How US Trade Obligations Apply To Biden's Infrastructure Law

“How US Trade Obligations Apply To Biden's Infrastructure Law,” an article by international trade partner Stephen Kho, counsel Sarah Sprinkle and associate Thor Petersen, has been published by Law360.

The article discusses the expansion in the Infrastructure Investment and Jobs Act (IIJA) of Buy America requirements attached to federally funded infrastructure. As the authors note, this expansion “could require some state agencies that receive federal funding for infrastructure to consider for the first time whether U.S. international treaty obligations prevent the application of Buy America preferences for certain government purchases.”

The article provides background on “Buy America” legislation and its scope and on the World Trade Organization’s Government Procurement Agreement (GPA), among other international treaties, which prohibits the U.S. from discriminating against the goods, services and suppliers of parties to those agreements for procurement.

The authors discuss factors for applying the GPA and, in particular, whether the U.S. GPA applies to procurement by state entities, and they then look at states’ applications of Buy America preferences. They note that states “have historically been able to apply Buy America preferences without concern for international treaty obligations because these preferences have applied to projects covered by an exception negotiated by the U.S. or were otherwise scoped out of trade agreements.”

The article closes with a review of the implications of the GPA on the IIJA’s Buy America requirement. The authors note that many state agencies implementing IIJA-funded projects may be unaware of the implications of the U.S.’s GPA commitments on their procurement because previous federal funding similarly subject to Buy America requirements was “generally covered by exceptions to these commitments,” as they discuss in the article.

They conclude by noting, among other benefits and risks, that “[T]he Buy America expansion in the IIJA could significantly complicate the administration of procurements for infrastructure projects for covered states. Unlike with previous federal funding, states agencies will now have to consider whether the procurement for each infrastructure project is subject to U.S. GPA commitments via consideration of the factors listed above.”

Subscribers can read the full article here.