Thread: 'BUY AMERICAN' stimulus plan riles trade partners

by Veronica Smith Veronica Smith – 57 mins ago

WASHINGTON (AFP) – A new "Buy American" push in President Barack Obama's economic stimulus plan is sparking protests about protectionism from US trading partners.

Passage of the 819 billion dollar economic stimulus package Wednesday by the US House of Representatives raised hackles in Europe and Canada, the United States's biggest trading partner.

Obama has pushed for swift passage of the American Recovery and Reinvestment Act as vital to prevent the collapse of the US economy, reeling from the global financial crisis that has thwarted governments' unprecedented actions to ease the turmoil.

The legislation's package of tax cuts and spending has moved to the Senate, where lawmakers are working on their own version of the plan.

The bulk of the bill's spending is aimed at bringing aging infrastructure into the 21st century to preserve and improve the country's long-term competitiveness in the global economy, creating millions of jobs in the process. (Not quite so true, unless you consider aprox. 30 billion to be the "bulk" of the $819B spending bill)

The sweep of projects is broad, from roads, rail, bridges, airports and dams to military construction and housing, among others.

The House-approved plan's "Buy American" provision generally prohibits the purchase of foreign iron and steel for any infrastructure project in the bill.

The European Union's trade commissioner, Catherine Ashton, pre-emptively voiced concern about the US measure.

"We are looking into the situation. ... Before we have the final text ... it would be premature to take a stance on it," Ashton's spokesman, Peter Power, said in Brussels.

"However, the one thing we can be absolutely certain about, is if a bill is passed which prohibits the sale or purchase of European goods on American territory, that is something we will not stand idly by and ignore," he said.

Canada's government said it is concerned about US protectionism in the economic stimulus and its diplomats were lobbying US makers against the "Buy American" drive.

"We're always concerned when there are protectionist pressures in the United States," Industry Minister Tony Clement told public broadcaster CBC.

"At the same time the United States has treaty obligations," he said, citing US membership in the World Trade Organization and the North American Free Trade Agreement (NAFTA).

"And we expect the United States to live up to its treaty obligations of open and fair trade."

About 40 percent of Canadian steel is sold in the United States and Canada imports steel from its southern neighbor.

Clement said Canadian diplomats have been lobbying US lawmakers "to try to persuade them to take that clause out or soften it or at least not make it any tougher in the days ahead."

Prime Minister Stephen Harper also plans to bring up the controversial clause in talks with Obama when he visits Ottawa on February 19, he said.

The "Buy American" provision bars spending on any infrastructure project "unless all of the iron and steel used in the project is produced in the United States."

There would be exceptions if the head of the federal department or agency determines that applying the provision "would be inconsistent with the public interest."

Other exceptions would be made if there was an insufficient quantity of US iron and steel of satisfactory quality available and if inclusion of US iron and steel would raise the overall project's cost by more than 25 percent.

Italian Trade Minister Adolfo Urso warned Monday as the US legislation was being developed: "A dangerous new steel war is looming and we need to counter it with strong and decisive actions."

A European familiar with an EU trade commissioner dinner held the same day said that "one or two delegations signaled that the US recovery package contains seeds of a new steel dispute."

Obama, who criticized international trade agreements, including NAFTA, in his presidential campaign, has wasted no time in taking a tough stance on the trade front since taking office on January 20.

The next day, the Obama administration branded China a currency manipulator, setting the stage for a trade war with the Asian giant which has overtaken Japan as America's biggest foreign creditor.

http://news.yahoo.com/s/afp/20090129/pl ... 0129173404

Kay Bailey Hutchinson was just on the CNBC news this morning warning that the Buy American provision would prohibit products that had even a portion or part of foreign manufacture---thus making it next to impossible for American products which might still be 90 per cent US made to be sold.

Haven't read the bill myself but this seems like a valid point.

Wow!! I am wholly surprised that Obama would be such a "protectionist".....

I am also surprised that the EU and Canada, thinks they can bully us into buying from them in these times especially, what nerve on their part.

However, we all can remember this, if the U.S. government buys form them under pressure, it certainly does not mean Americans must buy anything from them and we can put our dollars into American made products.

While I'm not a fan of the stimulus plan we do need some method to control money spent from going out of country this has been a large part of our problem past 30 years we are simply bleeding money to other
countries and killing our middle class.

Side note, as a Texan my opinion Senator Hutchinson has done little
for America.

Tough if they're mad.....we have the right to survive as well. Think we "shared" enough.....not planning to roll over and die for them as well.

I read that it has been many years since the United States was able to produce the iron and steel which would be needed in projects of this size. Evidently the only U.S. steel company which now shows a profit is one which recycles steel cans.

However, it would be good if it applied to building materials which the United States does produce well and in abudance, such as cement. "CEMEX", the huge Mexican-owned cement corporation, has been trying in every way possible to gain entry into the United States market.

The problem is that the trade agreements are NOT fair to the US. So go hang.

I never thought I would say it but I believe Obama is right on on this subject and the fact that he is against NAFTA makes me a little more hopeful for his Presidency. I guess time will tell.

So many good and valid points it is hard to know where to begin. I must say I am pleasantly surprised about the "buy American" clause.

Originally Posted by Captainron

Kay Bailey Hutchinson was just on the CNBC news this morning warning that the Buy American provision would prohibit products that had even a portion or part of foreign manufacture---thus making it next to impossible for American products which might still be 90 per cent US made to be sold.

Haven't read the bill myself but this seems like a valid point.

I am certain if they have other exceptions, that one will be made for this too. Maybe she could introduce an amendment stating that if they can not find a needed product that is 100% American made, which is possible since we don't make much anymore, they use the product with the largest percentage of American made components available.

Originally Posted by oldguy

While I'm not a fan of the stimulus plan we do need some method to control money spent from going out of country this has been a large part of our problem past 30 years we are simply bleeding money to other
countries and killing our middle class.

Side note, as a Texan my opinion Senator Hutchinson has done little
for America.

I fully agree

Originally Posted by Texas2step

I read that it has been many years since the United States was able to produce the iron and steel which would be needed in projects of this size. Evidently the only U.S. steel company which now shows a profit is one which recycles steel cans.

However, it would be good if it applied to building materials which the United States does produce well and in abudance, such as cement. "CEMEX", the huge Mexican-owned cement corporation, has been trying in every way possible to gain entry into the United States market.

I believe this was dealt with here:

The "Buy American" provision bars spending on any infrastructure project "unless all of the iron and steel used in the project is produced in the United States."

There would be exceptions if the head of the federal department or agency determines that applying the provision "would be inconsistent with the public interest."

Other exceptions would be made if there was an insufficient quantity of US iron and steel of satisfactory quality available and if inclusion of US iron and steel would raise the overall project's cost by more than 25 percent.

Now these points stuck out to me and I would like to address them.

"However, the one thing we can be absolutely certain about, is if a bill is passed which prohibits the sale or purchase of European goods on American territory, that is something we will not stand idly by and ignore," he said.

My understanding is that this bill does not "prohibit the sale or purchase of European goods on American territory". It just prohibits taxpayer funded stimulus money going to European goods if there is an American product available that will do the same job. I don't see that as a problem.

"At the same time the United States has treaty obligations," he said, citing US membership in the World Trade Organization and the North American Free Trade Agreement (NAFTA).

"And we expect the United States to live up to its treaty obligations of open and fair trade."

Did we sign a treaty FORBIDDING us from buying American made products? If we did, we need to unsign that puppy yesterday.

Italian Trade Minister Adolfo Urso warned Monday as the US legislation was being developed: "A dangerous new steel war is looming and we need to counter it with strong and decisive actions."

A European familiar with an EU trade commissioner dinner held the same day said that "one or two delegations signaled that the US recovery package contains seeds of a new steel dispute."

It seems to me that Obama plans on rebuilding the whole countries infrastructure. If that is so, I doubt a steel dispute would have any effect on us, we will be using all of our steel so we won't have any to export. Hey we might even have to reopen a bunch of new factories to keep up with the demand! Good, more jobs for AMERICANS!

The next day, the Obama administration branded China a currency manipulator, setting the stage for a trade war with the Asian giant which has overtaken Japan as America's biggest foreign creditor.

I agree, China is a currency manipulator, amongst other things.

The last sentence scares me, how the H-E-double toothpicks did we let that happen?

Let's see, Canada and Europe blame the US for all of their economic problems. They have not ever given us $1 to help our economy. Who cares what they think? We need to fix this country first and the rest of the world can sit back and wait.