September 2010

Proposed Buy America changes miss the real solution

by Frank Di Giacomo, Publisher

A new law recently introduced by California Congressman John Garamendi (D-Sacramento) would toughen existing Buy America rules governing public transportation procurements. While on the face of it the proposal sounds like a great idea, the changes miss the real solution to building the U.S. transit supply side and could worsen American companies' ability to compete overseas.

Waiver elimination

 "Buses, Rail Cars, Ferryboats: Make it in America Act of 2010 (H.R. 5791)" is one of three bills that Garamendi introduced on the same day this past July. This bill would eliminate all but one of the waivers to the Buy America requirement for rolling stock. Current law allows agencies and manufacturers to request a waiver for non-availability of the components or systems in the U.S., use of microprocessors and other reasons that the FTA deems in the public interest.

Under Garamendi's bill, if passed, transit agencies would be allowed a waiver for one remaining reason: if procurement from a domestic supplier increases costs by 25 percent or more. His other bills would encourage purchases of domestically produced alternative energy technologies and close loopholes that he and others say encourage the shifting of jobs overseas.

"Middle class wages in America have stagnated for three decades, and our country's future success depends on bringing back good manufacturing jobs," Garamendi says.

Tougher rules

All this is well intentioned, and there is certainly some merit in wanting to see the rules for waivers tightened. However, the FTA has not exactly been overwhelmed with waiver requests in the past two years, with almost half of them being denied anyway.

Any overtly tougher Buy America rules would probably cause some retaliation by other countries. Many were already complaining when some wanted tougher requirements in the 2009 stimulus bill, and threatened to do the same for their industries in their own stimulus packages.

The real solution to growing the supply side is to pass the main recommendations of the Apollo Alliance's reports issued on the bus and rail industries. In addition to some research and technical assistance, the Alliance strongly urges Congress and the president to pass a full authorization bill with the funding guarantees as in the past. I strongly agree. The real threat to our domestic industries and the jobs they create is the lack of orders.

 


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