A compromise defense policy bill unveiled late Wednesday includes a House-passed requirement that more U.S. military hardware be made in America, nixing a stricter Senate-passed requirement.

Negotiators adopted language from Rep. Donald Norcross (D-N.J.) that would codify into law an executive order by President Joe Biden on domestic content requirements and state explicitly that those requirements cover major defense programs.

Who won: The language is a win for Biden, who days after his inauguration in 2021 signed an executive order that said 60 percent of each product bought with taxpayer dollars must contain components from the U.S., ramping up to a final target of 75 percent in 2029.

It’s also a win for U.S. allies. The provision includes an exemption for countries that have agreements with the U.S. to ease trade barriers between the countries for military equipment.

Big backers: The Norcross provision has been endorsed by the AFL-CIO, America’s largest federation of unions; the International Association of Machinists and Aerospace Workers; and the Union Veterans Council.

The Defense MoU Attachés Group — an association of 25 foreign military attachés and officials whose countries have special reciprocal trade agreements with Washington — initially opposed the Norcross language but took a neutral stance on it after the carveout for allies was added.

Who lost: Negotiators rejected harsher language from Sen. Tammy Baldwin (D-Wis.), which would have required that by 2033, every Navy ship uses 100 percent domestically produced materials, such as propulsion systems, shipboard components, couplings, shafts and support bearings.

Baldwin’s home state includes Fincantieri Marinette Marine, a major shipbuilder.

That language was backed by the American Shipbuilding Suppliers Association and Wisconsin companies Appleton Marine and Fairbanks Morse.

The U.S. defense industry mostly opposes domestic content requirements because it fears allies may reciprocate by shutting out American firms and that costs of defense products made in America could rise. The Aerospace Industries Association, which represents 340 U.S. firms, didn’t reference either provision but opposes the principle.

“Aggressive domestic sourcing requirements like Buy America hinder our relationships with partners and allies, impact our ability to improve supply chain resiliency with global partners, and contribute growing inflation, and we hope Congress considers this as they finalize year-end legislation,” AIA’s Vice President for International Affairs Dak Hardwick said in a recent statement.

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