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Manufacture This

The blog of the Alliance for American Manufacturing

 Here's a random point of discussion for the day... Take a look at the photo in this blog post. It's a manhole cover on 9th Street in New York City, near 1st Avenue. 

[Coincidentally, it is located right near the New York office of the Alliance for American Manufacturing (AAM).]

Here's the question: Why wasn't this manhole cover made in the U.S.? Why was New York City taxpayer money used to buy a foreign manhole cover instead of an American-made one?

Let's hypothesize that the City of New York chose to purchase from India due to lower cost. Ie: The manhole covers imported from India were X percent cheaper for Y quantity. 

QUESTION: Is there anything wrong with NYC going with the lower-cost option?

Well, actually, let's find out WHY the Indian version was cheaper. Why might India be able to underbid its U.S. counterparts?

In 2008, the U.S. Commerce Department reviewed whether steel from India is being subsidized. It confirmed that upwards of 20 different subsidy programs (at both the federal and state government levels of India) are being used to benefit India's steel exports, to the detriment of U.S. producers. 

These subsidy programs were found to be "countervailable," which means they violate existing U.S. trade laws and give India's producers an unfair advantage.

The Office of the U.S. Trade Representative (USTR) also reported on India's unfair trade practices for its steel industry on page 248 of its 2009 National Trade Estimate (NTE).

Bottom line: The price of the Indian manhole cover was artificially lowered in order to undercut a comparable U.S. producer. Furthermore, the choice to import these manhole covers means that no U.S. jobs were supported with the tax dollars spent.

By contast, buying American-made components for infrastructure work supports American jobs and helps boost the U.S. economy.   

Click here to read more about the benefits of Buy America policy for infrastructure investment.