Texas lawmakers weigh new ‘buy American’ rules

By Bob Sechler - American-Statesman Staff

Posted: 3:24 p.m. Friday, May 05, 2017

Just weeks after President Donald Trump signed his “Buy American, Hire American” executive order, some Texas lawmakers are angling to do their part to bolster the first half of the slogan with their own protectionist measure.

The Texas House is scheduled on Monday to debate House Bill 2780, which would provide U.S. iron and steel manufacturers with a substantial edge over foreign competitors when it comes to supplying the construction of new state-owned buildings, roads, bridges and other big projects. The Texas Senate this week voted 23-7 vote to pass an identical measure —Senate Bill 1289 — although it was amended to exempt some water infrastructure projects.

Under the companion bills, Texas state government would be required to buy iron and steel from U.S. suppliers unless the price of doing so is more than 20 percent higher than the cost of purchasing imports. The state would be allowed to buy from a foreign company if U.S. supplies aren’t available for a specific project, and an exemption also exists if compliance is deemed “inconsistent with the public interest” in individual cases.

Texas already has some “Buy American” provisions in place for state transportation projects and other purchasing, but the measures would expand them.

“We’re here to protect Texas manufacturers (and) Texas jobs,” state Sen. Brandon Creighton, R-Conroe, who sponsored SB 1289, said during the debate over it. “Let’s let American and Texas companies compete against other companies — let’s don’t force them to compete against other countries.”

Creighton said foreign steel makers, such as China, Turkey and South Korea, have been violating federal trade agreements governing the industry and flooding the U.S. with cheap imports.

While Texas is hardly a Rust Belt state, the steel sector has a significant presence here that has felt the pressure of foreign competition, as well as an overall downturn in the industry.

Two years ago, pipe-manufacturer Tenaris blamed “record levels of unfairly traded imports” from South Korea when it suspended operations and laid off 230 people at its mill — in Conroe — that makes welded tubes. Last year, U.S. Steel said it would lay off up to 677 people at its Lone Star Tubular Operations unit in Lone Star, citing “unfairly traded imports,” as well as depressed steel prices and other economic reasons.

“We will continue to lose iron and steel manufacturing jobs” unless something is done, Creighton said this week.

Still, a number of objections were raised by state senators opposed to his remedy, even though they voiced broad support for the “Buy American” concept. They noted among other things that requiring state government to pay up to 20 percent more for steel and iron could significantly ramp up costs for Texas taxpayers, and they questioned if the provision will help the steel industry in other U.S. states more than in Texas.

“The Buy American process, which we would all like to see happen, is a federal issue,” said state Sen. Charles Perry, R-Lubbock, adding that the Texas Legislature shouldn’t “subsidize on the backs of Texans to make up for a lack of policy at the federal level.”

The state’s Legislative Budget Board was unable to estimate the cost of the bills. “Depending upon the level of anticipated future building, structure, or infrastructure construction, there could be an indeterminate fiscal impact to the state,” the agency said in its fiscal note.

Perry successfully pushed through an amendment to Creighton’s bill — over Creighton’s objections — that exempts projects from the provision that are financed under the voter-approved State Water Implementation Fund for Texas, known as SWIFT. Perry said he feared the “Buy American” provision would drive up costs and hurt the viability of future SWIFT water projects.

It remains to be seen if a similar amendment will be introduced in the House.