Biden Supports “American Products” – What Should Chinese Sellers Do?

Original title: What to do if Biden supports Chinese sellers of “American goods”

Recently, the President of the United States, Biden, issued an executive order on “Ensuring Future Manufacturing by American Workers in the United States” to promoteproductSales, employment and investment.

Throughout the content of the executive order, it mainly includes several points: maximizing the US element in federal procurement; establish a manufacturing office in the US for oversight; use the Association for the Promotion of Manufacturing Technology (MEP) to interact with national companies.supplierEstablish connections; amend the Federal Procurement Regulations (FAR) to replace the “component test” used to identify household end products and building materials withProduct added valueThe product must be produced by the United States or by economic activities that support American employment.movable propertyIn addition, increase the digital threshold for domestic content requirements for terminal products and building materials, and increase thepriceOffers.

　　“Buy American” is not a pioneering move

In fact, a little understanding will tell that the executive order issued by the Biden administration is not a pioneering move. As early as 1933, the United States enacted the “Purchase of American Products Act.” It was during the “Great Depression” and the United States attempted to expand governmentPublic expenditure, Increase considerablypublic constructionTo expand employment and promote the recovery of the domestic economy, this bill has been amended many times and is still in effect.

In response to the financial crisis, the Obama administration’s economic stimulus plan released in February 2009 included a “buy Americans” clause; The Trump administration also issued a “Buy Americans and Hire Americans” executive order in April 2017. Overall, these bills and administrative orders have a strong trade protectionist color. In actual implementation, they are not only countered by other countries, but also by national distributors. Additionally, the number of jobs it creates for the United States is limited and only shifts from some industries to government-supported industries, likely causing the loss of potential jobs.

Additionally, Biden’s executive order only involves procurement at the US federal government level and cannot restrict local government procurement.

According to statistics from the U.S. Government Accountability Office (GAO), goods and services from federal agencies in fiscal year 2019contractIt accounts for about 40% of government discretionary spending, spending a total of $ 586 billion, and foreign products account for less than 5% of federal direct purchases. According to data from the Grant Management System (SAM), the federal government purchased approximately $ 221.7 billion in assets in fiscal 2019 under the current procurement regulations of the American Product Purchase Act of 1933, of which only 3.5% or $ 7.8 billion were foreign. – manufactured product. Therefore, Biden’s executive order “Buy American” will basically not affect the United States.manufacturingMake an impact.

In addition, the members of the Government Procurement Agreement (GPA) are also not affected by the administrative order issued by Biden. The so-called ACP is a multilateral agreement of mutual assistance signed voluntarily by the members of the WTO. It aims to eliminate discrimination against foreign goods, services and suppliers, increase transparency and introduce international competition into traditional national competition.public financeManagement of government procurement areas, to achieveinternational tradeGreater liberalization and expansion of world trade. Currently, the GPA has 48 members, including the United States, and China has yet to join. To solve the problem of joining GPA and other free trade agreements and the American Products Purchase Act.conflictThe United States Congress passed the “Trade Agreements Act” in 1979, granting exemptions to GPA member parties and other government procurement treaties with the United States.

In fact, Biden’s move aims to revitalize the US automobile manufacturing industry. To profit from the “purchase of American products,” Biden will use the full influence of the federal government to make the United States a car. electric and itsRaw MaterialsAnd a world leader in parts manufacturing In China, it will promote factory expansion and reuse of existing manufacturing.supply chainAnd the automotive infrastructure sector to create 1 million new jobs. It will ensure that these workers have well-paying jobs and have the option to join the union. At the same time, Biden will use the power of federal procurement to increase demand for clean cars made and bought in the United States. This acquisition commitment will help significantly accelerate the US’s ability to produce clean cars and parts, while at the same time accelerating the upgrade of the 3 million vehicles in these fleets. Biden will offer rebates to consumers through the US Clean Car Proposal, allowing them to replace older, less efficient cars with new American cars made from raw materials and parts purchased in the United States.

　Investigate specifically

In response to the aforementioned administrative order, ChinamakerResearch can be done specifically. In accordance with the “Buy American” administrative order, the “component test” in the “Federal Procurement Regulations” (FAR) will be replaced by the added value of the product. In the past, “composition tests” were based on cost considerations. The final product must be manufactured in the United States and more than 50% of the cost of all parts must also be manufactured in the United States. The added value of products is considered from the perspective of added value, which can more accurately measure the content of American manufacturing.Before the amendment is introduced, it is recommended that Chinese manufacturersProduct supply chainTo get started, assess whether any end product is “close” to the new threshold and make any necessary adjustments to ensure compliance. It is also possible to consider whether the product manufacturing process should be improved to introduce more US-made items to meet various legal requirements. Resellers can start by reviewing vendor and product lists to find out which products may have problems.

In addition, China should speed up the GPA negotiation process.The public procurement market in a country or region is huge, and generally representsGDPFrom 15% to 20%. The current size of the market covered by offerings from GPA participants is up to $ 1.7 trillion – take the United States, a GPA member, for example, which awardedbusinessThe value of public procurement contracts reached $ 12 billion. The GPA is of great importance to improve the level of openness in my country. My country began negotiations to join the ACP in 2007 and is currently in a situation where bidding negotiations and legal adjustment negotiations are taking place simultaneously. Regarding the former, my country submitted its seventh offer in October 2019. In the future, it might consider including some large state-owned companies engaged in infrastructure construction in the list of offers and adding more commercial service offers. From this last point of view, it is necessary to promote the coupling of national public procurement laws with ACP regulations, improve the revision of the “Public Procurement Law”, coordinate the relationship between the “Public Procurement Law” and the “Bidding and Bidding Law”, and created an independent organization to handle the public procurement process. Various disputes that have arisen.

At the same time,Guoxin EnergycarindustryCompetitiveness must be improved. Biden believes that failed trade policy during the Trump era has allowed China to lead future competition in the auto industry. Compared to the United States, China’s global market share in electric vehicle production is expected to be more than four times that of the United States. From Biden’s “Buy American” executive order to the short-term plan “to formulate new, more stringent fuel emission standards to ensure 100% of newly sold light / midsize vehicles are electrified” to the mid-range plan. long term “by the end of 2030” Implement more than 500,000 new public charging points and restore full tax credits for electric vehicles. ”China and the United States are expected to compete fiercely in the field of new energy vehicles.

China has pledged to liberalize all restrictions on foreign investment in the auto sector by 2022. By then, it will be easier for the United States to establish a wholly-owned new energy vehicle company in China. This is also forcing companies. domestic new energy automobile to do a good job of internal strength, strengthen technological research and development and improveMarkPicture; on the other hand, developingfusionReorganization, Strategic cooperation to improve and optimize corporate mechanisms and governance structures.

(Source: International Finance News)

(Responsible editor: DF524)