Breaking Down the “Buy American and Hire American” Executive Order
On April 18, 2017, President Trump signed an Executive Order stating that “it shall be the policy of the executive branch to buy American and hire American.” Here’s what you need know:
Buy American: In an effort to promote American manufacturing and domestic purchasing, federal agencies are tasked with improving enforcement of what the Executive Order collectively refers to as “Buy American Laws.” This assortment of laws consists of all existing statutes, regulations, rules and executive orders relating to federal procurement or federal grants that require or provide a preference for goods, products or materials produced in the United States, including iron, steel, and manufactured goods.
Under the Executive Order, federal agencies are directed to:
Assess the use of waivers based on type and impact on domestic jobs and manufacturing;
Develop policies for federally funded projects to maximize the use of U.S.-manufactured products, including components of manufactured products, and materials such as steel, iron, aluminum, and cement;
Review all U.S. free trade agreements, including the World Trade Organization Agreement on Government Procurement, and their impact on Buy American Laws; and
Re-examine the bidding process for government procurement contracts by ensuring that the relevant agency considers whether a significant portion of the cost advantage of a foreign-sourced product is the result of injuriously dumped steel, iron or manufactured goods, including those made from unfairly traded steel, before a public interest waiver is granted.
This Executive Order requires the Secretary of Commerce to provide a report to the President with recommendations on how to strengthen implementation of the “Buy American” laws by mid-November 2017.
Hire American: In an effort to prevent fraud and abuse of the U.S. immigration system, the Executive Order calls for federal agencies (Department of Labor, Department of Justice and Department of Homeland Security) to review the visa system regarding the H-1B and lottery programs, and “rigorously enforce” the laws governing entry into the United States of workers from abroad.
Specifically, federal agencies are directed to review and reform the rules that award H-1B temporary visas to highly skilled foreign workers to protect US workers from lower-cost foreign labor. The H-1B visa program allows companies to bring skilled foreign workers to work in the U.S. for a few years. Under the current program, visas are awarded under a random lottery system. Agencies are now directed to consider ways to allocate H-1B visas based on merit to “ensure that H-1B visas are awarded to the most-skilled or highest-paid petition beneficiaries” and propose reforms to address any problems.
Takeaway: Importantly, the Executive Order does not create any new requirements for employers or immediately change existing laws. Nevertheless, the Executive Order signals that further regulations and significant changes may be forthcoming. With the government’s emphasis on “Buy American,” we anticipate that there will be heightened enforcement on domestic source restrictions, as well as the potential renegotiation (or revocation) of a number of trade treaties. With respect to the “Hire American” priority, we expect to see major reforms to the H-1B visa program, which may include dismantling the lottery system and awarding visas to the highest-paid positions and/or positions with master’s degrees or other higher qualifications thereby limiting the ability of companies to petition for temporary work authorization visas for highly skilled workers. Employers stay tuned!