‘Buy American’ helps secure the U.S. supply chain [Commentary]


Jeffrey A. Green, DefenseNews

In the wake of U.S. President Donald Trump’s “Buy American, Hire American” executive order, commentators have condemned, even ridiculed, it — and thus demonstrated a fundamental and consistent misunderstanding of the vital role a secure domestic supply chain plays in our national security. While purists assert the infallibility of free trade and caution against the economic ramifications of any policy that prioritizes American-made goods, they fail to understand that Buy American provisions are an essential tool in ensuring fair trade and security of supply for most items that support America’s national security.

Congress enacted Buy American statutes, including a subset of domestic sourcing requirements known as the Berry Amendment and the Specialty Metals Clause, to ensure the defense industrial base purchases critical defense materials from U.S. suppliers, particularly considering rampant unfair trade practices from foreign competitors, both friend and foe. By mandating domestic sourcing, Congress ensured the defense industrial base will have the materials it requires to produce our nation’s weapons without risk of a supply gap due to foreign interests beyond our control. The United States military would be paralyzed without access to many of the critical materials it relies on to fly its planes or sail its ships. Without them, our ability to protect America’s interests around the world would be significantly, perhaps even critically, impaired.

For example, most U.S. aerospace and defense production, including the F-35 jet, relies on titanium, beryllium and other specialty metals. A recent estimate found the F-35 relies on titanium for roughly 18 percent of its production. Moreover, an optical system on the F-35 deliberately uses beryllium produced in Kazakhstan, and not from the sole U.S. producer.

Although domestic suppliers can meet these defense needs at competitive prices, many contractors advocate for the ability to purchase strategic materials overseas, including from Russia and China.

Such self-inflicted dependency is an unwise policy because it poses a national security risk; yet many oppose common-sense measures to mitigate the risk.

Even trade with U.S. allies can pose risks to national security. For example, only one American producer of ammonium perchlorate, or AP — an oxidizer used to fuel rockets, strategic missiles and intercontinental ballistic missiles — exists. Nevertheless, NASA and the Department of Defense are promoting purchases from a subsidized French producer. This policy decreases already precipitously low demand for the U.S. product, driving up the price, as it costs a fixed amount to provide this material to the U.S. market, threatening the economic viability of a company that is a national security resource. Thus, opposition to domestic sourcing of AP threatens America’s ability to preserve a product that powers our missile defense, tactical missiles and NASA’s Space Launch System.

Blindly relying on the free market also has significant consequences on the United States’ ability to obtain rare Earth elements, necessary to produce precision-guided munitions, engines, motors and more. With China dominating more than 90 percent of the rare-Earth market, and no requirement to buy American rare Earth elements, the United States’ only domestic supplier, Molycorp, filed for bankruptcy in 2015. The U.S. remains near wholly reliant on rare Earth elements originating in China and found in virtually every major aircraft and missile.

Without adequate domestic sourcing requirements, foreign suppliers may gain a competitive advantage against American companies by relying on cheap labor, lax environmental regulations and outright market manipulation. For example, the U.S. International Trade Commission conducted full reviews of corrosion-resistant steel products from Asia; they found foreign-source steel products often sold at less than fair value and in violation of anti-dumping regulations.

These practices fail to meet the standards legislators deem the minimum and, in many instances, threaten the security of the U.S. defense industrial base.

When the United States fails to adopt a defense industrial policy focused on domestic production, it tacitly supports a reliance on other nations for critical defense materials and allows its supply-chain to become subject to the whims of foreign powers. While many critics dismiss Buy American provisions as little more than protectionist attacks on global free markets, they forget that even the great free-trade economist Adam Smith supported promoting domestic industry in the defense of our society.

We would be wise, in these troubled times, to heed his warning. Building a military dependence on countries like Russia and China could fundamentally and irreversibly undermine the security of our country. Before attacking a policy that ensures the ability of America to domestically source weapons systems, without dependence on a foreign power, opponents should query why, exactly, they support principles that weaken our national security and ignore a tenet of the father of free trade.

Jeffery A. Green is the founder and president of J. A. Green & Company, which provides policy expertise on issues such as national security and defense. He most recently served with the House Armed Services’ Subcommittee on Readiness as its staff director.