Combating Foreign Use of Discriminatory Government Procurement Practices

GAO discussed H.R. 1750, the Buy American Act of 1987, which is intended to strengthen U.S. government efforts to combat foreign government use of discriminatory procurement practices. Although an international agreement was expected to open substantial export opportunities for U.S. businesses, its small membership, its limited coverage, and limited signatory compliance have reduced its effectiveness. GAO believes that the act would: (1) encourage other governments to assume the obligations of the agreement and limit their use of discriminatory procurement practices; (2) create support within the business communities of countries to lessen discriminatory practices; (3) serve as a strong impetus for nonsignatory countries to join the agreement; and (4) strengthen U.S. government efforts to enforce foreign country compliance with agreement obligations. Although agreement signatories recently concluded negotiations to improve the functioning of the agreement and eventually enhance U.S. government monitoring efforts, there are problems ensuring foreign government compliance. GAO believes that: (1) addressing compliance on a country-by-country basis, rather than an individual company basis, would better address problems with signatories' compliance and lower the risk of retaliation from foreign governments; and (2) requiring the executive branch to initiate dispute settlement procedures to remedy compliance problems and limiting the time the United States participates in such procedures before initiating reciprocal action would strengthen government compliance enforcement efforts.