxpayers. (Manufacturing wages in Vietnam average 52 cents per hour.)

If the U.S. government did not waive Buy American preferences for all firms operating in any TPP country to conform to TPP rules, the United States could be slammed with indefinite trade sanctions.

When word leaked out that U.S. negotiators were pushing such a lunatic plan, 69 House members and many Senators announced opposition to such measures, stating that the TPP's limits on Buy American "could result in large sums of U.S. tax dollars being invested to strengthen other countries' manufacturing sectors, rather than our own." But rather than respect Congress' Article I-8 exclusive constitutional authority over trade, executive branch negotiators have proceeded to agree to the very terms many in Congress opposed.

Even if one supports the offshoring of U.S. tax dollars in principle, it is a terrible idea for the TPP in practice. The U.S. federal procurement market is more than 10 times larger than ALL of the new prospective TPP procurement markets combined. That means we would trade away preferential access for U.S. firms to the $556 billion U.S. federal government procurement market in exchange for just $53 billion worth of new procurement markets for U.S. companies seeking business in TPP countries. At a loss of more than $10 for every $1 gained, access for some U.S. companies to bid on contracts in TPP countries is a terrible trade-off for waiving Buy American preferences on U.S. procurement.

So, this July 4th, you can say yes to made-in-America goods and yes to American jobs by getting your Representatives to say no to the TPP's ban on Buy American. Reps. Donna Edwards (D-MD) and Walter Jones (R-NC) have launched a Dear Colleague sign-on letter to provide a way for the House of Representatives to get the executive branch negotiators to knock it off. When you see your Representative at this week's July 4th festivities, let them know you want them to sign this letter -- and help build a majority in Congress protecting us from the TPP's damage.

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