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Trump orders agencies to rein in use of foreign contractors

April 17, 2017 (Photo Credit: Evan Vucci/AP)
In a move it says will boost manufacturing and skilled labor at home, the White House previewed an executive order that will make it tougher to obtain foreign contracting waivers and H-1B visas.

President Trump will sign the order, dubbed “Buy American, Hire American”, in Kenosha, Wisconsin, on April 18, which will order federal agencies to review and assess free trade agreements with foreign government contractors, closing loopholes in those agreements that might provide a competitive edge over domestic competition.

Senior administration officials outlined the broad goals of the measure in an April 17 briefing at the White House, saying that the move is to tackle an economic problem overlooked by previous administrations.

“It’s a well-known fact amongst those who study federal procurement policy and our visa and guest worker policies that both ‘Buy American’ and ‘Hire American’ rules have both been enormously diluted over time,” said a senior administration official, whom the White House asked not to be identified.

“The waivers and exemptions process in ‘Buy American’ have been abused greatly, resulting in many lost job opportunities for American workers.”

The order calls agencies to evaluate their contractor trade practices to clamp down on weak monitoring, enforcement and compliance efforts and “rooting out every single ‘Buy American’ loophole.”

The agencies will then submit their reports to Secretary of Commerce Wilbur Ross, who will advise the president on the policy objectives required to eliminate the loopholes, which the White House estimates will be done within 220 days of the order’s signing.

“For the first time, the ‘Buy American’ said a bidding process will take into account the flagrant use of unfair trade practices, by dumping an injurious subsidization now used to steal contracts from American workers and domestic manufacturers,” another senior administration official said.

The order is said to squarely take aim at what officials referred to as “unreciprocal trade” with foreign contractors the U.S. has trade agreements with through the World Trade Organization Agreement on Government Procurement.

Officials cited a Feb. 9 Government Accountability Office report that said in 2010, the U.S. spent more on foreign procurement than its next five largest foreign counterparts in the trade agreement — the European Union, Japan, South Korea, Norway and Canada — combined, potentially undercutting domestic companies.

But the report also noted that procurement information between the trading partners was often incomparable due to reports not being submitted on time and with all the relevant data. The GAO also found that while the North American Free Trade Agreement requires its partners to submit annual procurement reports, none had done so since 2005, while other agreements required no submission of procurement data.

As for the "Hire American" portion of the order, officials said they will direct the departments of Labor, Justice, Homeland Security and State to develop policies for the selection process for the H-1B visa program — which awards visas to specialty occupation workers from foreign countries — to focus on the “most-skilled and highest-paid applicants.”

White House officials said 80 percent of H-1B workers were paid less than the median wages in their fields, allowing companies to undercut domestic workers with cheaper salaries.

“If you change that current system that awards visas randomly, without regard for skill or wage, to a skills-based awarding, it makes it extremely difficult to replace or undercut American workers,” the first senior administration official said.

“So it’s a very elegant way of solving very systemic problems.”
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