Analysis and Commentary

Let’s formalise a ‘Made in Australia’ Office

Analysis and Commentary

By James Riley

Australian companies might be concerned about an increasingly protectionist United States and the spectre of a newly issued Made in America presidential executive order, but the Australian Government is not.

In Canberra, our government is confident that Australian companies will be treated as if they were American in their procurement dealings with US federal departments and agencies.

This is despite the creation of a Made in America Office within the powerful Office of Management and Budget of the US federal government, and which is designed specifically to institutionalise Trumpian ‘America First’ rhetoric.

The Made in America Office will oversee a formalised ‘Buy American’ program. US departments and agencies that want to buy products or services that are not made in the US will need to apply to the office for a special waiver do so.

The expressed aim of the President Joe Biden’s January Made in America executive order is to use government procurement dollars to “help American businesses compete in strategic industries and help America’s workers thrive”.

The US government is using its procurement muscle to build strategic capability and reap economic benefit. The executive order is a straight-forward and unequivocal document.

It is designed to send a very clear message to all agency heads, who must report back every six months to declare just how well they are adhering to the executive order.

In fact, each agency head must report on the amount of spending their agency has made as a result of waivers related to trade agreements, and to also put forward recommendations as to how their agency will improve their Made in America compliance in this regard.

This sends a powerful message for compliance. It would be a brave agency head that deviated in any way from either the spirit or the letter of this presidential order.

Even supposing that these heads of US agencies were familiar with the detailed innards of the Australia-US Free Trade Agreement, the pressure to put a thumb on the scale of local US suppliers is plain for all to see.

The Australian Government says the Made in America executive order will have no impact on the ability of Australian companies to sell into the US. The Free Trade Agreement means that under the executive order, Australian companies will be treated as if they were American.

Which frankly does not sound convincing, given that Australian companies will still need a waiver, even if it is considered straight-forward under our FTA arrangements.

“Australia is confident the United States will meet its international trade obligations – including under the Australia-US Free Trade Agreement (AUSFTA) – to treat Australian companies the same as American companies, subject to listed exceptions. This includes Australia’s steel producers,” according to a Department of Foreign Affairs spokesman.

It is understood that the Biden administration has confirmed that the Made in America executive order would be implemented in a way that was consistent with US trade obligations.

The Department of Finance, which sets federal procurement policy, says the Commonwealth Procurement Framework requires non-discrimination, allowing all suppliers, regardless of origin to compete on their merits.

“In doing so, this opens up comparable access to overseas markets for Australian businesses,” a Finance spokesman told InnovationAus.

“Australian businesses are exempt from President Biden’s Made in America Executive Order and under the Australia-US FTA (AUSFTA) and WTO Government Procurement Agreement, the United States is required to treat Australian companies the same as American companies,” the spokesman said.

Which makes you wonder why the Australian government doesn’t set up its own Made In Australia Office and require all departmental secretaries to report every six months on how they have improved their own agency’s procurement of local good and services – and to explain in detail their own recommendations for how they will continue to improve their performance in sourcing local goods and services.

If the US is able to easily maintain fidelity to both its trade agreement obligations and to a Made in America policy that aims to improve federal procurement outcomes for American companies and American workers, then sure Australia could do the same.

Right now, the Australian government’s record of buying Australian products and services in the technology sector is dismal, despite the clear national security spill-over benefits of building sovereign capability in this strategically important sector.

It’s not easy getting direct quotes on this issue. But Labor’s Industry and Innovation spokesman Ed Husic gives it a go, saying that while Australia is obsessed with dotting the I’s and crossing the T’s on our agreements, our trading partners don’t do the same.

“They manage to find a way to prioritise trade and the creation of economic benefit. Why can’t we?”

“We’ve really got to test the commitment of the Coalition to truly supporting local manufacturing,” Mr Husic told InnovationAus.

“And if we can’t use a pandemic as a good reason to sort out our supply chain issues around sovereign capability, then what would we use? And when would we do it?”

This article originally appeared at InnovationAus.

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