As the G-20 Summit officially kicks off today under a typical layer of London fog (comprised of economic storm clouds and tear gas), the topic of protectionist policies are certain to dominate trade discussions. Although I suspect many of the assembled leaders are truly “free traders” caught up in populist political pressure to protect jobs at home, they’ll spend the next few days discussing the recession and how they’ll cope with it on the national and global scale - including through tariffs, subsidies and restrictions.

Like I mentioned in my previous post, details of the Buy American Clause are likely to be another bargaining chip on the table, along with the other 47 recently enacted trade-restricting measures. And although complying with the “Buy American” rules is a still somewhat of a moving target right now, there are some strategies that can help buyers and suppliers minimize the risk and maximize potential opportunities.

What strategies should be implemented in response to Stimulus Package and Buy American provisions?

• Test the International Waters: If bidding on any public works projects, it will be very important to solicit quotes from foreign suppliers in an effort to identify US suppliers that are using advantageous pricing and to get around the 25% savings from foreign supplier exception.
• Set Expectations & Specifications: The use of specialized materials will either benefit or limit the involvement of US companies, so be sure to carefully set specifications that match your optimal supply base.
• Anticipate Capacity Problems: Proactively identify suppliers that may be active in public works packages so that you are not scrambling if their capacity for non-public works projects diminishes.

Once we’ve had time to digest the news coming out of the G-20 Summit, I’ll be sitting down for a round table session on the Buy American Clause with my category manager colleagues in EMEA and APAC. The regulations obviously impact regions, industries and companies in different ways, so the session (which we’ll podcast and blog about here) will attempt to bring together the various perspectives and concerns with an eye on providing actionable advice. Stay tuned…

Mike Petro is the Lead Category Manager for Direct Materials in Ariba’s Global Services Organization. Previously, Mike analyzed supply chain options and competitive pricing for US Steel and Timken Latrobe Steel.