Law360 Quotes Stephen Kho on New Rules re: US-Origin Materials for Fed Infrastructure Projects

For its article “US-Made Materials Rule May Create New Trade Friction,” Law360 quoted Akin Gump international trade partner Stephen Kho. The article reports that new rules that require federal infrastructure projects to use only U.S.-origin building materials could conflict with international obligations that foreign contractors and U.S. companies have the same opportunities to bid for projects. The legislation behind these rules, reports Law360, is the Infrastructure Investment and Jobs Act (IIJA), signed by President Biden in November 2021.

Kho, who served as legal advisor to the U.S. Mission to the World Trade Organization, said that the IIJA’s blanket acknowledgment of international obligations would likely be sufficient for federal agencies to comply with the law, but complications could arise in the infrastructure project pipeline: “It is a bit complicated at the state level because a lot of the grants, especially for highway and waterway projects, are given to state agencies for them to procure and for them to manage.”

He said that 37 states have opted into the government procurement agreement (GPA), which requires the U.S. to treat certain foreign bidders that same as domestic bidders when competing for government contracts. Agencies in states not covered by the GPA will have a learning curve to face in managing federally funded infrastructure projects.

Kho also note a potential for cross-border disputes in the IIJA’s Buy American provision, which appears to block federal agencies from releasing funds to infrastructure projects unless all of the materials, such as iron, steel and construction materials, are produced in the U.S.

Said Kho, “I've never seen a provision like that before where nothing moves forward until all is said and done. Could that raise the ire of our trading partners who say, ‘Look, I won this project fair and square, and then you didn't move forward with it’?”