The Buy American Requirements - Admission/Application Essay Example

? The Buy American Requirements Specify the main points of the Buy American Requirements in one page or less. The buy American act is an act, which was formed to encourage federal government to buy from the American companies. This act applies to various government departments such as the construction, repair, maintenance and alterations of public works. All the manufactured products such as the iron and steel has to be purchased from the United States Companies (Arrowsmith & Anderson, 2011). There are however certain waiver conditions that may exempt this regulation. These include situations where there is not sufficient quantity of the required substance of the required goods produced in the US. The second instance is where the cost of the project is likely to increase by 25% or over if the goods are purchased in United States. Thirdly, in cases where purchasing domestic products is likely to illicit negative public opinions about the process, the country may opt to purchase from the outside (Kennedy, 2011). Notably, the raw materials and the individual components that form part of manufactured goods must not necessarily originate from the US, rather, the final products used in the public works or building has to be manufactured or assembled to its final form in the US. Consequently, the act requires companies to document and maintain all the records that regard procurement in regards to this regulation (Arrowsmith & Anderson, 2011). This helps in checking their compliance levels with this act. Determine the substantive means by which the Buy American Requirements would benefit both Vector Cal and your new company. Provide a rationale for the response. The buy American requirements possess substantive benefits to both the VectorCal companyand our new company in a number of ways. The accrued benefits are long term and very suitable for economic development. Below are some of the benefits accrued to the buy American requirements. The buy American act has helped in protecting the Americans industrial base Awarding building contracts to foreign firms is known to depreciate a country’s industrial empowerment (Kennedy, 2011). The local companies find ready markets for their substances hence making it easy for them to develop. Maintaining a proper industrial base facilitates the growth and development of small companies. To a new company, this act is highly beneficial especially in cases where they need a quick breakeven point. A company that is awarded with the local contracts has many chances of developing and reaching its breakeven point faster than anticipated. Economic growth The buy American requirements create a business environment where external competitors are not allowed. This allows for a healthy competition within the existing economic market (Arrowsmith & Anderson, 2011). In such a market only the strong and the most competent companies dominate. The trade in such a market helps in quick economic development due to lack of external competitors from other countries. In the long run, the economy would experience a quick growth. Quick development of new companies As a newly established company, getting an award of these contracts, is important since it promotes quick establishment and development. The federal tenders help in strongly establishing the small companies and making them capable of producing products that can be used both locally and abroad. Creation of employment opportunities The buy American act also led to creation of employment opportunities. Through this act, many local firms have been created and revived hence resulting to many employment opportunities in the country. The act also prevents other low cost firms from entering the market hence preserving the high cost and value for labor. This is highly beneficial in the current economy. Analyze the fundamental ways in which the Buy American Requirements are contradictory to a capitalistic ethos, given that the U.S. government claims to promote competition and the U.S. espouses a free market ideology (i.e., capitalism). Support your answer with two (2) examples of such a contradiction. Most economic experts have considered the buy American requirement contradictory to the capitalistic ethos especially now that the American government has always claimed to promote free and fair competition as well as establish a free market. Some of the ways through which the contradiction comes is the closed market system (Kennedy, 2011). This is where foreign companies are locked out of a trade market and the companies operate internally. This move is contradictory to the capitalistic ethos since it discriminates the existence of other businesses in the competition. In addition, setting up regulations that bar local firms and companies from signing contracts with other foreign firms, do not promote the ideology of a free market economy (Griswold, 2009). A free market system should have free entry and exits, a factor that is far from what the US is currently implementing. The above contradictions are opposed to the capitalistic ethos and should be reviewed for amendments if the free market ideology is to be effectively implemented. Debate whether you believe that the exceptions to the Buy American Requirements set forth by the government are fair and advantageous to the U.S. economy. Provide a rationale for the response. Yes, the exceptions to the buy American requirements are advantageous and beneficial to the economy. For instance, in cases where the quantity and quality produced by American local firms are insufficient, the company may opt to outsource. This is because it allows them to outsource the required machinery at affordable rate hence preventing high cost of production that could have been incurred by the company. Similarly, the option of outsourcing products in cases where the cost of production would increase by more than 25 percent if produced locally is brilliant. This is economical in the sense that it will prevent the state from incurring extra loss from the purchase of these substances. Finally, the citizens form a major part of the country’s economy. Thus if the decision not to outsource is viewed negatively by the public opinion, the company has to consider its stand on the same. Such resistance from public may result into the product not getting market at all. This in turn will greatly harm the government. These exceptions are therefore equally important and can substantively lead to economic growth if prudently implemented. Determine the key advantages and disadvantages of using the Buy American Requirements with the navigation system that both VectorCal and your company produce. Justify the response. The buy American requirement is an important tool both for the VectorCal Company and our company in a number of ways. Some of the advantages include: The buy American requirement helps in developing readily available market for the navigation systems produced by both the companies. This is because there will be reduced competition in the market and the companies will have the few options of only buying from us (Griswold, 2009). This is highly beneficial for our company growth. The buy American requirement is also important for quick establishment of new companies like ours. For instance, when a new company gets a ready market for its products, there is likelihood of quick development and attainment of stability in the market. The requirement act also ensures price stability in the market. When foreign firms are allowed to trade into the market freely, there are many possibilities of price decrease hence the companies may incur loss; however locking these companies out of the market helps in ensuring price stability hence the companies enjoy their targeted profits (Arrowsmith & Anderson, 2011). Through this concept, both the companies will ensure complete utilization of the available resources to manufacture the final products. Proper utilization of a country’s resources and endowments often result to economic boosts. Therefore, despite the companies benefiting, their economies will equally benefit. Disadvantages Both the companies may be denied access to low cost production materials. As a result, they may continue producing items at high costs without considering other close alternatives. This is not economically prudent since the companies will be running at a constant loss. The buy American requirement may also lead to know how insufficiency since the company would only limit itself to the local means of production. They may not be aware of new ways that could have been probably invented by other countries. As a result, they may not be consistent in high quality and quantity production. Such inconsistency may lead to a drop in demand for the goods. The buy American requirement also does not promote healthy completion among the countries and completely contradicts the doctrine of capitalism (Griswold, 2009). This ruins the integrity of the entire trade process and may cause other key trading partners to withdraw their trade relations with the Americans. This is equally a blow to the economy since they may not have sufficient access to other products in the external market. References Arrowsmith, S., & Anderson, R. D. (2011). The WTO regime on government procurement: Challenge and reform. Cambridge: Cambridge University Press. Kennedy, K. C. (2011). North American Free Trade Agreement (NAFTA). Alphen aan den Rijn: Kluwer Law International. Griswold, D. T. (2009). Mad about trade: Why Main Street America should embrace globalization. Washington, D.C: Cato Institute. Read More