Upgrading from the current 55%
65% in 2024 and 75% in 2029
Protection policy to increase purchases of U.S. products. Inevitability of reducing opportunities for foreign companies to participate in procurement
From October 25, when participating in the U.S. federal procurement market, in order to be recognized as a U.S.-made product, the proportion of U.S.-produced parts must account for more than 60% of the total.
On the 6th, the US government published and announced the amendments to the Federal Acquisition Regulation in the Official Gazette of March 7th.
Currently, in order to be recognized as a product made in the United States, the proportion of parts produced in the United States needs to account for more than 55% of the total.
According to the revised regulations, the standard for production parts in the United States to be recognized as a product made in the United States will be raised to 60% from October 25th, and will be gradually strengthened to 65% in 2024 and 75% in 2029.
The size of the U.S. federal government procurement market is $600 billion per year.
Reinforcing the standards for recognition of products made in the United States is interpreted to increase the proportion of purchases of American products in the federal government’s procurement market for products and services, thereby revitalizing manufacturing in the United States and securing a stable supply chain. If this happens, the opportunity for foreign companies to access the U.S. federal procurement market will be reduced by that much, which is expected to affect Korean companies as well.
The current ‘Buy American Act’ stipulates that ‘substantially all U.S. products purchased by the federal government must be made in the United States’, and the Federal Procurement Regulations stipulate that “substantially” means 55 of all parts.
In relation to this, President Biden said in a speech at the White House on the 4th, “I am announcing the biggest change in the ‘by American law’ that has been in existence for 70 years.” not. “It’s just over half,” he pointed out.
“In order to be recognized as a product made in the United States, we are announcing a new regulation that raises the proportion of parts in the United States from 55% to 75%,” he said.
Next, President Biden said that he decided to establish a preferential price policy that would allow the purchase of products necessary for national security, health and economic recovery, even if they were made in the United States, at a slightly higher price, discussing semiconductors, some medicines, and advanced batteries.