The Buy American Act And Your Business

[geriatrickid]

Unknown to most Thai exporters is the pending Buy American Act that looks set to be passed by a very anxious U.S. Congress.

The Act would ban imports from companies that don't have an American agent and is aimed at ensuring that the foreign manufacturers of defective protects can be served with legal papers. It's a broad brush legislation that according to the EU trade commission will wipe out the exports of small and middle sized exporters. It also risks destroying trade with Canada, the USA's largest trading partner and largest supplier of energy. The end result would be an end to any economic recovery as the EU and Canada would retaliate. The legislation was introduced in response to the Chinese drywall fiasco in the USA but is really a protectionist trade policy promoted by republicans and democrats alike.

What will small and midsized Thai exporters do? Are those of you exporting even aware of the new law? Does this mean you have to hire an agent which in turn will add additional costs to the export process? Internet based businesses will not be exempt because the law is supposed to apply to ALL goods entering the USA. That means tshirts, silk, knick knacks originating from Thailand are included. I don't know how software will be managed, but it's apparently dealt with under the definition of goods in the law.

Congress may be forced to pass an amendment excluding Canada because legal papers can be served in Canada, but in today's terrified Congress that fears the November elections, there may be no exemptions. What impact will a trade war have on the small exporters of Thailand? It could be months before the issue is resolved, until then what will an entrepreneur do? BTW China introduced more draconian legislation in respect to foreign companies attempting to set up in China. The big MNEs call it a blue print for the theft of technology. The Chinese protectionism will not impact Thai exporters in the same way as the US legislation although it can be described as more lethal.

Edited September 14, 2010 by geriatrickid

[gregb]

Can you provide a link to this act, or a bill number?

I know the federal government has a Buy American Act for federal procurement, but I have never heard of anything that restricts imports for the average citizen. A quick Google search was not helpful, as there a dozen or so "Buy American Acts" that have been passed since 1933.

Where is the text of this proposed law? It sure isn't being widely advertised.

[BigBikeBKK]

the sky is falling the sky is falling!

[TongueThaied]

the sky is falling the sky is falling!

When shit happens and the sky falls, ride!

[geriatrickid]

Can you provide a link to this act, or a bill number?

I know the federal government has a Buy American Act for federal procurement, but I have never heard of anything that restricts imports for the average citizen. A quick Google search was not helpful, as there a dozen or so "Buy American Acts" that have been passed since 1933.

Where is the text of this proposed law? It sure isn't being widely advertised.

Sorry for the delay in responding. Here are a couple sources;

Based upon one article that stated;

The chief sponsor of the House legislation is Betty Sutton, an Ohio Democrat who is facing a tough re-election battle. Several other Democrats fighting for their political lives are the bill's co-sponsors.

This law;

H.R.4678 : Foreign Manufacturers Legal Accountability Act of 2010

Sponsor: Rep Sutton, Betty [OH-13] (introduced 2/24/2010) Cosponsors (64)

Committees: House Energy and Commerce; House Ways and Means; House Agriculture

http://www.govtrack....?bill=h111-4678

I found a good article on line here

http://www.canadianb...ontent=b4503010

I originally heard about it from an importer of medical devices (latex gloves are classified as such) and he's in panic mode because his Malaysian and Thai suppliers are unaware of the implications.

Summary of law follows. Note that it directs each agency to comply; EPA, Commerce, USDA, FDA etc. It can wipe out Thai exports for some specialty items. The US manufacturers associations are against the law.

Foreign Manufacturers Legal Accountability Act of 2010 - Directs the Food and Drug Administration (FDA) (with respect to drugs, devices, cosmetics, and biological products), the Consumer Product Safety Commission (CPSC) (with respect to consumer products), and the Environmental Protection Agency (EPA) (with respect to chemical substances, new chemical substances, and pesticides) to require foreign manufacturers and producers of such products (or components used to manufacture them), in excess of a minimum value or quantity, to establish a registered agent in the United States who is authorized to accept service of process on their behalf for the purpose of all civil and regulatory actions in state and federal courts. Requires the registered agent to be located in a state with a substantial connection to the importation, distribution, or sale of the products. Directs the Secretary of Commerce to establish, maintain, and make available to the public a registry of such agents. Deems a foreign manufacturer or producer of products covered under this Act that registers an agent to consent to the personal jurisdiction of the state or federal courts of the state in which the agent is located for the purpose of any civil or regulatory proceeding. Prohibits importation into the United States of a covered product (or component part that will be used in the United States to manufacture a covered product) if the product (or component part) or any part of the product (or component part) was manufactured or produced outside the United States by a manufacturer or producer who does not have a registered agent whose authority is in effect on the date of the importation. Requires the Secretary of Agriculture and the Commissioner of Food and Drugs to jointly study the feasibility and advisability of requiring foreign producers of food distributed in commerce to establish a registered agent in the United States who is authorized to accept service of process on behalf of such producers for the purpose of all civil and regulatory actions in state and federal courts.

[Genericnic]

Can you provide a link to this act, or a bill number?

I know the federal government has a Buy American Act for federal procurement, but I have never heard of anything that restricts imports for the average citizen. A quick Google search was not helpful, as there a dozen or so "Buy American Acts" that have been passed since 1933.

Where is the text of this proposed law? It sure isn't being widely advertised.

Sorry for the delay in responding. Here are a couple sources;

Based upon one article that stated;

The chief sponsor of the House legislation is Betty Sutton, an Ohio Democrat who is facing a tough re-election battle. Several other Democrats fighting for their political lives are the bill's co-sponsors.

This law;

H.R.4678 : Foreign Manufacturers Legal Accountability Act of 2010

Sponsor: Rep Sutton, Betty [OH-13] (introduced 2/24/2010) Cosponsors (64)

Committees: House Energy and Commerce; House Ways and Means; House Agriculture

http://www.govtrack....?bill=h111-4678

I found a good article on line here

http://www.canadianb...ontent=b4503010

I originally heard about it from an importer of medical devices (latex gloves are classified as such) and he's in panic mode because his Malaysian and Thai suppliers are unaware of the implications.

Summary of law follows. Note that it directs each agency to comply; EPA, Commerce, USDA, FDA etc. It can wipe out Thai exports for some specialty items. The US manufacturers associations are against the law.

Foreign Manufacturers Legal Accountability Act of 2010 - Directs the Food and Drug Administration (FDA) (with respect to drugs, devices, cosmetics, and biological products), the Consumer Product Safety Commission (CPSC) (with respect to consumer products), and the Environmental Protection Agency (EPA) (with respect to chemical substances, new chemical substances, and pesticides) to require foreign manufacturers and producers of such products (or components used to manufacture them), in excess of a minimum value or quantity, to establish a registered agent in the United States who is authorized to accept service of process on their behalf for the purpose of all civil and regulatory actions in state and federal courts. Requires the registered agent to be located in a state with a substantial connection to the importation, distribution, or sale of the products. Directs the Secretary of Commerce to establish, maintain, and make available to the public a registry of such agents. Deems a foreign manufacturer or producer of products covered under this Act that registers an agent to consent to the personal jurisdiction of the state or federal courts of the state in which the agent is located for the purpose of any civil or regulatory proceeding. Prohibits importation into the United States of a covered product (or component part that will be used in the United States to manufacture a covered product) if the product (or component part) or any part of the product (or component part) was manufactured or produced outside the United States by a manufacturer or producer who does not have a registered agent whose authority is in effect on the date of the importation. Requires the Secretary of Agriculture and the Commissioner of Food and Drugs to jointly study the feasibility and advisability of requiring foreign producers of food distributed in commerce to establish a registered agent in the United States who is authorized to accept service of process on behalf of such producers for the purpose of all civil and regulatory actions in state and federal courts.

As a lawyer practicing in the U.S., I can tell you that the law, as proposed in the quoted paragraph, is no big deal for any supplier exporting to the U.S. Most U.S. businesses are required to maintain a registered agent for service by the state where they are formed, such as Delaware. See this Wikipedia entry on registered agents to get an idea of what they do. There are companies that will act as a registered agent for a very reasonable yearly fee. Here is an example of a registered agent company in Texas where I live that charges $95.00 per year to accept service of process. Hardly a high enough price to stop a supplier from exporting to the U.S. The main purpose of a registered agent is to be able to serve legal papers on a company (foreign or domestic) without having to head up a long elephant track trying to locate the company.

David

[gregb]

Well,

That law is extremely brief. It doesn't say anything at all actually. Just directs the relevant agencies to define the term "minimum" for who it covers and who is exempt.

The way I read it, given how incredibly brief it is, they are simply going to require a registered agent in the US who has the manufacturing details on file. There is nothing in there about the agent having any sort of liability, so it will likely simply be a registry where consumers can easily find the address of the manufacturer if they want to complain or file a lawsuit.

So any small exporters would simply have to pay a nominal annual fee to one of these registered agent lists and put their details on file. Sounds completely harmless really. If the manufacturer gets sued for a faulty product and tells the US justice system to go pound sand, then all he really loses is the US as an export market until he opens up a new front company to sell the same crappy product under a new name. Of course, that is already the case today, this just makes the process much, much easier.

I just don't see where it is going to have a huge impact other than creating a new level of bureaucracy and possibly cost a few hundred dollars a year for these exporters to register.

Seems harmless enough compared to some of the really serious legislation they've been kicking around, like supporting the codex alimentarius. That is going to have a much bigger impact on Thai exporters than this. This looks relatively benign.

Just wait until they release the list of approved agents, register with one, and pay a small fee. Why the worry?

[geriatrickid]

Thank you for taking the time to answer and for your insight. In one of the conference calls we had ,the concern expressed was in respect to; Requires the registered agent to be located in a state with a substantial connection to the importation, distribution, or sale of the products. The procurement officer stated that his government affairs compliance officer claimed this would necessitate having agents in multiple high risk states. Yes, Delaware is a wonderful state to have a corporate registry, but if the major markets were CA, TX, NJ, NY then an agent would be required in that state and that is where the service of suit would be. As you know, some states are more plaintiff friendly and have state laws that allow for treble damages etc. For example, clinical trials avoid some states because the risk is just too high. Alabama being one of the worst states for that. There is a difference between states such as VT and CA. Sometimes a claim can be mounted to use the most favourable jurisdiction. The Chinese drywall mess that sparked this law did have local import agents involved. However, the agents were not in the hard hit states of CA and FL and the agents were not designated for service of suit. I can certainly see the benefit of accountability, but I get a feeling this is intended more of a trade barrier. In any case, I am not a litigator so I will leave it to the experts to deal with that.

The other concern was the paperwork and compliance. All the new forms and the delays envisioned are believed to be adding costs and more bureaucracy. As you guys are not concerned at this time, I'm just going to sit tight and watch this develop. The trade brief memo out of the EU yesterday says that if the law is passed it will be "vigorously" challenged as it is claimed to violate existing trade agreements.

It's time's like his I am glad I don't have to do the compliance or take responsibility for exports. My few brain cells sure is aching sumthin' mighty.

[Xonax]

What a stupid law! This will only result in a serious trade war, with heavy import duties on american products all over the world, or at least a boycot US products action.

Edited September 16, 2010 by Xonax