Backing away from “Buy American”

With the world up in arms about American protectionism (and Jumpin’ Jack, true to form, calling for a “Buy Canadian” policy), President Obama is making reassuring noises:

The final version of the United States’ $819-billion economic stimulus package will not contain protectionist language, President Barack Obama said Tuesday.
In interviews with major U.S. networks, the president attempted to soothe global concerns that protectionism will be part of the package.
“We can’t send a protectionist message,” Obama said in an interview with Fox News.
“I think it would be a mistake though at a time when worldwide trade is declining for us to start sending a message that somehow we are just looking after ourselves and not concerned with world trade,” he said.
The bill, which is meant to help pull the U.S. out of recession by stimulating the economy and creating jobs, has raised concerns about protectionism.
In its current form, it requires that all steel and iron used for infrastructure projects funded through the stimulation package be U.S.-made. The provision has quickly become known as the “Buy American” rule.
[…]
“We believe that with our input on this and constant involvement with the administration, that something is going to come of this that will be better than what’s being proposed right now in the U.S. Senate,” International Trade Minister Stockwell Day said Monday.
Before Obama made his comments, Day told reporters that Ottawa would be pressing forward in its efforts to convince Washington that the provision is a bad idea.
Obama would likely have the law on his side if he opted to block the “Buy American” provision from the final stimulus package due to existing international trade agreements, he said.
Within the constitutional framework of the U.S., the president can overrule something passed in Congress if he believes it violates international agreements, Day said.

Damian P.

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3 thoughts on “Backing away from “Buy American”

  1. The problem here is that people are mis-using the “Buy Domestic” phrase.
    “Buy Domestic” laws are policies under which governments choose to buy from domestic companies wherever possible. They are totally legal under our trade agreements, make perfect economic sense and–most of all–the US has already had one for over 75 years.
    The provision in the current US stimulus bill goes far beyond “Buy Domestic” by requiring private companies that are contracting with the US government to buy all their inputs for government projects from other domestic companies only. THAT is what violates our trade agreements.
    This is the distinct Jack Layton is referring to in the story to which you link.

  2. Just in case anyone thinks Canada talked the president out of protectionism, this from Ed Morrissey:
    http://hotair.com/archives/2009/02/04/obama-retreats-on-trade-war/
    “Barack Obama found another way to look weak and inexperienced this week, this time on the trade war threatened by the administration’s stimulus package. After pandering to unions by inserting a “Buy American” clause in the gigantic porkfest, Europe and Asia threatened trade sanctions on American companies competing for business in their markets. Obama finally ran up the white flag instead of Old Glory:
    http://www.timesonline.co.uk/tol/news/world/europe/article5655115.ece
    ‘The European Union warned the US yesterday against plunging the world into depression by adopting a planned “Buy American” policy, intensifying fears of a trade war.
    The EU threatened to retaliate if the US Congress went ahead with sweeping measures in its $800 billion (£554 billion) stimulus plan to restrict spending to American goods and services. …
    Last night Mr Obama gave a strong signal that he would remove the most provocative passages from the Bill.
    “I agree that we can’t send a protectionist message,” he said in an interview with Fox TV. “I want to see what kind of language we can work on this issue. I think it would be a mistake, though, at a time when worldwide trade is declining, for us to start sending a message that somehow we’re just looking after ourselves and not concerned with world trade.”’
    Give Obama some credit for coming to his senses, albeit a little late. The protectionist language in the bill locks out foreign suppliers from our infrastructure projects, which sounds great until one realizes that other nations will lock out American companies from their infrastructure projects as well. It’s a replay of the Smoot-Hawley disaster, and it would magnify the current economic crisis immeasurably in touching off a trade war — just as the original Smoot-Hawley did in 1930…”
    And Canada?
    Mark
    Ottawa

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