U.S. Government Procurement and International Trade
Congressional research reportJan 10, 2023
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U.S. Government Procurement and
International Trade
Updated January 10, 2023
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https://crsreports.congress.gov
R47243
SUMMARY
U.S. Government Procurement and
International Trade
The Coronavirus Disease 2019 (COVID-19) pandemic and the global supply chain issues it
brought to light revealed that the U.S. government relies heavily on foreign manufacturers and
suppliers when procuring goods in some industrial sectors. Some of these foreign suppliers are
based in countries of growing concern, such as the People’s Republic of China (PRC or China).
These revelations, in turn, have prompted heightened congressional interest in the role of
international trade in U.S. government procurement. Some Members of Congress have expressed
interest in the extent to which federal agencies procure from foreign suppliers or acquire foreignmade goods; related import trends; and U.S. production capacity in industries deemed essential.
R47243
January 10, 2023
Andres B. Schwarzenberg
Analyst in International
Trade and Finance
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please call 7-5700 or visit
www.crs.gov.
Since the 1970s, the United States has played a prominent role in opening government procurement markets abroad through
trade liberalization and the establishment of transparent and nondiscriminatory rules. Successive Congresses and
Administrations broadly supported this agenda. At the same time, Congress has sought to incentivize U.S. domestic
production by prioritizing the procurement of domestic goods and services or by restricting foreign firms’ access to the U.S.
government procurement market. Federal agency acquisitions must comply with various domestic sourcing laws (“Buy
American” laws) unless these requirements have been waived—for example, to uphold U.S. commitments under various
international agreements. Such laws include the Buy American Act of 1933 (BAA), which is distinct from the “Buy
America” laws, and the Trade Agreements Act of 1979 (TAA). Although both BAA and TAA affect international trade, their
respective requirements differ. Whereas BAA operates as a price preference for U.S. products, TAA establishes a prohibition
on procuring products and services from nondesignated countries, unless one of TAA’s exceptions applies. (TAA also
implements several international trade agreements and initiatives.) Both the Trump and Biden Administrations issued
executive orders to increase oversight of waivers of these laws that would allow government purchases of foreign goods.
U.S. efforts to strengthen so-called “Buy American” requirements have several implications. They could potentially conflict
with U.S. international procurement commitments or require the United States to renegotiate them. “Buy American” laws
aim to revitalize and rebuild domestic manufacturing capacity and safeguard national security. They also have some potential
to adversely affect some U.S. suppliers and exporters, and some global supply chains. Many U.S. government contractors
rely on global supply chains to support their U.S. government contracts, which may include networks of suppliers and
manufacturing facilities in the territories of trading partners with which the United States has international agreements that
include government procurement commitments. Even when manufactured in the United States, many of the products that
U.S. suppliers deliver to federal entities may include components manufactured in a foreign partner’s territory. Changes to
domestic sourcing requirements could require some U.S. businesses to restructure their supply chains—including, for
example, by changing suppliers or relocating facilities. Some observers note that this could be a positive development. Other
observers note that this, in turn, could potentially increase some costs, and in some circumstances, risk decreasing U.S.
competitiveness vis-a-vis other trading partners. If U.S. trading partners adopt similar measures, some U.S. firms could be
disqualified from bidding for foreign government contracts.
Congress may consider whether the Biden Administration’s government procurement agenda is appropriate, whether or not
Congress should seek to shape it, and, if so, how. Congress could consider exercising oversight over the implementation of
recent legislative changes to “Buy American” requirements. Congress could also consider whether or not to codify or amend
additional changes that the Biden Administration has implemented or proposed. These changes include President Biden’s
executive orders that modified domestic content rules to prioritize further the procurement of U.S. goods and services; the
limitation or elimination of waivers that allow government purchases of foreign goods; and working with allies to modernize
trade rules and modify U.S. international commitments regarding government procurement. Given the size of the global
government procurement market and the effects of domestic preference policies on trade, some Members of Congress and
U.S. businesses have supported opening procurement markets to international competition, subject to certain requirements
and reciprocal commitments by trading partners, to ensure greater access for U.S. suppliers and their goods and services.
This report explains when U.S. international trade obligations require federal agencies to allow foreign suppliers to compete
for government contracts. It also provides an overview of U.S. multilateral and bilateral efforts to develop rules and trade
disciplines on government procurement. The report illustrates how international agreements, such as the World Trade
Organization (WTO) Agreement on Government Procurement (GPA) and U.S. free trade agreements (FTAs), require parties
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to establish transparent and nondiscriminatory rules for covered procurement and enable U.S. businesses to bid for certain
contracts in the markets of other GPA and FTA parties.
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Contents
Background ..................................................................................................................................... 1
Buy American Act of 1933 .............................................................................................................. 4
Application ................................................................................................................................ 5
Foreign Content and the Micro-Purchase Threshold .......................................................... 6
Compliance Test ........................................................................................................................ 7
Exemptions................................................................................................................................ 8
Trade Agreements Act of 1979 ........................................................................................................ 9
Application .............................................................................................................................. 10
Compliance Test ....................................................................................................................... 11
BAA or TAA? Procuring Foreign-Made Products ......................................................................... 11
International Agreements and U.S. Application ............................................................................ 13
WTO Government Procurement Agreement (GPA) ................................................................ 16
General Obligations under the GPA.................................................................................. 18
National Security and General Exceptions ....................................................................... 22
Effects of GPA Membership for the United States ........................................................... 22
U.S. Free Trade Agreements ................................................................................................... 23
Reciprocal Defense Procurement Memoranda of Understanding ........................................... 25
U.S. States and Cities Covered by International Agreements ................................................. 26
U.S.-EU Procurement Market Issues............................................................................................. 27
Data Limitations on U.S. Government Procurement ..................................................................... 29
Biden Administration Procurement Policy and Priorities.............................................................. 29
Recent Changes to Buy American Regulations....................................................................... 30
Issues for Congress ........................................................................................................................ 32
Outlook and Policy Options .................................................................................................... 33
Government Procurement Data Collection Options ......................................................... 35
CRS Resources .............................................................................................................................. 36
Figures
Figure 1. Government Procurement in 2019: Select Economies ..................................................... 2
Figure 2. Simplified Example of Foreign-Made Product Procurement ......................................... 12
Figure 3. U.S. Reciprocal Agreements Affecting the Application of Buy American
Requirements by Country........................................................................................................... 16
Figure 4. WTO GPA Parties and Observers .................................................................................. 17
Figure 5. U.S. States and Cities Covered by International Agreements ........................................ 27
Tables
Table 1. Procurement Thresholds for Implementation of the Trade Agreements Act ..................... 6
Table 2. Economies to Which the United States Extends Nondiscriminatory Treatment in
Certain U.S. Government Procurement Activities ..................................................................... 14
Table 3. Links to Government Procurement Provisions in U.S. FTAs .......................................... 23
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Contacts
Author Information........................................................................................................................ 37
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Background
Since the 1970s, the United States has played a prominent role in the development of global trade
rules and agreements on government procurement. The most notable of U.S. international
agreements addressing procurement and trade are the World Trade Organization’s (WTO’s)
plurilateral Agreement on Government Procurement (GPA) and the procurement chapters in most
U.S. free trade agreements (FTAs). The federal government implements these agreements
primarily through the Trade Agreements Act of 1979 (TAA, 19 U.S.C. §§2501-2581).
Data limitations and other factors make it difficult to quantify accurately the size of the global
government procurement market. The Organization for Economic Cooperation and Development
(OECD) estimates that procurement expenditures by its members are, on average, equivalent to
13% and 30% of gross domestic product (GDP) and total general government expenditures,
respectively (Figure 1).1 The WTO estimates the size of the procurement market covered by the
GPA alone (i.e., areas where the 48 parties to the GPA have chosen to open up their procurement
markets) at $1.7 trillion.2
The Role of Government Procurement in International Trade
According to the Organization for Economic Cooperation and Development (OECD), government (or public)
procurement “refers to the purchase by governments and state-owned enterprises of goods, services and works.
The public procurement process is the sequence of activities starting with the assessment of needs through
awards to contract management and final payment.” Government policies that accord preferences to domestic
firms over foreign firms in government procurement contracts are one of the “behind-the-border” measures that
affect international trade and efforts toward increased economic integration.
While aimed at boosting the domestic economy and supporting domestic firms, these policies also may introduce
some economic inefficiency or market distortions that could limit choice, or increase some prices. Increased
competition from foreign suppliers for government procurement contracts may reduce some costs for supplied
goods and services, increase some taxpayers’ value for money, and encourage economically efficient allocation of
resources across the economy.
There are two forms of domestic bias:
Explicit: measures or practices that directly and intentionally reduce or prevent foreign companies' access
to a government procurement market, such as explicit market access restrictions, domestic price
preferences, or local content requirement policies.
Implicit: measures or practices that do not expressly target foreign bidders, but that may indirectly—or
potentially—affect cross-border procurement opportunities. These relate to the conduct of procurement
(such as type of tendering), qualification and evaluation criteria, and review and complaints mechanisms.
Lack of reliable and disaggregated international data limits analysts’ and policymakers’ ability to assess the extent
to which government procurement policies distort international trade and investment flows. It may also
complicate efforts to design policies that minimize or eliminate these effects.
Recognizing the cost inefficiencies that restrictive government procurement can impose on national economies,
the United States and major trading partners, working with international economic organizations, have sought for
many years to bring government procurement under multilateral trade rules. In parallel, a number of regional and
bilateral trade agreements include commitments on procurement.
Source: Adapted from the Organization for Economic Cooperation and Development (OECD), “Government
Procurement,” Trade Policy Brief, January 2019.
1 Organization for Economic Cooperation and Development (OECD), National Accounts Statistics (Database). As of
January 2023, the OECD’s 38 members are: Austria, Australia, Belgium, Canada, Chile, Colombia, Costa Rica, Czech
Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea,
Latvia, Lithuania, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic,
Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom, and the United States.
2 World Trade Organization (WTO), “Agreement on Government Procurement,” Trade Topics.
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Figure 1. Government Procurement in 2019: Select Economies
Source: Congressional Research Service (CRS) with data from the Organization for Economic Cooperation and
Development (OECD).
Notes: 2019 is the most recent year for which complete data are available. Comparable data are not available
for every country, including China.
Because governments spend a large amount of money on procurement each year, they exert
influence on market outcomes. This may change the composition of international trade and
investment flows and affect the competitiveness of producers and suppliers globally.
Governments are often the largest purchasers of goods within their territories. Competing policy
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goals may require varying approaches to economic development and national security. Policies
that discriminate in favor of domestic products or suppliers may yield some economic, social, and
political benefits, but they may also introduce market distortions that, for example, may limit
some consumer choice, increase some prices, introduce some economic inefficiency, and affect
international trade flows. In particular, by restricting the pool of suppliers, governments may
incur higher costs. Procurement policies and practices can also act as barriers to trade and
international competition.
Many governments use procurement regimes to achieve a wide range of economic, social,
political, and strategic goals. These include safeguarding national security, creating employment
opportunities in specific industries or regions, achieving environmental and social sustainability,
or improving the international competitiveness of domestic industries. Whether policies are
efficient or effective at meeting their stated goals is subject to debate. Ultimately, governments
typically weigh the potential adverse effects against the potential benefits of these measures.
International agreements have opened many procurement opportunities around the world to
international competition, while also requiring parties to establish transparent and
nondiscriminatory rules for certain procurements. However, international regimes on government
procurement are not necessarily comprehensive and do not cover every country or sector. For
example, the 48 parties bound by the WTO GPA negotiate market access commitments on a
reciprocal basis, meaning that procurement coverage in each market varies considerably. A 2017
study by the U.S. Government Accountability Office (GAO) estimates that while the United
States opens as much as 80% of its federal contracts to foreign suppliers, South Korea and Japan,
for example, may do the same for 13% and 30%, respectively.3 The United States, while among
the world’s most open markets overall, maintains restrictions on foreign sourcing under laws such
as the Buy American Act of 1933 (BAA, 41 U.S.C. §§8301-8305). In the United States, state and
local level governments may also have similar preferential policies.
Recent global economic developments, combined with increasing cross-border trade and supply
chain digitization, have raised a number of issues and questions for Members of Congress,
Administration officials, and policymakers abroad.4 These relate to
Globalization of supply chains. As a result of global supply chains, fewer
products are sourced and assembled in any one country.5 Increasingly, some
components of U.S. products are sourced abroad and assembled in the United
States, or conversely, products composed of U.S. components are assembled
elsewhere. Hence, it has become increasingly difficult to determine the origin of
products to comply with government procurement regulations or to find solesourced U.S. products. To comply with domestic content requirements,
companies may segregate their supply chains. This could potentially disrupt
existing sourcing patterns and long-standing business relationships. The extent to
which this might affect overall efficiency and competitiveness remains an open
3 U.S. Government Accountability Office (GAO), “Government Procurement: United States Reported Opening More
Opportunities to Foreign Firms Than Other Countries, but Better Data Are Needed,” February 2017, GAO Report
GAO-17-168. The study uses data for 2010 and focuses “on the United States, Japan, and South Korea because only
these countries reported detailed data on non-covered central government procurement to the WTO.”
4 See, for example, Knut Alicke, Jürgen Rachor, and Andreas Seyfert, “Supply Chain 4.0—The Next-Generation
Digital Supply Chain,” McKinsey & Company, October 27, 2016; and CRS Report R46198, Internet Regimes and
WTO E-Commerce Negotiations, by Rachel F. Fefer.
5 For more detail on global supply (value) chains, see CRS Report R46641, Global Value Chains: Overview and Issues
for Congress, coordinated by Rachel F. Fefer.
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question. Effects vary across businesses and sectors, but such developments
could drive up costs for some companies that, in turn, could be passed on to the
U.S. federal government.
Access to foreign procurement. The WTO GPA and U.S. FTAs do not cover
many of the largest foreign markets (e.g., Brazil, China, and India).6 Many U.S.
businesses would like to access these markets, but they may face resistance from
foreign governments when the United States imposes BAA restrictions, for
example. U.S. access to these markets would entail establishing U.S. reciprocal
commitments to allow these countries’ products and suppliers access to the U.S.
government procurement market. Such commitments could potentially constrain
the U.S. government’s current efforts to shift certain supply chains and diversify
certain dependencies away from China. Additional restrictions or requirements
on U.S. government procurement, even if consistent with U.S. international trade
obligations, could prompt other foreign governments to adopt similar policies,
possibly to the detriment of U.S. businesses and economic interests.
Higher costs. “Buy national” policies generally allow price preferences for
domestic goods up to a certain price differential. The use of price differentials
could increase costs to complete some projects, or yield fewer projects
undertaken for a given appropriation. In stimulus-related spending, these
restrictions may help, in some circumstances, to support wages but in some
circumstances may not yield a greater number of jobs.
The following two sections provide a high-level overview of BAA and TAA, and issues of
congressional interest with implications for U.S. trade policy.
Buy American Act of 1933
The Buy American Act is the most broadly applicable U.S. domestic preference statute that
governs procurement by the federal government. As implemented, it establishes a price
preference for federal agencies’ purchases of domestic end products to be used in the United
States—one that effectively requires agencies to favor domestic end products (textbox). It
generally does not prohibit a federal agency from purchasing an essentially equivalent foreign
product if the agency determines that the foreign product is less costly after a comparative price
evaluation test. For civilian agency procurement, the contracting officer typically adds a price
preference or evaluation factor (commonly referred to as the price evaluation “penalty”) to the
lowest foreign offer equal to 20% or 30%, depending on whether the lowest domestic offer is
from a large or small business.7 For U.S. Department of Defense (DOD) procurements, the
“penalty” is 50%, regardless of whether the low domestic offeror is a small or large business.8
The BAA price evaluation penalty serves as an evaluation tool. If a foreign offer is less expensive
even after the application of the “penalty,” contracting agencies may generally purchase the
foreign product. In such a case, the contracting agency would only pay the proposed price, not the
6 Brazil and China are currently in negotiations to accede to the WTO GPA and India participates as an observer.
7 For purposes of the BAA’s price evaluation penalty, a “small business” generally refers to an “entity organized for
profit, with a place of business located in the United States, and which operates primarily within the United States or
which makes a significant contribution to the U.S. economy through payment of taxes or use of American products,
materials or labor” (13 C.F.R. Part 121).
8 Foreign bidders may still outcompete domestic firms. For example, if the low U.S. offer is priced at $20,000 and the
low foreign offer is priced at $10,000, the low foreign offer has a lower evaluated price even after the application of
any of the possible BAA price evaluation “penalty” percentages (20%, 30%, or 50%).
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increased evaluated price. BAA does not apply to contracts for services. However, it may apply to
any products purchased under a services contract, such as a notional maintenance contract for
U.S. Air Force HH-60G Pave Hawk helicopters that might include both repair services and
provision of replacement parts.
Applicability of the Buy American Act (BAA)
APPLICATION Will the good be procured under a contract with an award value above the micropurchase threshold (generally $10,000) but below the TAA threshold (generally $183,000)?
COMPLIANCE
TEST
Manufactured End Product: Is it “manufactured in the United States substantially all
from articles, materials, or supplies mined, produced, or manufactured in the United
States” (41 U.S.C. §8302) AND does the cost of its components mined, produced, or
manufactured in the United States exceed 60% of the cost of all its components (48
C.F.R. §25.003)?
Unmanufactured End Product: Is it “mined or produced” in the United States (41
U.S.C. §8302)?
Iron and/or Steel End Product: Is it manufactured in the United States, does it
consist wholly or predominantly of iron and/or steel, AND does the cost of U.S. iron
and/or steel constitute more than 95% of the cost of all the components used in the
end product (48 C.F.R. §25.003)?
EXCLUSIONS
Nonavailability (quantity and quality) (48 C.F.R. §25.003(b) and 48 C.F.R. §25.004(a))
Resale (48 C.F.R. §25.004)
Information technology that is a commercial item (48 C.F.R. §25.103(e))
WAIVERS
Public interest (48 C.F.R. §25.003(a))
Unreasonable cost (48 C.F.R. §25.003(c))
Commercially available off-the-shelf (COTS) items (48 C.F.R. §12.103 and 48 C.F.R.
§25.001(c)(1))
“Qualifying countries” (48 C.F.R. §225.872-1)
Source: Congressional Research Service (CRS), the Buy American Act of 1933 (as amended), and the Code
of Federal Regulations (C.F.R.).
Notes: (1) TAA = Trade Agreements Act of 1979. (2) A variety of factors determine applicability. BAA may
also apply above the TAA threshold if, among other things, the relevant trade agreement excludes a product
or agency from TAA coverage. (3) The U.S. Trade Representative (USTR) establishes TAA thresholds
biannually. (4) There is no statutory definition of “manufactured” or “substantially all.” Agencies have long
construed “substantially all” to mean that the costs of a product’s U.S. components exceed 50% of the cost
of all its components, but this definition is not set forth in statute. (The threshold was increased to “greater
than 55%” in January 2021 and is set to increase further to “greater than 65%” in October 2022.) (5)
Commercially available off-the-shelf (COTS) items are exempt from BAA’s component cost test. (6) The U.S.
Department of Defense (DOD) also treats end products from 28 “qualifying countries”—those with which it
has signed reciprocal defense procurement memoranda of understanding (RDP MOUs)—as domestic end
products for BAA purposes.
Application
BAA generally applies to supply and construction contracts with an estimated value above the
micro-purchase threshold (generally $10,000) and below the TAA threshold, which varies by
trade agreement (e.g., for the WTO GPA, the threshold is currently $183,000 for goods and
services and $7,032,000 for construction). The TAA threshold is set biannually by the U.S. Trade
Representative (USTR) (Table 1). In general, contracts with an estimated value in excess of the
TAA threshold are exempt from the BAA and are instead subject to the TAA compliance test (see
“Trade Agreements Act of 1979”).
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Table 1. Procurement Thresholds for Implementation of the Trade Agreements Act
January 1, 2022, through December 31, 2023
Trade Agreement
Supply
Contract
Service
Contract
Construction
Contract
WTO Agreement on Government Procurement (2014)
$183,000
$183,000
$7,032,000
Australia Free Trade Agreement*
$92,319
$92,319
$7,032,000
Bahrain Free Trade Agreement
$183,000
$183,000
$12,001,460
Chile Free Trade Agreement
$92,319
$92,319
$7,032,000
Colombia Trade Promotion Agreement
$92,319
$92,319
$7,032,000
Dominican Republic-Central American Free Trade
Agreement
$92,319
$92,319
$7,032,000
Israel Free Trade Agreement*
$50,000
N/A
N/A
Jordan Free Trade Agreement
N/A
N/A
N/A
Korea Free Trade Agreement*
$100,000
$100,000
$7,032,000
Morocco Free Trade Agreement
$183,000
$183,000
$7,032,000
Oman Free Trade Agreement
$183,000
$183,000
$12,001,460
Panama Trade Promotion Agreement
$183,000
$183,000
$7,032,000
Peru Trade Promotion Agreement
$183,000
$183,000
$7,032,000
Singapore Free Trade Agreement*
$92,319
$92,319
$7,032,000
U.S.-Mexico-Canada Agreement (with respect to
Mexico only)
$92,319
$92,319
$12,001,460
Source: Congressional Research Service (CRS) and the Office of the U.S. Trade Representative (USTR).
Notes: (1) Procurement obligations in USMCA are between the United States and Mexico only. (2) The USTR,
pursuant to Executive Order 12260, sets the U.S. dollar thresholds for the WTO Agreement on Government
Procurement (GPA) and U.S. free trade agreements (FTAs). U.S. obligations under these agreements apply to
covered procurement valued at or above the specified U.S. dollar thresholds. The thresholds are adjusted every
two years. For more detail, see 86 FR 67579 (November 26, 2021). * = indicates that the party is also a signatory
to the WTO GPA.
Foreign Content and the Micro-Purchase Threshold
Pursuant to the Federal Acquisition Streamlining Act of 1994 (P.L. 103-355), manufactured
articles, materials, or supplies procured under any contract that has an award value of less than or
equal to the micro-purchase threshold (MPT) are excluded from the application of BAA
requirements.9 As a result, federal agencies may generally procure goods composed in whole or in
part of inputs from any country as long as the purchase or contract is below the MPT. Section 806
of the National Defense Authorization Act for Fiscal Year 2018 (P.L. 115-91) increased the MPT
from $3,000 to $10,000, effective August 31, 2020.
Certain categories of contracts remain subject to BAA restrictions, regardless of their estimated
value. The most common categories include arms, ammunition or war materials, purchases
indispensable for national security or defense, and small business set-aside contracts.
9 41 U.S.C. §1902(a), “Procedures Applicable to Purchases Below Micro-Purchase Threshold.”
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Select BAA Definitions
End product: those articles, materials, and supplies to be acquired under the contract for public use.
Component: an article, material, or supply incorporated directly into an end product.
Cost of components: (1) for components purchased by the contractor—the acquisition cost, including
transportation costs and any applicable customs duty (tariff), and excluding the contractor’s profit margin on
manufactured components; and (2) for components manufactured by the contractor—all costs associated with the
manufacture of the component, including transportation costs, and allocable overhead costs, and excluding any
costs associated with the manufacture of the end product.
Commercially available off-the-shelf (COTS) item: any item of supply (including construction material) that
is: (1) a commercial product; (2) sold in substantial quantities in the commercial marketplace; and (3) offered to
the U.S. government, under a contract or subcontract at any tier, without modification, in the same form in which
it is sold in the commercial marketplace. It does not include bulk cargo, such as agricultural and petroleum
products.
Source: Adapted from 48 C.F.R. §52.225-1, “Buy American—Supplies.”
Compliance Test
BAA prescribes three different tests for determining whether items qualify as domestic end
products, depending on whether they are non-manufactured, manufactured, or made primarily of
iron and/or steel.
A non-manufactured end product must be mined or produced in the United States
to qualify as domestic.
A manufactured end product is one that is manufactured substantially all from
articles, materials, or supplies (i.e., components) mined, produced, or
manufactured in the United States. Additionally, domestic components must
exceed a certain percentage of the cost of all components.
An iron and/or steel end product is manufactured in the United States if it
consists wholly or predominantly of iron and/or steel and the cost of foreign iron
and/or steel is less than 5% of the cost of all its components.
There is no statutory definition of “manufactured” or “substantially all.”10 Agencies had long
construed “substantially all” to mean that the costs of a product’s U.S. components must exceed
50% of the cost of all its components, but this interpretation appears to be solely at the executive
branch’s discretion. In January 2021, the Trump Administration raised the domestic content
threshold to “more than 55%,” and the Biden Administration raised it to “more than 60%” in
October 2022 (see “Recent Changes to Buy American Regulations”).
Subcomponent cost is not considered when procuring end products, and commercially available
off-the-shelf (COTS) items are exempt from BAA’s component cost test. However, it can be
difficult to determine if a particular item is either a component of the end product, or a
subcomponent of a component that is incorporated directly into the end product.
Component or Subcomponent? A Simplified Example
A U.S. firm supplies electric-adjustable-height standing desks to a federal agency. The base of the desk is made of
metal, wood, plastic hooks, and screws wholly sourced and manufactured in the United States. However, it also
has an embedded electric motor manufactured in China, which the firm incorporated into the base during the
assembly process performed in the United States. If the motor is treated as a component by itself (because the
10 For more detail, see CRS Report R46748, The Buy American Act and Other Federal Procurement Domestic Content
Restrictions, by David H. Carpenter and Brandon J. Murrill.
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domestic assembly process of the entire desk was deemed to be too simple to qualify as manufacturing—i.e., the
motor was not substantially transformed), it would be considered foreign (Chinese) for BAA purposes. However,
if the entire finished base is treated as the component, it would be considered domestic (because the domestic
assembly process qualified as manufacturing and the U.S.-made components of the base account for more than
60% of its overall cost, causing the motor to become a subcomponent to the component-level base).
When a supplier is unable to determine the country of origin of certain components used in the
end products that it delivers to the U.S. government, the component is presumed to be foreign.
Exemptions
There are a number of specific circumstances under which the BAA permits contractors to supply
foreign end products. The most common of these circumstances occurs when a federal agency’s
purchase of a domestic product would force the government to bear an “unreasonable cost.” The
unreasonable cost exception is implemented through BAA’s price evaluation preference. BAA
also permits exceptions when it would not be in the “public interest” to procure a domestic end
product; the product is to be used outside the United States or for commissary resale; or the
product in question is not produced domestically in sufficient quantities or quality. BAA
requirements and restrictions on purchasing foreign end products generally do not apply to the
acquisition of “information technology” (IT) that is a “commercial product.”11 Contracts for IT
commercial products above the TAA threshold, however, may still be subject to TAA
requirements and restrictions.
DOD also treats end products from 28 “qualifying countries”—those with which the United
States has signed reciprocal defense procurement and acquisition policy memoranda of
understanding (RDP MOUs)—as domestic end products for BAA purposes (see “Reciprocal
Defense Procurement Memoranda of Understanding”).12
“Buy America” Laws
A number of domestic content restrictions that have been attached to certain federal funds administered by the
Department of Transportation (DOT) are collectively and commonly known as “Buy America” (as opposed to Buy
American) laws. These funds are awarded through grants to states, localities, and other nonfederal government
entities for various transportation projects. Specific sources of funding administered by the Federal Highway
Administration, the Federal Aviation Administration, the Federal Transit Administration, the Federal Railroad
Administration, and the National Railroad Passenger Corporation (Amtrak) are covered under various “Buy
America” provisions. Generally, these statutes require applicable agency grant programs and spending to be used to
fund projects that include only steel, iron, and/or manufactured products produced in the United States. Each
provision includes a series of circumstances under which the agency may issue a nationwide or project-specific
waiver to these domestic content requirements. Such exemptions may be based upon a finding that application of
the domestic content requirement is not in the public interest, the needed materials are not produced in sufficient
quantity and/or quality in the United States, or the cost of using domestic materials is unreasonable, among others.
BAA does not apply to DOT-administered grant funds because, while the source of the money is federal,
purchases are not made directly by the federal government.
In 2021, the “Build America, Buy America Act” (BABA, Division G, Title IX of the “Infrastructure Investment and
Jobs Act,” P.L. 117-58) expanded the application of “Buy America” requirements to all federal financial assistance
programs for infrastructure. The BABA, however, states that new “Buy America” requirements must be applied in
a manner consistent with U.S. obligations under international agreements. Therefore, if the World Trade
Organization (WTO) Agreement on Government Procurement (GPA) or a U.S. free trade agreement (FTA)
11 See the Consolidated Appropriations Act, 2004 (P.L. 108-199) and Consolidated Appropriations Act, 2005 (P.L.
108-447). The terms “information technology” and “commercial product” are defined in 40 U.S.C. §11101.
12 DFAR 252.225-7000(b)(2). For more detail, see 48 C.F.R. §25.103(e) and 48 C.F.R. §2.101.
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covers a state agency procurement that is subject to “Buy America” requirements, then the state government
would be required to waive domestic preferences for goods and suppliers from other GPA and FTA parties.
For more information on “Buy America” and other domestic preference requirements, see CRS Report R44266,
Effects of Buy America on Transportation Infrastructure and U.S. Manufacturing, by Michaela D. Platzer and
William J. Mallett.
Trade Agreements Act of 1979
The Trade Agreements Act implements several international trade agreements that guarantee that
the products and services of signatory countries and other eligible countries receive
nondiscriminatory treatment for TAA-covered procurements. Specifically, it authorizes the
President to waive domestic procurement restrictions and discriminatory provisions (i.e., laws,
regulations, procedures, or practices), such as BAA, for eligible or covered products and services
from designated-countries.13 These are countries that
1. are parties to the WTO GPA;
2. have signed an FTA with the United States that provides appropriate reciprocal
competitive government procurement opportunities to U.S. products, services,
and suppliers; or
3. benefit from U.S. unilateral trade preferences (e.g., Caribbean Basin countries).14
The President has delegated TAA’s waiver authority to the USTR, who establishes TAA
thresholds depending on the agreement and type of contract covered (Table 1).
Unlike BAA, which creates only a preference for domestic end products, TAA prohibits
supplying products and services from non-TAA-designated countries, such as China and India. If
a product or service is from one of these countries, it may not be supplied in connection with
TAA-covered procurements without a waiver by the head of an agency or department (e.g.,
granted due to non-availability or national interest).
When BAA provisions are waived, certain products that are wholly grown, produced, or
manufactured in TAA-designated countries, or “substantially transformed” into new and different
articles within these foreign jurisdictions, may be treated the same as “domestic” ones for certain
U.S. government procurements (textbox).
13 TAA does not authorize the waiver of any small business or minority preference.
14 48 C.F.R. §25.405: “Under the Caribbean Basin Trade Initiative, the United States Trade Representative has
determined that, for acquisitions covered by the WTO GPA, Caribbean Basin country end products, construction
material, and services must be treated as eligible products.”
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Applicability of Trade Agreements Act (TAA)
APPLICATION Will the good or service be procured under a contract with an award value at or above
the TAA threshold (generally $183,000)?
COMPLIANCE
TEST
Good: Is it wholly the growth, product, or manufacture of the United States or a
designated country? If no, has it been substantially transformed in the United States or a
designated country into a new and different article of commerce with a name, character,
or use distinct from that of the article or articles from which it was transformed (19
U.S.C. §2518)?
Service: Is the firm that is providing it established in the United States or a designated
country (48 C.F.R. §25.402)?
EXCLUSIONS
Acquisitions set aside for small businesses, including minority-owned
Acquisitions of arms, ammunition, or war materials, or purchases indispensable for
national security or for national defense purposes
Acquisitions of end products for resale
Nonavailability or insufficient availability
Contracts for certain services (e.g., research and development, utility services, dredging,
and military support services)
DESIGNATED
COUNTRIES
WTO GPA parties
Certain U.S. FTA countries
Least developed countries (“United Nations List”)
Caribbean Basin countries
Source: Congressional Research Service (CRS), the Trade Agreements Act of 1979 (as amended), and the
Code of Federal Regulations (C.F.R.).
Notes: (1) A variety of factors determine applicability. BAA may apply above the TAA threshold if, among
other things, the relevant trade agreement excludes a product or agency from TAA coverage. (2) USTR
establishes TAA thresholds biannually. (2) There is no statutory definition of “manufactured” or “substantial
transformation.” However, these terms have been interpreted by agencies and courts. (3) Designated
countries are listed in 48 C.F.R. §52.225-5. End products from designated countries are generally treated the
same as U.S.-made products for certain federal acquisitions exceeding specified TAA thresholds.
Application
TAA’s nondiscriminatory treatment applies only when the procuring agency and the goods or
services being procured are covered by a relevant trade agreement. The value of those goods or
services also must meet or exceed certain specified monetary thresholds. The type of procurement
must not be one for which the TAA’s waiver of BAA is inapplicable (e.g., procurements set aside
for small and minority businesses or purchases indispensable for national security).15
15 “Set-aside for small business” is the limiting of an acquisition, in total or in part, for exclusive competitive
participation by small business concerns, U.S. Small Business Administration (SBA)’s 8(a) Business Development
program participants, SBA’s Historically Underutilized Business Zones (HUBZone) program participants, servicedisabled veteran-owned small business concerns, and economically disadvantaged women-owned small business
(EDWOSB) concerns and women-owned small business (WOSB) concerns eligible under SBA’s WOSB Federal
Contracting Program exclusively for participation by small business concerns.
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Compliance Test
In order to be TAA-compliant, contractors must supply products that either are wholly grown or
manufactured in the United States or in a TAA-designated country. In the case of products
consisting in whole or in part of materials from a third country, the product must have been
substantially transformed in the United States or in a TAA-designated country into a new and
different product. TAA, unlike BAA, is expressly applicable to government contracts for services.
For services, the contractor must be established in the United States or in a TAA-designated
country.16
The Berry and Kissell Amendments: U.S. International Commitments
The Berry and Kissell Amendments are two separate but closely related laws requiring that certain goods
procured by agencies with national security responsibilities be produced in the United States.
The Berry Amendment (10 U.S.C. §2533a) requires textiles, clothing, food, and hand or measuring tools procured
by the U.S. Department of Defense (DOD) to be grown, reprocessed, reused, or produced wholly in the United
States. Over the years, Congress has modified the list of products covered by the law, more recently reinstating
stainless-steel flatware and adding dinnerware as covered items. While the United States has made binding
commitments related to its government procurement market under the World Trade Organization (WTO)
Agreement on Government Procurement (GPA) and various U.S. free trade agreements (FTAs), these agreements
do not apply to DOD procurements involving these items.
Under the Kissell Amendment (6 U.S.C. §453b), textile, apparel, and footwear products procured by certain
agencies under the U.S. Department of Homeland Security (DHS) must be manufactured in the United States with
100% U.S. inputs. In theory, the Kissell Amendment applies to all DHS agencies. However, in practice, its
restrictions apply only to the Transportation Security Administration (TSA) and the U.S. Coast Guard. Prior to
the Kissell Amendment’s enactment in 2009, the United States had committed, under various international trade
agreements, to open certain U.S. government procurement opportunities, including from DHS, to products and
suppliers from GPA and several U.S. FTA parties. However, provisions in the GPA and FTAs allow the United
States to exempt agencies critical to national security from U.S. international procurement obligations. Because
the United States has applied this exemption only to those two agencies, the Kissell Amendment generally governs
their procurement decisions. Kissell Amendment requirements do not apply to other agencies within DHS, so
their procurements are instead generally subject to BAA and TAA requirements.
For more detail, see CRS In Focus IF10609, Defense Primer: The Berry and Kissell Amendments.
BAA or TAA? Procuring Foreign-Made Products
Determining the conditions under which federal agencies must open contracts to foreign
suppliers, which legal framework applies in a given procurement decision, or how agencies
determine whether goods and services are BAA- or TAA-compliant is a complex task.
Determinations are often made on a case-by-case basis, and these decisions depend on a number
of factors (e.g., specific agency, product, value, exceptions, and time constraints.). In broad terms,
it is possible to divide government procurement decisions into three categories, depending on the
award value of the contract or the cost of the product:
1. at or below the micro-purchase threshold (MPT, generally $10,000);
2. above the MPT but below the TAA threshold; and
3. at or above the TAA threshold.
16 There is no statutory definition of “established.” According to the U.S. Government Accountability Office’s (GAO’s)
reading of 48 C.F.R. §25.402(a)(2), “the origin of services is determined based on the country in which the firm
providing the service is legally established [or headquartered], not on the location from which the service is ultimately
provided.” For more detail, see GAO Decision: “Technosource Information Systems, LLC; TrueTandem, LLC,” File:
“B-405296; B-405296.2; B-405296.3,” October 17, 2011.
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The simplified example below illustrates how a federal agency might make a determination as to
whether or not it can procure a foreign-made product (Figure 2).
Figure 2. Simplified Example of Foreign-Made Product Procurement
Source: Congressional Research Service (CRS).
A hypothetical case study also illustrates the challenge of determining country of origin for a
product with inputs sourced abroad (textbox).
Determining a Pharmaceutical Product’s Country of Origin:
A Hypothetical Case
A U.S. drug manufacturing company imports active pharmaceutical ingredients (APIs) from China, which it then
subjects to a series of processing procedures (e.g., testing and mixing) and then encapsulates the processed API in
its U.S. laboratory. The U.S.-made components of the pill account for 61% of its overall cost, while the Chinasourced API accounts for the remaining 39%. What is the pill’s country of origin? Can the pill generally be
procured by a federal agency? The following analysis examines how this scenario could play out under current
laws and regulations.
Food and Drug Administration (FDA). Neither the Federal Food, Drug, and Cosmetic Act (P.L. 75-717) nor
FDA regulations require drug manufacturers to identify a pill’s “country of origin.” The FDA requires that each
drug label bear the place of business of the manufacturer (defined as one who performs mixing, granulating,
milling, molding, lyophilizing, tableting, encapsulating, coating, or sterilizing). In this case study, only the company’s
U.S. address would be required to be listed on the pill’s label.
Customs and Border Protection (CBP). The “substantial transformation” test is what CBP uses to
determine how a product should be marked under the Tariff Act of 1930, which requires all imports to be marked
with its country of origin.17 Under CBP regulations, in this case study, the pill would be determined to be a
17 According to U.S. Customs and Border Protection (CBP), “U.S. non-preferential rules of origin schemes employ the
‘substantial transformation’ criterion for goods that consist in whole or in part of materials from more than one country.
In the majority of the non-preferential schemes, the substantial transformation criterion is applied on a case-by-case
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product of China and should be marked accordingly. CBP does not consider processing procedures and
encapsulation in the United States a "substantial transformation" of the API. (See, for example, CBP Customs
Ruling HQ 561975.18)
Federal Acquisition Regulation (FAR). FAR defines a “foreign end product” as an article that is wholly
grown, produced, or manufactured in a foreign country or that has been substantially transformed into a new
product in a foreign country. The FAR definition for a “domestic end product” omits the term “wholly.” It is
unclear in this case study if the pill would qualify for high-value government contracts (above the TAA threshold)
under current FAR guidelines. A February 2020 decision by the U.S. Court of Appeals for the Federal Circuit
(Acetris Health, LLC v. United States) suggests that a U.S.-made end product may be partially—not “wholly”—
manufactured in the United States for it to be TAA-compliant.19
Trade Agreements Act (TAA). The substantial transformation test is also used under the TAA to determine
whether a product is made in the United States or a “designated foreign country,” and thus eligible for high-value
government contracts (above the TAA threshold). In this case study, it would be determined, under the
substantial transformation test, that the pill is a product of China—not a TAA-designated country. Therefore,
unless it were granted a waiver, the pill could not be placed on a Federal Supply Schedule.
Buy American Act (BAA). The pill in this case study would qualify for sale as a “domestic end product” under
lower-value government contracts (above the micro-purchase threshold and below the TAA threshold), as the
cost of the components manufactured in the United States exceeds 60% of the cost of all its components.
International Agreements and U.S. Application
The United States has played a prominent role in the development of international trade rules on
government procurement—multilaterally under the General Agreement on Tariffs and Trade
(GATT)/WTO and other international economic institutions and bilaterally through FTAs
(textbox). As noted previously, international agreements addressing government procurement and
trade have opened many procurement opportunities around the world to international competition,
worth trillions of U.S. dollars annually, while also requiring parties to establish transparent and
nondiscriminatory rules on government procurement. In particular, the agreements enable U.S.
businesses to bid for government contracts in the markets of other GPA and FTA parties.
Likewise, such agreements allow foreign businesses to bid for federal and state government
contracts in situations where these governments have chosen to open up their procurement
markets.
International Economic Institutions and Government Procurement
International economic institutions have shaped international rules and principles for government procurement,
especially with regard to transparency, openness, and nondiscrimination. Leading institutions in this area include
the World Trade Organization (WTO), Organization for Economic Cooperation and Development (OECD),
United Nations Commission on International Trade Law (UNCITRAL), World Bank, and regional development
banks. The WTO Agreement on Government Procurement (GPA), in particular, provides signatories with a
multilateral rules-based framework for the procurement of goods and services.
UNCITRAL’s Model Law on Procurement of Goods and Services also “contains procedures and principles aimed
at achieving value for money and avoiding abuses in the procurement process. The text promotes objectivity,
basis, and it is based on a change in name/character/use method (i.e., an article that consists in whole or in part of
materials from more than one country is a product of the country in which it has been substantially transformed into a
new and different article of commerce with a name, character, and use distinct from that of the article or articles from
which i[t] was so transformed).” For more detail, see CBP, “What Every Member of the Trade Community Should
Know About: Rules of Origin,” updated February 26, 2020.
18 U.S. Customs and Border Protection, “561975: Country of Origin Marking for the Anesthetic Drug Sevoflurane,”
Customs Rulings Online Search System (CROSS), April 3, 2002.
19 Acetris Health, LLC v. United States, No. 2018-2399 (Fed. Cir. Feb. 10, 2020).
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fairness, participation and competition and integrity toward these goals. Transparency is also a key principle,
allowing visible compliance with the [procurement laws and] procedures.”20 Additionally, the OECD
Recommendation on Public Procurement is a “guiding principle that promotes the strategic and holistic use of
public procurement. It is a reference for modernizing procurement systems and can be applied across all levels of
government and state-owned enterprises.”21
The adoption of best practices and frameworks endorsed by international economic institutions have arguably led
to a more efficient and effective allocation of resources and increased competition in the procurement markets of
certain countries. For example, they have increased trade and strengthened economic integration among OECD
and EU member states. Yet, the influence of these principles remains limited. Most countries around the world are
not signatories to the GPA, and many have only partially reformed their government procurement regimes.
Since the outbreak of the COVID-19 pandemic and the global supply chain issues that it brought
to light, Congress’ interest in the role of international trade in U.S. government procurement has
intensified. In particular, some Members have sought ways to incentivize U.S. domestic
production by prioritizing the procurement of domestic goods and services and strengthening
government procurement requirements. At the same time, some Members have raised questions
regarding how, when, and to whom the United States extends nondiscriminatory treatment in
procurements by federal agencies.
Through various international agreements and programs, the United States extends
nondiscriminatory treatment in certain government procurements to 129 countries and territories
(Table 2). (Figure 3 depicts formal, reciprocal agreements affecting the application of Buy
American requirements by country.) As noted earlier, data limitations and other factors, however,
make it difficult to quantify accurately the size of the government procurement market covered by
these agreements and programs, as well as the extent to which governments procure from
suppliers in—and acquire goods and services from—these countries and territories.
Table 2. Economies to Which the United States Extends Nondiscriminatory
Treatment in Certain U.S. Government Procurement Activities
WTO GPA
U.S. FTAs
DOD MOUs
LDCs
Caribbean Basin
Armenia
Aruba
(NLD)
Australia
Austria
Belgium
Bulgaria
Canada
Croatia
Cyprus
Czech Rep.
Denmark
Estonia
European
Union
Finland
France
Germany
Australia
Bahrain
Chile
Colombia
Costa Rica
Dominican
Rep.
El Salvador
Guatemala
Honduras
Israel
Mexico
Morocco
Nicaragua
Oman
Panama
Peru
Singapore
Australia
Austria
Belgium
Canada
Czech Rep.
Denmark
Egypt
Estonia
Finland
France
Germany
Greece
Israel
Italy
Japan
Latvia
Lithuania
Afghanistan
Angola
Bangladesh
Benin
Bhutan
Burkina Faso
Burundi
Cambodia
Central African
Rep.
Chad
Comoros
Congo [DRC]
Djibouti
Equatorial
Guinea
Eritrea
Ethiopia
Antigua and Barbuda
Aruba (NLD)
Bahamas
Barbados
Belize
Bonaire (NLD)
British Virgin Islands
(GBR)
Curacao (NLD)
Dominica
Grenada
Guyana
Haiti
Jamaica
Montserrat (GBR)
Saba (NLD)
St. Kitts and Nevis
St. Lucia
20 United Nations Commission on International Trade Law (UNCITRAL), “UNCITRAL Model Law on Public
Procurement (2011),” Text and Status: Procurement and Public-Private Partnerships, July 1, 2011.
21 Organization for Economic Cooperation and Development (OECD), “Public Procurement Recommendation,”
Directorate for Public Governance.
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WTO GPA
U.S. FTAs
DOD MOUs
LDCs
Caribbean Basin
Greece
Hong Kong
Hungary
Iceland
Ireland
Israel
Italy
Japan
Latvia
Liechtenstein
Lithuania
Luxembourg
Malta
Moldova
Montenegro
Netherlands
New
Zealand
Norway
Poland
Portugal
Romania
Singapore
Slovakia
Slovenia
South Korea
Spain
Sweden
Switzerland
Taiwan
Ukraine
United
Kingdom
South
Korea
Luxembourg
Netherlands
Norway
Poland
Portugal
Slovenia
Spain
Sweden
Switzerland
Turkey
United
Kingdom
Gambia
Guinea
Guinea-Bissau
Haiti
Kiribati
Laos
Lesotho
Liberia
Madagascar
Malawi
Mauritania
Mozambique
Nepal
Niger
Rwanda
Samoa
Sao Tome and
Principe
Senegal
Sierra Leone
Solomon Islands
Somalia
South Sudan
Tanzania
Timor-Leste
Togo
Tuvalu
Uganda
Vanuatu
Yemen
Zambia
St. Vincent and the
Grenadines
Sint Eustatius (NLD)
Sint Maarten (NLD)
Trinidad and Tobago
Source: Congressional Research Service (CRS).
Notes: (1) FTA = free trade agreement; MOU = memorandum of understanding; LDCs = least developed
countries. (2) The U.S.-Jordan FTA’s only procurement provision is a commitment by the parties to engage in
negotiations on Jordan’s accession to the WTO Agreement on Government Procurement (GPA). (3) A country
or territory may be subject to nondiscriminatory treatment under multiple agreements.
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Figure 3. U.S. Reciprocal Agreements Affecting the Application of Buy American
Requirements by Country
Source: Congressional Research Service (CRS). Adapted from U.S. Government Accountability Office, “Buy
American Act: Actions Needed to Improve Exception and Waiver Reporting and Selected Agency Guidance,”
GAO Report GAO-19-17, December 2018.
WTO Government Procurement Agreement (GPA)
In recognition of the economic and political benefits of open and rules-based trade, the United
States and other major trading partners established the General Agreement on Tariffs and Trade
(GATT) in the aftermath of World War II.22 The first seven rounds of GATT trade negotiations
dealt primarily with reducing tariffs among the signatory countries. The seventh round—the
Tokyo Round (1973-1979)—took an important step in addressing nontariff barriers, such as socalled “buy national” government procurement policies. Negotiators addressed many of these
barriers in a series of codes, including the Government Procurement Code, which went into effect
in 1981. The Code’s chief sponsors, particularly the United States, wanted to open up government
procurement markets to foreign contracts in an effort to liberalize international trade. To do so,
22 For more detail, see CRS Report R45417, World Trade Organization: Overview and Future Direction, by Cathleen
D. Cimino-Isaacs and Rachel F. Fefer.
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the Code imposed a set of rules that Code signatories had to apply in their government
procurement procedures and practices.
Later, as a part of the GATT’s Uruguay Round of trade negotiations, which resulted in the
creation of the WTO in 1995, Code signatories negotiated a new agreement, the WTO Agreement
on Government Procurement (GPA) (Figure 4). It entered into force in 1996. Although the GPA
extended the scope of the 1981 Code to include additional entities, services, and construction
services, it shared the Code’s plurilateral nature. This means that, unlike most of the other
agreements of the WTO, which countries must accept as a condition of membership, GPA parties
are only committed to apply the agreement to other GPA parties. Signatories agreed to enter into
negotiations to expand GPA’s membership and coverage three years after the agreement entered
into force.
Figure 4. WTO GPA Parties and Observers
Source: Congressional Research Service (CRS) and the World Trade Organization (WTO).
In 2012, after more than a decade of negotiations, the GPA parties adopted a revision to the 1996
GPA agreement, which entered into force in 2014. The revised agreement reflects new
procurement practices, clarified obligations, and a further expansion of the types of procurement
covered by the 1996 GPA. In particular, it added new government entities and included new
services and other areas of government procurement activities to the scope of the GPA. Australia
is the newest party to the GPA, to which it has been bound since 2019. Switzerland was the last
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GPA party to submit its “instrument of acceptance” to the WTO in December 2020.23
Accordingly, as of January 2021, the revised GPA is in force for all 48 GPA parties.24 In addition,
since its withdrawal from the EU in January 2021 (“Brexit”), the UK takes part in the GPA in its
own right—and not as part of the EU. Several WTO members, including China, are currently in
negotiations to accede to the GPA and others participate as observers (textbox).25
2021 USTR Report to Congress on China’s WTO Compliance:
Government Procurement
“In its WTO accession agreement, China made a commitment to accede to the WTO Agreement on Government
Procurement (GPA) and to open up its vast government procurement market to the United States and other GPA
parties. To date, however, the United States, the EU and other GPA parties have viewed China’s offers as highly
disappointing in scope and coverage. China submitted its sixth revised offer in October 2019. This offer showed
progress in a number of areas, including thresholds, coverage at the sub-central level of government, entity
coverage and services coverage. Nonetheless, it fell short of U.S. expectations and remains far from acceptable to
the United States and other GPA parties as significant deficiencies remain in a number of critical areas, including
thresholds, entity coverage, services coverage and exclusions. Although China has since stated that it will ‘speed
up the process of joining’ the GPA, it has not submitted a new offer since October 2019. China’s most recent
submission, made in June 2021, was only an update of its checklist of issues, which informs GPA parties of changes
to China’s existing government procurement regime since its last update.”
Source: Office of the U.S. Trade Representative (USTR), 2021 Report to Congress on China’s WTO Compliance,
February 2022.
The GPA, like the GATT-era 1981 Code, is implemented in U.S. law by the TAA. TAA prohibits
procurements from countries—other than least developed and Caribbean Basin countries—that do
not provide reciprocal nondiscriminatory treatment to the United States. Thus, only trading
partners that are party to the GPA (or a U.S. FTA with comparable provisions) are eligible for
nondiscriminatory treatment with respect to certain U.S. federal government procurement above
specified thresholds. Title III of the TAA authorizes the President to waive some, but not all,
domestic purchasing requirements (e.g., BAA) for goods and suppliers from GPA parties (and
certain U.S. FTA signatories). The USTR establishes U.S. thresholds biannually (Table 1).
General Obligations under the GPA
The GPA governs procurement by any contractual means and applies to laws, regulations, and
practices regarding any procurement by entities covered by the agreement.26 This could include
central (federal) and sub-central (state) government entities, as well as utilities and other
government enterprises that a party designates. The GPA, however, does not cover every country
or sector. The 48 parties bound by the GPA negotiate market access commitments on a reciprocal
basis. In its market access schedule of commitments (i.e., the Appendix), each party specifies
government entities and goods and services—with limitations and monetary thresholds—that are
23 World Trade Organization (WTO), “UK and Switzerland Confirm Participation in Revised Government Procurement
Pact,” December 2, 2020.
24 Technically, the WTO GPA consists of 21 parties: 47 WTO members (counting the European Union [EU] and its 27
member states as one party) and Aruba (or “Netherlands with respect to Aruba”). The EU is a WTO member in its own
right as are each of its member states. Aruba is not a WTO member in its own right.
25 WTO members that are not parties to the GPA may generally follow the proceedings of the Committee on
Government Procurement in an observer capacity. Four international organizations participate in the committee as
observers: (1) International Monetary Fund (IMF), (2) Organisation for Economic Cooperation and Development
(OECD), (3) United Nations Conference on Trade and Development (UNCTAD), and (4) International Trade Centre.
26 For more detail, see World Trade Organization (WTO), “Agreement on Government Procurement 2012 and Related
WTO Legal Texts,” March 30, 2012.
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open to procurement bids by firms from other GPA parties. For example, the U.S. Appendix
covers 85 federal-level entities, as well as voluntary commitments by 37 states (see textbox).27
U.S. Appendix to the WTO GPA
The U.S. Appendix to the GPA is divided into seven annexes. It includes central (federal) and sub-central (state)
agencies that have agreed to be covered by the agreement, the U.S. thresholds for procurement contracts, and
various exceptions that the United States has taken to GPA obligations.
Federal Agencies (Annex 1). Subject to monetary threshold requirements, the GPA generally covers all federal
agencies listed in Annex 1. The GPA, however, does not apply to certain categories of goods and services
procured by the U.S. Agency for International Development (USAID), General Services Administration, and
Departments of Agriculture, Defense, Energy, Homeland Security, and Transportation.
State Agencies (Annex 2). Thirty-seven states and their covered agencies are currently listed in U.S. Annex 2.
Commitments regarding state procurement are subject to the General Notes (Annex 7) and any exceptions listed
for a particular state. General exemptions allow states, for example, to exclude the procurement of certain goods
and services (e.g., construction-grade steel and printing services) and to apply preferences or restrictions
associated with programs promoting the development of distressed areas.
Other Entities (Annex 3). The GPA covers 10 quasigovernmental agencies, including the Tennessee Valley
Authority and the Port of Baltimore. Procurements by some of these entities are subject to specific exceptions
stated in Annex 3, as well as in the General Notes (Annex 7). In addition, the GPA does not apply to restrictions
attached to federal funds for airport projects with respect to all listed entities.
Goods (Annex 4) and Services (Annex 5). Unless otherwise specified, the GPA covers all goods and services
procured by entities included in Annexes 1, 2, and 3. Excluded services listed in Annex 5 include transportation
services, public utilities services, and research and development (R&D) services.
Construction (Annex 6). Construction services covered by the agreement (e.g., those listed in Division 51 of
the Central Product Classification) are specified in Annex 6. The threshold levels for the procurement of
construction services are listed in Annexes 1, 2, and 3. (A higher threshold for certain construction services from
South Korea, however, is provided for in Annex 7.)
General Notes (Annex 7). The United States specifies a number of general exclusions in Annex 7, including
set-asides for small and minority-owned businesses. A set-aside may include any form of preference, such as the
exclusive right to provide a good or service, or a price preference.
Consistent with the overall framework of the WTO, the GPA requires nondiscrimination and
transparency in contracting—the two cornerstone principles of the agreement, as well as of the
WTO in general (see below). In addition, the GPA contains obligations regarding tendering and
selection requirements, qualification of suppliers, offsets, invitations to participate in
procurements (solicitations), awarding of contracts, and bid challenge procedures. Disputes under
the GPA are generally subject to the procedures of the WTO Dispute Settlement Understanding
(DSU), although there are additional special rules given the plurilateral nature of the agreement.
The agreement also allows for general exceptions from GPA obligations. For example, countries
typically exclude defense and national security purchases from the agreement, and in the case of
the United States, set-asides for small and minority-owned businesses are excluded. Finally, a
party to the GPA may also make changes to its schedule of commitments. However, changes are
subject to consultations and, in the case of significant changes, negotiations with—and potentially
compensation to—other parties to the agreement.
In negotiating reciprocal procurement commitments under the GPA, the United States has not
required that markets all be open to foreign competition in the same nominal amounts. Rather, its
27 Under the GPA, 37 U.S. states voluntarily agreed to be covered under the GPA and their covered agencies are
currently listed in U.S. Annex 2: Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Hawaii,
Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota,
Mississippi, Missouri, Montana, Nebraska, New Hampshire, New York, Oklahoma, Oregon, Pennsylvania, Rhode
Island, South Dakota, Tennessee, Texas, Utah, Vermont, Washington, Wisconsin and Wyoming.
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aim has been to gain access to generally comparable procurement opportunities in other parties’
markets.
Nondiscrimination
The first cornerstone principle of the GPA is a non-obligation that requires parties to accord to the
goods, services and suppliers of other GPA parties treatment “no less favorable” than that given to
their domestic goods, services and suppliers throughout the procurement process. In other words,
parties can neither favor domestic goods, services, or suppliers over those of GPA parties (i.e.,
national treatment), nor can they treat the goods, services or suppliers of one GPA party more
favorably those of another GPA party (i.e., most-favored nation [MFN] treatment).
Transparency
The second cornerstone principle of the GPA is transparency. The GPA requires each party to
publish information on its procurement system, including laws, regulations, and judicial decisions
regarding covered procurement, in an officially designated medium that is widely disseminated
and accessible to the public. Parties are also required to collect and report to the WTO Committee
on Government Procurement statistics on its contracts covered by the agreement. Finally, on
request of any other party, a party must provide any information necessary to determine whether a
procurement was conducted fairly, impartially and in accordance with the agreement.
Rules of Origin
The GPA itself does not contain separate rules of origin from those of the WTO. However, it
prohibits parties from implementing rules regarding the importation or supply of government
procured goods or services that are different from those that it applies in the normal course of
trade to imports or supplies of the same goods or services from the same party.
Conduct of Procurement
A procuring entity must conduct procurement in a transparent manner that is consistent with the
GPA, avoids conflict of interest, and prevents corrupt practices. Additionally, parties are to ensure
that their procedures are not applied on a discriminatory basis and do not preclude competition or
create unnecessary obstacles to international trade. The GPA also establishes general rules
regarding the systems through which suppliers engage in competitive bidding for government
contracts (i.e., open, selective, and limited tendering procedures).
Tendering Procedures
The GPA establishes general rules regarding tendering procedures. A tendering procedure is the
system through which suppliers engage in competitive bidding for government and other
contracts. Specifically, parties to the GPA are to ensure that their procedures are applied in a
nondiscriminatory manner and do not provide to any supplier information with regard to a
specific procurement in a manner which would have the effect of precluding competition. There
are three types of tendering procedures governed by the GPA:
1. open tendering procedures (in which all interested suppliers may bid);
2. selective tendering procedures (under which only those suppliers invited to bid
may do so); and
3. limited tendering procedures (where the entity contacts the suppliers individually
and requests bids).
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Qualifications and Treatment of Suppliers
The GPA requires that parties not discriminate among suppliers of other parties—that is, between
domestic suppliers and suppliers of other GPA parties—in the process of drawing up lists of
qualifying suppliers. It also requires that any conditions for participation in tendering procedures
be limited to those which are essential to ensure the firms’ capability to fulfill the contract in
question and not create unnecessary obstacles to the participation of suppliers of another party.
Offsets
Pursuant to the GPA, government entities may not impose, seek, or consider offsets either in
qualifying and selecting suppliers, products, or services, or in evaluating tenders and awarding
contracts for covered procurement. Offsets are defined in the GPA as “any condition or
undertaking that encourages local development or improves a party’s balance-of-payments
accounts, such as the use of domestic content, the licensing of technology, investment,
counter‑trade and similar action or requirement.”
Dispute Settlement
The WTO Dispute Settlement Understanding (DSU) applies—with certain exceptions—to
consultations and dispute settlement involving the GPA. For example, only GPA parties may
participate in decisions or actions by the DSU in GPA disputes. In addition, cross-retaliation is not
allowed with respect to the GPA. As such, GPA parties may not suspend GPA benefits or
concessions as a countermeasure in a dispute arising under a separate WTO agreement.
Bid Challenge Procedures
In addition to the possibility of party-to-party dispute settlement under the general WTO dispute
resolution procedures, the GPA requires that suppliers have access to separate challenge
procedures for alleged breaches in the context of government procurement. In the event that a
supplier complains of a breach, each party must initially encourage the supplier to seek resolution
of its complaint in consultations with the procuring entity. The procuring entity is then committed
to accord impartial and timely consideration to any such complaint, in a manner that is not
prejudicial to obtaining corrective measures under the challenge system. The GPA then sets forth
requirements for the challenge procedures themselves, generally requiring that they be
nondiscriminatory, timely, transparent and effective.
Modifications
A GPA party generally cannot modify the procurement that it covers in its Appendix without the
consent of—or absence of objections from—the other parties. To make changes, it must first
notify the WTO Committee on Government Procurement and provide information as to the likely
consequences of the change for the mutually agreed coverage of the agreement. In some cases,
changes may become effective if there is no objection from any of the GPA parties within 45 days
of notification. In others, the modifying party may have to offer compensatory adjustments for
modifications, “with a view to maintaining a balance of rights and obligations and a comparable
level of mutually agreed coverage provided” in the GPA.
If parties are unable to reach an agreement over the proposed modifications, the modifying party
may be able to implement the change 150 days after its notification. However, any objecting party
may withdraw substantially equivalent coverage. Parties are also free to pursue the matter under
WTO consultation and dispute settlement procedures, and they must abide by arbitration rulings.
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In cases in which the modifying party does not comply with the results of the arbitration
procedures, any objecting party may withdraw substantially equivalent coverage, provided that
any such withdrawal is consistent with the result of such procedures.
Accession Negotiations
Any WTO member may accede to the GPA on terms agreed between that member and GPA
parties. Since the GPA entered into force in 1996, its membership has grown from 23 to 48
parties. The GPA accession process is based on negotiations with the acceding member on the
procurement that it will cover under the agreement and a determination by the GPA parties that its
procurement system complies with the GPA. Many of the members that have joined the WTO
since 1995 have committed to seek GPA membership as part of their terms for accession; these
members include China and Russia—both of which have been engaged in GPA accession
negotiations. Most recently, in May 2020, Brazil formally submitted its application for accession
to the GPA.
National Security and General Exceptions
The GPA contains a national security exception, which is broadly in line with Article XXI of the
GATT 1994. The exception states that parties are allowed to take “any action or not [disclose] any
information that it considers necessary for the protection of its essential security interests relating
to the procurement of arms, ammunition or war materials, or to procurement indispensable for
national security or for national defense purposes.”
In addition to the national security exception, the GPA also contains a number of general
exceptions, which are to some extent modeled after Article XX of the GATT 1994. Examples of
exceptions include, but are not limited to, public morals, order or safety, human, animal, or plant
life or health, intellectual property, and philanthropic institutions.
Effects of GPA Membership for the United States
Because significant purchases financed by U.S. taxpayers are normally supposed to be made
using competitive tendering procedures, U.S. government procurement is an attractive market for
foreign firms. As other countries join the GPA to gain access to U.S. (and other) markets for their
own companies, the GPA has the effect of bringing the purchasing procedures of other countries
more into line with U.S. standard practice. In addition to greater equity, the agreement offers
increased export opportunities for U.S. businesses. Under the GPA, foreign government
purchasing restrictions that discriminate against U.S. suppliers—such as local content
requirements, prohibitions on awarding contracts to foreigners, or other preference schemes
favoring local supplies—are generally eliminated for covered procurement. U.S. suppliers are
also provided greater transparency in the purchasing processes of governments in some of the
largest U.S. export markets. The right to predictable treatment in selling to foreign signatory
governments allows U.S. suppliers and exporters to plan, make investments, and market their
products and services abroad more effectively.28 This, in turn, has the potential to increase U.S.
GDP and employment.
According to a 2017 GAO study, from 2008 to 2012, less than one-tenth of total global
government expenditures, and approximately one-third of U.S. federal government procurement,
28 See, for example, International Trade Administration, “WTO Agreement on Government Procurement (GPA),”
updated May 17, 2019.
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was covered by the GPA or similar commitments in U.S. FTAs.29 Additionally, U.S. GPA
commitments appear to be the most significant in what they offer other GPA parties. The study
also found that the amount (based on value) of U.S. procurement available for bidding by
companies of other GPA or FTA parties was worth more than double the combined amount
reported by the next five largest GPA procurement markets (European Union, Japan, Canada,
South Korea, and Norway). The Trump Administration, for example, argued that the United
States benefits less from the agreement than do other GPA signatories.30 However, GAO also
found that the U.S. methodology for reporting statistics on procurement to the GPA suffers from
deficiencies, which limits detailed analytical comparison and transparency.
U.S. Free Trade Agreements
Since concluding the U.S.-Israel FTA in 1985 and the North American Free Trade Agreement
(NAFTA) in 1994, the United States has sought to include government procurement chapters in
bilateral and regional FTAs that it negotiates with other countries (Table 3). For a country that is
not a party to the WTO GPA, the government procurement chapter in the FTA generally
introduces GPA-like disciplines on a country’s procurement practices and provides a list of
procuring entities that will be covered. For a country that is a party to the GPA, the government
procurement chapter may list additional covered entities of each party that may not appear in the
schedules of the GPA. Particularly since the 2000s and until the enactment of the United StatesMexico-Canada Agreement (USMCA), the government procurement chapters in U.S. FTAs
tended to reaffirm the provisions of the GPA with respect to all FTA parties. They may also
clarify definitions or details of procurement procedures.
Table 3. Links to Government Procurement Provisions in U.S. FTAs
AGREEMENT
CHAPTERS/ARTICLES
Australia Free Trade Agreement
Chapter 15 (Articles 15.1-15.15)
Annex 15-A
Bahrain Free Trade Agreement
Chapter 9 (Articles 9.1-9.15)
Annex 9-A
Chile Free Trade Agreement
Chapter 9 (Articles 9.1-9.20)
Annex 9.1
Colombia Trade Promotion
Agreement
Chapter 9 (Articles 9.1-9.16)
Annex 9.1
Side Letter on 30-Day Tendering
Side Letter Regarding Interim Measures
Dominican Republic-Central
American Free Trade Agreement
Chapter 9 (Articles 9.1-9.17)
Annex 9.1.2(b)(i)
Annex 9.1.2(b)(ii)
Annex 9.1.2(b)(iii)
29 U.S. Government Accountability Office (GAO), “Government Procurement: United States Reported Opening More
Opportunities to Foreign Firms Than Other Countries, but Better Data Are Needed,” February 2017, GAO Report
GAO-17-168. See also, GAO, “International Trade: Foreign Sourcing in Government Procurement,” May 2019, GAO
Report GAO-19-414.
30 Bryce Baschuk, “Trump Sights In WTO Procurement Pact for Leverage on U.K., EU,” Bloomberg, February 5,
2020.
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AGREEMENT
CHAPTERS/ARTICLES
Israel Free Trade Agreement
Article 15
Jordan Free Trade Agreement
Article 9
Korea Free Trade Agreement
Chapter 17 (Articles 17.1-17.11)
Annex 17-A
Morocco Free Trade Agreement
Chapter 9 (Articles 9.1-9.16)
Annexes: Central Level Government Entities
Side Letter on Services
Oman Free Trade Agreement
Chapter 9 (Articles 9.1-9.15)
Annex 9: Terms and Conditions of Coverage
Side Letter on Impartial Authority
Side Letter on State-Owned Enterprises
Panama Trade Promotion
Agreement
Chapter 9 (Articles 9.1-9.17)
Annex 9.1
Peru Trade Promotion Agreement
Chapter 9 (Article 9.1-9.16)
Annex 9.1
Singapore Free Trade Agreement
Chapter 13 (Articles 13.1-13.6)
Annex 13A
U.S.-Mexico-Canada Agreement
(with respect to Mexico only)
Chapter 13 (Articles 13.1-13.21)
Appendix 13-A
Source: Congressional Research Service (CRS) and Office of the U.S. Trade Representative (USTR).
The procurement chapters in U.S. FTAs vary in their respective coverage and details, but they all
have several provisions in common. These include exemptions for certain DOD procurements,
threshold requirements, and obligations regarding tendering and selection requirements,
qualification of suppliers, and offsets. Many of the “second generation” U.S. FTAs, such as those
concluded with Chile, Singapore, Morocco, and Australia, contain procurement provisions that
closely track the GPA. Some of the more recent U.S. FTAs, however, contain monetary thresholds
that are lower than those specified under the GPA, opening a greater percentage of the U.S.
procurement market to the FTA partner.
The U.S.-Jordan FTA is the only U.S. FTA without substantive procurement obligations. Its only
procurement provision is a commitment by the parties to enter into negotiations with regards to
Jordan’s accession to the GPA. Jordan applied for GPA membership in 2000 but has yet to
complete its accession.
Formerly, the government procurement chapter in NAFTA included standards and parameters for
purchases of certain goods and services made by governments in all three NAFTA parties—the
United States, Mexico, and Canada. The USMCA, however, only applies to procurement between
the United States and Mexico.31 It carries over much of the NAFTA government procurement
chapter’s coverage for U.S.-Mexico procurement. Procurement opportunities between the United
States and Canada continue to be governed by the WTO GPA, as long as both countries remain
members of that agreement, while those between Canada and Mexico are now governed by the
31 For more detail, see CRS Report R44981, The United States-Mexico-Canada Agreement (USMCA), by M. Angeles
Villarreal.
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Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP or TPP-11).
Notably, Mexico is not a member of the GPA.
Reciprocal Defense Procurement Memoranda of Understanding
DOD has concluded Reciprocal Defense Procurement Memoranda of Understanding (RDP
MOUs) with 28 “qualifying” countries.32 Under these memoranda, countries agree to remove
discriminatory barriers to purchases of supplies produced—or services performed—by sources in
each other’s territories. For the purposes of BAA and the Balance of Payments Program,33
supplies and components produced in qualifying countries are treated as the same as supplies and
components produced in the United States.34 The purpose of RDP MOUs is to promote
rationalization, standardization, and interoperability of conventional defense equipment with
allies and other close partners. These agreements provide a framework for ongoing
communication regarding market access and procurement matters that enhance effective defense
cooperation.
The countries that are currently designated as qualifying countries under RDP MOUs are
Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Egypt, Estonia, Finland, France,
Germany, Greece, Israel, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, Norway,
Poland, Portugal, Slovenia, Spain, Sweden, Switzerland, Turkey, and the United Kingdom.35
RDP MOUs generally include language by which the parties agree that their defense
procurements will be conducted in a transparent manner and in accordance with certain
implementing procedures (e.g., publication of notices of proposed purchases, the content and
availability of solicitations for proposed purchases, etc.).36 Under these MOUs, each country also
affords the other certain benefits on a reciprocal basis consistent with national laws and
regulations. While each MOU is different, the United States (i.e., DOD), for example, evaluates
offers of qualifying country end products or components without applying the price evaluation
“penalty” otherwise required by BAA and the Balance of Payments Program. The United States
may also waive tariffs and other import duties for these products and components.
RDP MOUs are not trade agreements. Given their underlying political and operational/technical
objectives, they are primarily national security agreements. However, they have economic and
industrial objectives with trade implications. Moreover, they are rooted in authorities that are
32 DOD has also entered into agreements with six countries regarding “Reciprocal Quality Assurance” in support of the
procurement of defense products and services. These countries are the Czech Republic, Finland, South Korea, Poland,
Romania, and Slovakia. See also CRS In Focus IF10548, Defense Primer: U.S. Defense Industrial Base, by Heidi M.
Peters.
33 The Balance of Payments Program was established in the early 1960s to provide a preference for U.S. end products
and services for overseas use. It now applies only to Department of Defense (DOD) procurements above a certain
threshold and for certain items. Program restrictions and exemptions are similar to those of the Buy American Act,
which are generally limited to products procured for domestic use. For more detail, see Defense Federal Acquisition
Regulation Supplement (DFARS) Subpart 225.75.
34 Defense Federal Acquisition Regulation Supplement (DFARS) 252.225-7000(b)(2): “Buy American—Balance of
Payments Program Certificate.”
35 Currently, Belgium, Canada, Czech Republic, Denmark, Estonia, France, Germany, Greece, Italy, Latvia, Lithuania,
Luxembourg, Netherlands, Norway, Poland, Portugal, Slovenia, Spain, Turkey, and the United Kingdom are members
of the North Atlantic Treaty Organization (NATO).
36 There is no authoritative definition of defense procurement within the scope of these agreements. Widely defined, it
could include any procurement carried out by government agencies in the field of defense. Narrowly defined, it could
include only the goods and services manufactured or intended to be used only for military purposes.
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connected to the conduct of trade, particularly under TAA. They may seek to facilitate trade in
defense goods and establish procedures that enhance access to the defense procurement markets
of U.S. allies or close partners by reducing or removing discriminatory barriers such as buy
national laws.
Unlike the WTO GPA and FTAs, whose scope is generally narrow, most defense procurement is,
in theory, covered by RDP MOUs. However, these MOUs lack substantial procedural
requirements to ensure national treatment.37 In particular, they lack specificity and generally are
not enforceable. While the GPA and FTAs require parties to establish transparent and
nondiscriminatory rules for procurement, the primary requirement of RDP MOUs is that
procurement activities be conducted according to—or consistent with—the laws of each party. As
noted above, these agreements operate on the principle of reciprocity and mutual commitment to
not discriminate against the other party. However, parties are not specifically obligated, for
instance, to waive tariffs and domestic content requirements if doing so conflicts with their
domestic laws.
There is no corresponding preferential treatment for qualifying country end products in
acquisitions by non-DOD federal agencies, unless these countries are parties to the GPA or a U.S.
FTA and the procurement is covered by the relevant agreement.
U.S. States and Cities Covered by International Agreements
Forty U.S. states allow foreign businesses to bid for contracts tendered by state entities in
situations and areas where state and local governments have chosen to open up their procurement
markets (Figure 5). There are 37 states with voluntary procurement commitments under the WTO
GPA and the U.S.-Chile and U.S.-Singapore FTAs. The U.S. state of Georgia is the only state
with commitments under an FTA (the U.S.-Australia FTA) but not the GPA. Similarly, Puerto
Rico does not participate in the GPA, but the unincorporated, organized U.S. territory has opened
certain procurement opportunities to products and suppliers from Colombia, Costa Rica,
Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, Panama, and Peru.
Three states, seven cities, and the Massachusetts Port Authority (MPA) also have commitments
under a 1995 agreement between the United States and the EU—the European Union
Memorandum of Understanding on Public Procurement.38 In particular, the agreement gives EU
suppliers access to certain procurement opportunities in two states not covered by the GPA (North
Dakota and West Virginia) and Illinois state procurement that is not covered under the GPA. It
also commits Boston, Chicago, Dallas, Detroit, Indianapolis, Nashville and San Antonio—
whenever they open their procurement markets to suppliers from outside of their cities—to allow
EU suppliers to participate and bid for contracts. Similarly, the MPA does the same when
considering non-Massachusetts suppliers. The agreement does not include any EU commitments,
entity lists, or monetary thresholds.
37 National treatment generally refers to the principle of treating foreign and domestic end products and suppliers
equally.
38 Office of the U.S. Trade Representative, “Agreement in the Form of an Exchange of Letters Between the European
Community and the United States of America on Government Procurement,” May 31, 1995.
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Figure 5. U.S. States and Cities Covered by International Agreements
Source: Congressional Research Service (CRS), WTO Agreement on Government Procurement (GPA), U.S.
Free Trade Agreements (FTAs), U.S. Trade Promotion Agreements (TPAs), and the U.S.-EU Memorandum of
Understanding (MOU) on Public Procurement.
Notes: MPA = Massachusetts Port Authority.
U.S.-EU Procurement Market Issues
Opening U.S. and EU procurement markets has been a major issue in transatlantic trade relations
for more than four decades. The WTO GPA governs EU and U.S. firms’ access to government
procurement markets in the United States and the EU, as there is no bilateral FTA between the
partners.39 The GPA enables U.S.-based businesses to bid for certain government contracts in the
39 An exchange of letters also exists involving EU access to procurement markets in North Dakota and West Virginia
(not covered by the GPA), and Illinois; Massachusetts Port Authority; and the cities of Boston, Chicago, Dallas,
Detroit, Indianapolis, Nashville, and San Antonio. Office of the U.S. Trade Representative (USTR), “Agreement in the
Form of an Exchange of Letters between the European Community and the United States of America on Government
Procurement,” May 30, 1995. The United States and the EU began Transatlantic Trade and Investment Partnership (T-
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EU and its 27 member states. Likewise, it allows EU-based companies to bid for contracts
tendered by certain U.S. procuring entities in areas where federal and state governments have
agreed to open up their procurement markets.
Because parties bound by the GPA negotiate market access commitments on a reciprocal basis,
procurement coverage in each market varies considerably. Since the 1970s, the United States and
the EU have sought to open each other’s procurement markets to increase their own exports of
goods and services. U.S. and EU procurement expenditures are estimated to have been equivalent
to around 10% to 14% of GDP in recent years.40 As a result, further market access in this sector
could be of significant benefit to both partners.
The United States, in particular, has sought to ensure fair, transparent, and predictable rules for
government procurement, and nondiscriminatory treatment for U.S. suppliers. According to the
USTR, accurate assessment of the current level of U.S. participation in EU government
procurement markets is difficult due to the EU’s lack of country-of-origin data for winning bids.41
In contract competitions conducted by EU member state governments, U.S. firms point to
concerns over a lack of transparency, including overly narrow definitions of tenders; language
and documentation barriers; and implicit biases in favor of local or EU vendors and state-owned
enterprises (SOEs).42
The EU, on the other hand, has sought to achieve greater access for EU firms to sub-central
government procurement markets in the United States—access to which only U.S. states,
counties, municipalities, and cities themselves can voluntarily grant.43 EU officials have also
pointed to U.S. laws such as BAA and the Berry and Kissell Amendments—which restrict
government purchases of certain items to U.S. suppliers for security reasons—as potentially
injurious to EU companies that want to bid for U.S. procurement contracts.44
Among other goals, both sides recently announced their intention to explore possibilities for
facilitating trade through digital tools and increased cooperation in the area of government
procurement. At the second U.S.-EU Trade and Technology Council (TTC) meeting in May 2022,
the TTC’s Climate and Clean Tech working group announced that the United States and EU had
discussed a “joint mapping of policies and a joint catalogue of best practices” related to green
government procurement.45 They also expressed their intention “to work towards a joint U.S.-EU
initiative incorporating sustainability considerations” in government procurement approaches.
TIP) negotiations in July 2013, which sought, in part, to expand current U.S. and EU government procurement
commitments and market access. However, President Donald Trump suspended T-TIP negotiations in 2017 and
President Joe Biden has not announced any plans to restart them.
40 Organization for Economic Cooperation and Development (OECD), National Accounts Statistics (database).
41 Office of the U.S. Trade Representative (USTR), 2022 National Trade Estimate Report on Foreign Trade Barriers,
March 31, 2022.
42 Ibid.
43 See, for example, Christopher R. Yukins, George Washington University Law School, Testimony Submitted to the
European Parliament Committee on the Internal Market and Consumer Protection and the Committee on International
Trade, for the Joint Public Hearing on TTIP: Public Procurement—Challenges and Opportunities for the European
Union and the United States, European Parliament, Brussels, Belgium, April 20, 2016.
44 For an overview of EU concerns regarding access to U.S. central and sub-central procurement markets, see European
Commission, Directorate General for Trade, Access2Markets, Trade Barriers, United States of America, “Government
Procurement” (last updated on January 14, 2022).
45 White House, “U.S.-EU Joint Statement of the Trade and Technology Council,” Annex II: Conclusions on Working
Group 2–Climate and Clean Tech, May 16, 2022.
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Data Limitations on U.S. Government Procurement
Data limitations relate to both the availability of data and gaps in U.S. and other government
reporting, which complicates assessments of the extent of the U.S. government’s reliance on
foreign goods and U.S. access to foreign government procurement markets. The U.S. General
Services Administration’s (GSA’s) Federal Procurement Data System-Next Generation (FPDSNG) is where agencies report federal procurement contracts whose estimated value is $10,000 or
higher.46 Data, however, are generally not always fully reliable. Documented quality issues
relating to the accuracy, completeness, and timeliness of this data are among the limitations.47
These concerns have prompted many analysts to rely on these data primarily to identify broad
trends and produce rough estimates, or to obtain information about specific contracts. Despite
these limitations, the data may provide general information regarding the value, quantity, and
types of domestic and foreign-made goods that U.S. government agencies procure. Private
research firms, trade associations, think tanks, and the media may also offer information and
estimates on domestic sourcing and acquisitions by the federal government.
It is generally not possible fully or accurately to discern vulnerabilities regarding raw materials
and inputs procured by the government, such as active pharmaceutical ingredients (APIs) and
critical minerals, from official trade and industry data. Tracking these items might be particularly
difficult if they originate in one country but are then processed in another, reflecting modern trade
patterns and global supply chains. Another complication is the lack of a statutory definition of
what qualifies as a “U.S. product” or what is “manufactured” in the United States, which may
mask and understate the extent to which the U.S. government relies on foreign inputs.
In early 2022, the Biden Administration took a number of steps to address and remedy some of
these issues (see “Recent Changes to Buy American Regulations”).
Biden Administration Procurement Policy and
Priorities
The Biden Administration has stated that ensuring that the U.S. government procures goods,
products, and materials produced—and services offered—in the United States is a key component
of its procurement and manufacturing policy agenda. In January 2021, President Biden issued
Executive Order (E.O.) 14005 (“Ensuring the Future is Made in All of America by All of
America’s Workers”). He pledged that his Administration would review past and current actions
to ensure that they are consistent with “Made in America Laws” and Administration policy.
Specific commitments contained in the E.O. include
Reviewing Agency Actions Inconsistent with Administration Policy. The
President directed agencies to suspend, revise, or rescind those agency actions
that are inconsistent with Administration policy and to propose any additional
measures necessary to enforce it.
46 GSA’s System for Award Management (SAM) is the primary system to manage the federal awards process, and it is
where much of the data from suppliers is collected, validated, stored, and made available to government acquisition
agencies and the public.
47 For more information on FPDS-NG data quality issues, see “Appendix A. FPDS Background, Accuracy Issues, and
Future Plans” in CRS Report R44010, Defense Acquisitions: How and Where DOD Spends Its Contracting Dollars, by
John F. Sargent Jr. and Christopher T. Mann.
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Updating and Centralizing the “Made in America” Waiver Process. The
President directed the Director of the Office of Management and Budget (OMB)
to establish within OMB a Made in America Office (MIAO). Before granting a
waiver from the requirements to “Buy American,” agencies are now required to
provide MIAO with a description of a proposed waiver and a detailed
justification for the use of goods, products, or materials that have not been mined,
produced, or manufactured in the United States.
Accounting for Sources of Cost Advantage. The President directed agencies to
assess, when relevant, whether a significant portion of the cost advantage of a
foreign-sourced product is the result of the use of dumped or injuriously
subsidized steel, iron, or manufactured goods.
Promoting Transparency in Federal Procurement. The President directed the
Administrator of General Services to develop a public website that contains
information on all proposed waivers and whether those waivers have been
granted.
Scouting Suppliers. The President directed agencies to partner with the Hollings
Manufacturing Extension Partnership (MEP) to conduct supplier scouting in
order to identify U.S. companies, including small- and medium-sized businesses,
that are able to produce goods, products, and materials in the United States that
meet federal procurement needs.48
Promoting Enforcement of BAA. The President directed the Federal
Acquisition Regulatory Council (FAR Council) to consider revisions to the
applicable provisions in the Federal Acquisition Regulation (FAR) to increase the
numerical threshold for domestic content requirements for end products and
construction materials, among other things.
Provisions in the “Build America, Buy America Act” (BABA, Division G, Title IX of the
“Infrastructure Investment and Jobs Act,” P.L. 117-58) affirm and codify many of these
commitments (e.g., expanding Buy American requirements, improving the accuracy and
transparency in the waiver process, and formally establishing the MIAO within OMB).
Recent Changes to Buy American Regulations
Pursuant to President Biden’s January 2021 executive order, the FAR Council, in March 2022,
published a final rule revising the BAA requirements applicable to federal procurement.49 In
particular, it amended the FAR to implement three changes: (1) a near-term increase to the
domestic content threshold and a schedule for future increases; (2) a fallback threshold that would
allow for products meeting a specific lower domestic content threshold to qualify as domestic
products under certain circumstances; and (3) a framework for application of an enhanced
48
For more detail on the MEP Program, see CRS Report R44308, The Hollings Manufacturing Extension Partnership
Program, by John F. Sargent Jr.
49 U.S. Department of Defense (DOD), General Services Administration (GSA), and the National Aeronautics and
Space Administration (NASA), “Federal Acquisition Regulation; Amendments to the FAR Buy American Act
Requirements,” 87 Federal Register 12780, March 7, 2022. In E.O. 14005, President Biden directed the FAR Council
to consider proposing regulations that would replace the “component test” (or “domestic content test”) with a test under
which domestic content “is measured by the value that is added to the product through U.S.-based production or U.S.
job-supporting economic activity,” rather than the cost of components. While this change was not included in the final
rule, the FAR Council and the MIAO may consider the public comments received regarding unaddressed topic areas in
the proposed rule, potentially including “the strengths and shortcomings of the ‘component test,’ as currently
structured,” as well as “how domestic content might be better calculated to support America's workers and businesses.”
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evaluation factor for a domestic product that is considered a critical item or consists of critical
components. This last change is intended to align federal procurement policy with the Biden
Administration’s goals of improving supply chain resiliency in six critical sectors: information
and communications technology (ICT), energy, agriculture, public health, defense, and
transportation.
The domestic content thresholds set forth in the rule will not apply to end products or
construction materials that consist wholly or predominantly of iron or steel or a combination of
both. Such items are to continue to be classified as domestic for BAA purposes only if the cost of
foreign iron and steel constitutes “less than 5% of the cost of all the components used” in the
product or construction material. The fallback threshold also is not to apply to such products.
Increase to the Domestic Content Threshold
The rule is to gradually increase the domestic content threshold for non-iron and non-steel
products and construction materials over a period of several years. As discussed above, to qualify
as a domestic end product presently, a product must be manufactured in the United States and the
cost of domestic components must be “more than 60%” of the total cost of all components—
effective October 25, 2022 (up from “more than 55%”). The current threshold is to remain in
effect until December 31, 2023. The domestic content threshold is to continue increasing
according to the following schedule:
January 1, 2024: to “more than 65%” (for products delivered in calendar years
2024 through 2028)
January 1, 2029: to “more than 75%” (for products delivered starting in calendar
year 2029)
Under the final rule, a supplier holding a contract with a period of performance that spans the
schedule of threshold increases will normally be required to comply with each increased
threshold for the items in the year of delivery. For example, a supplier awarded a contract in 2023
would have to comply with the “more than 60%” domestic content threshold initially, but in 2024
would have to supply products with “more than 65%” domestic content.
Exception for a Lower Domestic Content Threshold Due to Unavailability or
Unreasonable Cost
The rule also creates a “fallback threshold,” which allows an agency to make use of the former
“more than 55%” domestic content threshold in instances when it has determined that (1) there
are no end products or construction materials that meet the new domestic content threshold, or (2)
such products are of unreasonable cost. The fallback threshold is set to be available through the
end of 2030.
Enhanced Price Preference for “Critical Products” and “Critical Components”
The rule provides for a framework through which procuring federal agencies are to apply higher
price preferences to end products and construction material that OMB deems to be “critical” to
U.S. supply chains or consist of “critical components” in accordance with E.O. 14017 from
February 2021 (“America’s Supply Chains”). This change was scheduled to take effect on
October 25, 2022. The Defense Acquisition Regulatory Council is now scheduled to draft the
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proposed rule by January 11, 2023, originally due July 20, 2022.50 OMB is set to publish a final
rule establishing the list of critical products and components in the FAR—which will be added to
the newly designated FAR 25.105—and the level of additional price preference for such items.
Upcoming Changes
The final rule also preceded changes to BAA regulations stemming from the Infrastructure
Investment and Jobs Act of 2021 (IIJA, P.L. 117-58). The IIJA required that, by November 15,
2022, regulations be implemented amending the definitions of “domestic end product” and
“domestic construction material” to ensure that iron and steel products are—to the greatest extent
possible—made with domestic components and providing a definition for “end product
manufactured in the United States.” OMB has sought input on a definition for “end product
manufactured in the United States.”51 The definition is set to be incorporated into the FAR, as
required by the IIJA.
Impact of International Agreements with Procurement Provisions
The Infrastructure Investment and Jobs Act (IIJA) (P.L. 117-58) also directs the executive branch to assess the
impact of all international agreements that deal with government procurement and to which the United States is a
party. Specifically, Section 70934 directs the Secretary of Commerce, the U.S. Trade Representative (USTR), and
the Director of the Office of Management and Budget (OMB) to assess, in a publicly available report, the impact of
U.S. free trade agreements (FTAs), the World Trade Organization (WTO) Agreement on Government
Procurement (GPA), and federal permitting processes on the operation of “Buy American” laws, including their
impacts on the implementation of domestic procurement preferences. The report was due no later than 150 days
after the date of the enactment of the IIJA (on or about April 14, 2022). Additionally, Section 70923 of the IIJA
directs the Director of the Made in America Office (MIAO) to review U.S. Department of Defense’s (DOD’s) use
of Reciprocal Defense Procurement Memoranda of Understanding (RDP MOUs) and to determine if U.S. suppliers
and products have equal and proportional access to the defense procurement markets of MOU parties. The
MIAO Director was required to report the findings to the OMB Director and the Secretaries of Defense and
State no later than 180 days after the date of the enactment of the IIJA (on or about May 14, 2022). The MIAO
Director will also be required to review all future RDP MOUs to assess whether or not U.S. suppliers and
products will have equal and proportional access to the defense procurement markets of the other party to the
MOU. As of January 9, 2023, these assessments—if completed—have not been made publicly available to CRS’s
knowledge.
Issues for Congress
The COVID-19 pandemic, including its impact on global supply chains, revealed that some
decisionmakers in government and industry in the United States, as well as many consumers, may
not have fully appreciated the extent to which domestically-produced goods procured by the
federal government rely on foreign inputs. Key questions such as how a federal agency ensures
that a procured good is manufactured in the United States from substantially all U.S. components
are not easily answered. The lack of clear statutory definitions of various terms (e.g.,
“manufactured” and “substantially all”) and differences in the ways procuring federal agencies
apply standards often yield different determinations for the same product.52 The “substantial
50 U.S. Department of Defense (DOD), “Open FAR Cases as of 1/6/2023,” Defense Acquisition Regulations Systems
(accessed January 9, 2023).
51 Office of Management and Budget (OMB), “Notice of Listening Sessions and Request for Information,” 87 Federal
Register 23888, April 21, 2022, and “Construction Materials Used in Federal Financial Assistance Projects for
Infrastructure and End Products Manufactured in the United States Under the Build America, Buy America Act;
Request for Information,” 87 Federal Register 32063, May 26, 2022.
52 Needs in terms of quantity, quality, and timing, for example, may also affect the extent to which a procuring agency
is able to comply with “Buy American” requirements or might require a BAA waiver.
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transformation” test used to determine a product’s country of origin for trade purposes is
complex, fact-specific, and thus frequently applied somewhat subjectively.
U.S. government contractors often rely on global supply chains to support their U.S. government
contracts, including networks of suppliers and manufacturing facilities in the territories of other
GPA and FTA parties. Even when manufactured in the United States, many of the products that
U.S. suppliers deliver to federal and state entities have components from other GPA and FTA
parties, which are generally not subject to U.S. preferential purchasing requirements. Therefore,
modifications to U.S. commitments under the GPA or FTAs, or U.S. withdrawal from these
agreements, could potentially require U.S. businesses to restructure their supply chains—
including, for example, by changing suppliers or relocating manufacturing facilities—to comply
with domestic sourcing laws.53 These actions could also disqualify U.S. businesses from selling
products to the federal and state governments that contain GPA-party components.
Active participation in the GPA may help U.S. companies’ maintain their ability to compete for
foreign contracts, and could potentially give the United States leverage to negotiate greater
market access and better terms with WTO members in accession negotiations—particularly
China. This might be especially so as governments around the world spend higher shares of their
budgets on procurement. As countries compete to set global standards (e.g., with respect to 5G
technology or electric vehicles), U.S. businesses unable to bid for government contracts may find
themselves at a disadvantage, ceding opportunities in key markets to competitors from Europe,
Canada, Japan, and China, for example.
Outlook and Policy Options
As Congress continues to review regulations, oversee the implementation of recent legislation,
and consider amending legislation to prioritize federal procurement of U.S. goods and services,
Members could consider the potential implications of such measures for U.S. businesses
(including government contractors) and workers, and their consistency with U.S. obligations
under international agreements. Members could engage with the Administration as it seeks to
clearly define terms and requirements, and set uniform guidelines regarding foreign sourcing in
federal procurement (e.g., by defining “produced” or “manufactured” in the United States
pursuant to BABA requirements). This could promote transparency, consistency, and proper
application of standards in procurement decisions, thereby helping to ensure that agencies carry
out procurement objectives as prescribed by Congress. Additionally, amid debate over renewal of
Trade Promotion Authority (TPA) and potential changes to it, Congress could focus on U.S. trade
negotiating objectives with respect to government procurement (textbox).
Trade Promotion Authority (“Fast Track”)
Trade Promotion Authority (TPA)—sometimes called “fast track”—is a time-limited authority that Congress uses
to establish trade negotiating objectives, notification, and consultation requirements, and procedures to consider
implementing legislation for certain reciprocal trade agreements, provided that they meet certain statutory
requirements. The negotiating objectives are definitive statements of U.S. trade policy that Congress expects the
Administration to honor if such legislation is to be considered under expedited rules.
53 The Trump Administration reviewed the benefits of the GPA, and according to one news report, considered
withdrawal from the agreement. The Trump Administration stated that the GPA was “imbalanced” and sought to
modify U.S. commitments under the agreement by removing certain “essential medicines” from GPA coverage. For
more detail, see Bryce Baschuk, “Trump Considers Withdrawing From WTO’s $1.7 Trillion Purchasing Pact,”
Bloomberg, February 4, 2020, and Jean Heilman Grier, “U.S. Proposes Removal of Essential Medicines from GPA,”
Perspectives on Trade, December 3, 2020.
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TPA was reauthorized in 2015 by the Bipartisan Congressional Trade Priorities and Accountability Act of 2015
(P.L. 114-26) and expired on July 1, 2021. Under TPA-2015, two of the principal objectives outlined by Congress
touched on government procurement:
(7) Regulatory Practices: “to establish consultative mechanisms and seek other commitments, as appropriate, to
improve regulatory practices and promote increased regulatory coherence, including through... transparency
in developing guidelines, rules, regulations, and laws for government procurement and other regulatory
regimes.”
(13) WTO and Multilateral Trade Agreements: “to expand country participation in and enhancement of the”
WTO Agreement on Government Procurement.
For more detail, see CRS Report R43491, Trade Promotion Authority (TPA): Frequently Asked Questions.
The ongoing Russian invasion of Ukraine, like the COVID-19 pandemic, has also accelerated and
magnified existing issues in global supply chains and underscored the interconnected nature of
the global economy. For many observers, the invasion further highlights the importance of
improving the resilience of domestic and global supply chains and potentially limiting trade
dependencies on certain countries for products procured by the government. This presents the
United States and its allies with new questions about the manner and extent to which government
procurement policy can and should alter existing production and supplier arrangements. In
particular, Congress could consider the costs and benefits of adopting policies that attempt to
reallocate resources within the economy toward developing domestic production of goods
currently being procured from certain countries. Congress could also consider whether or not to
reinforce U.S. support for global trade arrangements and agreements with like-minded trading
partners, whether or not to encourage “reshoring” and “friend-shoring” to select countries, and
whether or not to increase incentives for government contractors to utilize a greater diversity of
suppliers to increase resilience.
More broadly, Congress may consider some of the following options:
Opening up or restricting government procurement markets. Opening up
procurement to foreign firms allows for greater international competition,
providing a government agency with greater choice and potentially lower-cost or
more-efficient options, while also possibly disadvantaging some U.S. firms and
workers. Restricting procurement to domestic sources may support some U.S.
firms and workers, but may also reduce competition, which could in turn raise
costs for public entities and possibly displace jobs in other sectors. Members of
Congress could undertake fact-finding on the impact of these measures on the
U.S. economy, including specific sectors, and on trade relations with allies and
major trading partners.
Changing U.S. content requirements. The proportion of U.S. content required
in a product in order to qualify as domestic may come under additional scrutiny
by Members of Congress, U.S. businesses, allies, and WTO GPA and U.S. FTA
parties. In March 2022, the FAR Council published a final rule that makes
significant changes to the regulations at FAR Part 25, which implements BAA.54
As part of this final rule, the domestic content requirement increased from “more
than 55%” (i.e., the cost of domestic components must exceed 55% of the cost of
all the components) to “more than 60%” in October 2022. It is set to continue
increasing gradually to “more than 75%” over a period of several years.
54 U.S. Department of Defense (DOD), General Services Administration (GSA), and the National Aeronautics and
Space Administration (NASA), “Federal Acquisition Regulation; Amendments to the FAR Buy American Act
Requirements,” 87 Federal Register 12780, March 7, 2022.
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Members of Congress could consider whether or not to codify in statute domestic
content requirements, reverse or accelerate changes proposed by the Biden
Administration, or assess their economic impact. The integrated nature of modern
industrial supply chains, especially in North America as a result of NAFTA and
now USMCA, can make it difficult to determine domestic content. Congress
could examine the extent to which domestic producers and suppliers might be
able to meet these more stringent Buy American requirements going forward.
Assessing foreign market access for U.S. businesses. By participating in the
WTO GPA and through U.S. FTAs, U.S. companies gain access to the
government procurement markets of other signatories. Violating the agreement
could subject the United States to complaints by other parties under WTO dispute
settlement procedures, and withdrawing from the GPA—as some past officials
briefly considered—would eliminate these export opportunities for U.S.
businesses and workers. In weighing the merits of such a course, Congress could
seek a more complete statistical picture of the costs and benefits to the U.S.
economy at large of the GPA and FTA-wide government procurement market,
and other large procurement markets that could potentially be subject to greater
future U.S. access (see below). Doing so would likely entail a whole-ofgovernment approach in which departments and agencies, in a coordinated and
systematic way, estimate the share of the procurement market that the United
States opens to foreign competition. It would also require engaging with the
United States’ GPA and FTA partners to determine the shares of their markets
that are opened to foreign competition. The GPA and U.S. FTAs generally
include provisions on data and transparency that require parties to these
agreements to disclose information on their government procurement activities.
Potential options in this area may depend on the Biden Administration’s
assessments of international agreements pursuant to the Infrastructure Investment
and Jobs Act (IIJA) (P.L. 117-58).
Renegotiating international commitments. As a result of recent legislation and
E.O.s providing for stricter domestic content/waiver issuance requirements, the
United States may seek to renegotiate its government procurement commitments
under the GPA or U.S. FTAs—or advance new commitments or cooperation, for
example, as part of the U.S.-EU Trade and Technology Council (TTC) or the
Indo-Pacific Economic Framework for Prosperity (IPEF). This could take the
form of terminating or reducing some U.S. commitments, or seeking further
access from trading partners for U.S. suppliers. Either way, U.S. trading partners
may seek concessions in return. Congress could consider whether or not to renew
TPA and establish negotiating objectives to shape the Administration’s
negotiating stance and may conduct oversight of any negotiations.
Government Procurement Data Collection Options
Without greater visibility into the makeup of products and services procured by the federal
government and globally, policymakers might continue to have an incomplete or inaccurate view
of existing and potential future vulnerabilities and dependencies, and the means by which to
evaluate or address them. U.S. policymakers could seek to improve such visibility in ways that
may enable them to advance economic interests more effectively, while at the same time
encouraging more transparency by government contractors and suppliers in the United States and
designated countries. Such efforts could include
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Collecting, maintaining, and publicizing data that could be used by analysts to
develop more accurate assessments of domestic and foreign sourcing in
government procurement activities (e.g., either unilaterally or by encouraging or
requiring greater disclosure through international economic institutions, such as
the OECD). As a first step, Congress could consider prioritizing certain critical
sectors for improved data collection, analysis, and dissemination.
Conducting oversight as executive branch agencies use a whole-of-government
approach and develop guidance to evaluate and track the origin of goods and
services procured. As part of this effort, Congress could consider whether or not
to require or otherwise incentivize the Administration to continue or ramp up
efforts to harmonize U.S. programs for gathering information and streamline data
centralization. In addition, it could examine the adequacy of data and information
recording, collection, disclosure, reporting, and analysis at the U.S. and
international levels and recommend necessary improvements.
Examining ways to improve existing systems and programs tasked with
collecting current information related to government procurement by the United
States and other countries.
Examining more closely the activities (particularly those related to data
collection) and transparency commitments in various international and regional
organizations, including the WTO, OECD, International Monetary Fund (IMF),
the World Bank, and United Nations Conference on Trade and Development
(UNCTAD) on government procurement to determine if these mechanisms are
sufficient and/or are being adhered to. Congress could examine whether or not
existing tools are adequate to address emerging data requirements and
deficiencies. Congress could consider whether or not a U.S. and/or
internationally-coordinated effort is called for, and if so, of what magnitude or
scale.
Considering whether or not to support U.S. and international efforts to provide
training courses, workshops, and technical assistance programs for countries to
implement international statistical guidelines and improve comparable data
compilation and dissemination practices related to government procurement. In
particular, Congress could examine how the WTO may or may not be able to play
a greater role in enhancing transparency and setting standards for dissemination
of procurement data through future reforms to the GPA or new agreements on
government procurement.
CRS Resources
CRS Report RS22536, Overview of the Federal Procurement Process and
Resources, by L. Elaine Halchin.
CRS Report R46748, The Buy American Act and Other Federal Procurement
Domestic Content Restrictions, by David H. Carpenter and Brandon J. Murrill.
CRS Insight IN11756, The Buy American Act: Proposed Rules, by L. Elaine
Halchin.
CRS In Focus IF10548, Defense Primer: U.S. Defense Industrial Base, by Heidi
M. Peters.
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CRS In Focus IF10605, Buying American: The Berry and Kissell Amendments,
by Michaela D. Platzer.
CRS In Focus IF11989, Congress Expands Buy America Requirements in the
Infrastructure Investment and Jobs Act (P.L. 117-58), by Christopher D. Watson.
CRS In Focus IF10628, Buy America, Transportation Infrastructure, and
American Manufacturing, by Michaela D. Platzer and William J. Mallett.
Author Information
Andres B. Schwarzenberg
Analyst in International Trade and Finance
Acknowledgments
The author is grateful to the following individuals for their thoughtful and detailed comments and
suggestions: Shayerah I. Akhtar, Cathleen D. Cimino-Isaacs, Rachel F. Fefer, Rileigh K. Greutert, L. Elaine
Halchin, Brandon J. Murrill, Heidi M. Peters, Mallary A. Stouffer, and Karen M. Sutter. The author also
thanks Amber Hope Wilhelm for developing graphics for this report.
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
shared staff to congressional committees and Members of Congress. It operates solely at the behest of and
under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not
subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in
its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or
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copy or otherwise use copyrighted material.
Congressional Research Service
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