The Buy American Act (BAA - 41 U.S.C. § 10a–10d) passed in 1933 by Congress and signed by President Hoover, required the United States government to prefer U.S.-made products in its purchases. Other pieces of Federal legislation extend similar requirement to third-party purchases that utilize Federal funds, such as highway and transit programs.
In certain government procurements, the requirement purchase may be waived if the domestic product is more expensive than an identical foreign-sourced product by a certain percentage, if the product is not available domestically in sufficient quantity or quality, or if doing so is in the public interest.
The President has the authority to waive the Buy American Act within the terms of a reciprocal agreement or otherwise in response to the provision of reciprocal treatment to U.S. producers. Under the 1979 General Agreement on Tariffs and Trade (GATT) Government Procurement Code, the U.S.-Israel Free Trade Agreement, the U.S.-Canada Free Trade Agreement, and the World Trade Organization (WTO) 1996 Agreement on Government Procurement (GPA), the United States provides access to the government procurement of certain U.S. agencies for goods from the other parties to those agreements. However, the Buy American Act was excluded from the GPA's coverage.
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