Senate tones down Buy American provision

 

   The U.S. Senate voted Wednesday to ease a Buy American requirement in its $900 billion economic recovery plan after President Barack Obama said the provisions would cause trading partners to retaliate, according to mainstream news outlets.

   The language now says the provisions would be applied consistent with existing international trade obligations, including commitments made with 19 other nations in November at an emergency meeting in October. However, the United States does not have trade treaties with all nations.

   The House version calls for the use of American-made steel and iron in projects funded by the massive spending plan. But the Senate plan says that all "manufactured goods" procured by government money for the stimulus should be produced in the United States.

   An attempt by Republican Sen. John McCain to entirely strip the provision from the bill failed. 

   The European Union, Canada and other allies have strongly protested that the bill will create a trade rift and contradicts what the U.S. tells other countries trying to pass similar measures.

   Some Democrats are now upset and say they may not support the stimulus bill if the Buy American provision is removed. It's not clear how they'll vote with the caveats on barring purchases of foreign goods.

   The California-Asia Business Council on Wednesday sent a letter to the Obama administration and Congress urging them to eliminate protectionist provisions in the pending U.S. economic stimulus bill.

   The council said that it was important to resist putting new Buy American provisions into law through the stimulus bill because doing so would trigger a cycle of increased global protectionism that would be detrimental to the economies of California and the nation and to job development and retention.

   The letter said the president and Congress should note that other countries, namely China, are enacting similar stimulus bills.

   American companies do not want to be barred from participating in their newly stimulated market, the letter said. Global trade and investment constitute one of the few bright spots in America’s economy today, and China is one of the main markets in the world that will continue to grow substantially, with capacity to accept increasing volumes of U.S. exports, and to invest in U.S. companies that can benefit from capital infusion.

   Inclusion of new protectionist trade barriers in the U.S. stimulus bill can be expected to backfire by triggering retaliation abroad against American sales of goods and services. This response would jeopardize the intended creation of new trade-related jobs in the United States, which is the sole and critical purpose of the proposed stimulus package.

   The council said the United States should be mindful of the agreement in November that sought to fight protectionism.

   Recognizing the dangers of creating trade wars at a time of global financial crisis, and aggravating the crisis not only in the U.S. but for all our trading partners, the G-20 nations agreed in November to refrain from raising new barriers to investment or to trade, the letter said. We urge the administration and Congress to ensure that the economic stimulus legislation does not include new, counterproductive, trade-restrictive provisions that would invite retaliation or in any way undermine the ability of American companies to export U.S. goods and services internationally or the ability of investors at home and abroad to put their money to work in America.

Source: American Shipper