"Buy American" meets formidable challenge
www.chinaview.cn 2009-02-16 17:43:39   Print

Special Report: Global Financial Crisis

The 787-bln-U.S. dollar stimulus package was finally passed by U.S. Congress last Friday.
The benefit of the bill, however, was overshadowed by the "Buy American" provisions it included.
Apart from criticism from abroad, the provisions gained no easy passes at home.

    by Xinhua writer Dan Ran

    BEIJING, Feb. 16 (Xinhua) -- The mammoth 787-billion-U.S. dollar stimulus package was finally passed by the U.S. Congress last Friday, a crucial step forward in Washington's ambition to revive the faltering economy.

    The asserted benefit of the bill, however, was overshadowed by the "Buy American" provisions it included, which barred the use of foreign iron, steel, and manufactured goods in public works projects funded by the plan. The clause easily invited deep concern outside and inside the United States, raising fears of a recurring of protectionism.

    "Buy American" has become particularly sensitive in a time that the world is facing sagging economy and slumping trade, echoing the Great Depression in the 1930s when a wave of tit-for-tat protectionism choked global trade and prolonged the economic pain.     

    WORLD CONCERNED ABOUT PROTECTIONISM

    The United States has alleged that the implementation of the bill will strictly abide by its international trade obligations. Analysts pointed out that according to the international government procurement agreement, Canada, the European Union (EU),Japan and a few other countries might be exempted from the provisions. Even so, potential protectionism embedded in the provisions still touched the nerves of these nations and blocs.

    Canada, with about 40 percent of its steel export going to its southern neighbor the U.S., has repeatedly expressed its deep concern.

    The country's Prime Minister Stephen Harper said on Feb. 3 that the clause could contravene the North American Free Trade Agreement (NAFTA) and backtrack on Washington's "international obligations" to break down global trade barriers.

    Harper spoke out again last Friday, after the bill was approved by the Congress, that "there were some improvements as this went through the congressional process but obviously all of us remain concerned, and I think (U.S.) President (Barack) Obama himself has said that he wants to ensure that the stimulus packages do not lead to protectionist measures in the United States or anywhere else."

    On Feb. 4, the U.S. Senate voted to retain the "Buy American" provisions in the bill. At the same time, Washington's major trade partner Japan joined in to lobby against the clause.

    Japanese Prime Minister Taro Aso described the provisions as "ridiculous" and a "breach of WTO (norms) of the current age," and chief cabinet secretary Takeo Kawamura said protectionism might lead the world economy to "atrophy".

    The EU did not refrain from giving tough criticism, neither. John Bruton, European Commissions' ambassador in Washington, said last Thursday that "in the previous administration we had the experience of American unilateralism in the military sphere. The risk now is that we might be experiencing American unilateralism in the economic sphere."

    The ambassador said such clause would counteract efforts to avoid protectionism, despite Washington's promise not to violate any international trade agreements.

    China, that also adopted massive stimulus package to spur its economy, said "no" to a similar plan that bans foreign products in its domestic stimulus projects.

    "We won't practice 'Buy China'," said Chinese Vice Commerce Minister Jiang Zengwei last Monday, "We'll treat domestic and foreign products equally as long as they are needed."

    Despite international doubts, "Buy American" provisions in the stimulus bill managed to strike its way through the Congress. Final approval of the plan coincided with the G7 meeting in Rome last Friday, raising deeper worry from G7 participants about widespread protectionism.

    In the meeting, finance ministers and central bank governors of the leading industrialized countries pledged to prevent the snowball from getting rolling by voicing unanimous opposition against trade barriers and advocating open trade and free market.

    British Financial Minister Alistair Darling said protectionism "is very damaging and will hold up the recovery."

    Meanwhile, German Financial Minister Peer Steinbrueck called for full efforts to "ensure history does not repeat itself," referring to the spread of protectionism during the Great Depression.

    Amid such collective concern, new U.S. finance minister TimothyGeithner tried to ease the worry at the G7 meeting by reaffirming Washington's determination to comply with international trade obligations and President Barack Obama's commitment to open trade.     

    CATCALLS AT HOME

    Apart from criticism from abroad, the provisions gained no easy passes at home. During the heated discussion of the bill in the Congress, Republican Senator John McCain, Obama's rival in the presidential election, had proposed to wipe off the protectionist measures, saying that "should we enact such a provision, it will only be a matter of time before we face an array of similar protectionism from other countries -- from 'Buy European' to 'Buy Japanese' and more."

    Although his proposal was rejected, the Senate did make amendments by adding languages requiring the implementation of the bill to honor international trade commitments.

    A study conducted by Gary Hufbauer and Jeffrey Schott, both economists at the Peterson Institute for International Economics, said "the negative job impact of foreign retaliation against 'Buy American' provisions could easily outweigh the positive effect of the measures on jobs in the U.S. iron and steel sector and other industries."

    Moreover, one day after the stimulus packaged was passed by the Congress, the U.S. Consumer Electronics Association issued a statement warning "the 'Buy American' provisions in the stimulus bill will signal to our trading partners around the world that the U.S. is returning to the bad old days of protectionism and economic nationalism."

    "Rather than stimulate the American economy, these provisions will lead to retaliation from abroad and cost precious jobs in the United States," said Gary Shapiro, president of the association, who also dismissed the promise of keeping with the letter of WTO commitments as "a meaningless gesture."

    Such mounting criticism has put President Obama in a tough position. In his election campaign, Obama emphasized his determination to protect and create domestic job opportunities, and even touched upon questions weather the U.S. trade pacts were protective enough for the national industries.

    However, amid strong pressure from the international society, the formidable challenge for Obama now is to strike a balance between ensuring domestic job opportunities and strictly respecting trade obligations.


CEA: "Buy American" provisions to hurt U.S. economy, lead to trade war

    WASHINGTON, Feb. 13 (Xinhua) -- The U.S. Consumer Electronics Association (CEA) warned on Friday the "Buy American" provisions in the economic stimulus package would hurt the U.S. economy and lead to a trade war.

    "The 'Buy American' provisions in the stimulus bill will signal to our trading partners around the world that the United States is returning to the bad old days of protectionism and economic nationalism," CEA President and CEO Gary Shapiro said in a statement. Full story

PM: Canada still concerned about "Buy American" policy 

    OTTAWA, Feb. 13 (Xinhua) -- Canada remains concerned about the "Buy American" provision in the U.S. stimulus package, which was approved by the U.S. Congress on Friday, Prime Minister Stephen Harper said.

    "There were some improvements as this went through the congressional process but obviously all of us remain concerned, and I think (U.S.) President (Barack) Obama himself has said that he wants to ensure that the stimulus packages do not lead to protectionist measures in the United States or anywhere else," Harper told a televised news conference in Montreal on Friday. Full story

"Buy American" call can't create many jobs 

   BEIJING, Feb. 12 -- The U.S. trade deficit dropped markedly in November as imports from the rest of the world plunged in reaction to the global recession.

    U.S. imports from China and Japan declined at double-digit rates, and in response to this, U.S. lawmakers are scrambling to find strategies that will re-ignite global trade, and in their desperation to find a panacea it is clear that some of them are grasping at straws. Full story

Canada making "great headway" in "Buy American" battle, says minister

    OTTAWA, Feb. 5 (Xinhua) -- Canada has made "great headway" in the battle to scrap the "Buy American" provision in the U.S. stimulus package, International Trade Minister Stockwell Day said on Thursday.

    "It's not finished yet ...we are keeping on this full-court press, 24/7 to work with our American counterparts to see this through to what we hope will be a successful conclusion," Day said in a speech to the Toronto Board of Trade.Full story 

U.S. Senate retains "Buy American" provision in stimulus plan

    WASHINGTON, Feb. 4 (Xinhua) -- The U.S. Senate on Wednesday chose to retain "Buy American" provision in its roughly 900-billion-dollar economic stimulus plan despite of criticism from the nation's major trade partners and warnings of an international trade war.

    With a vote of 65-31, the Senate rejected an amendment by Republican Senator John McCain which would have stripped the stimulus package of the provision. Full story

Study: "Buy American" provisions bad for jobs, worse for reputation

    WASHINGTON, Feb. 3 (Xinhua) -- The "Buy American" provisions approved by the House together with the 819-billion-dollar stimulus package would violate U.S. trade obligations and damage its reputation, with very little impact on jobs, a new study said on Tuesday.

    "The negative job impact of foreign retaliation against Buy American provisions could easily outweigh the positive effect of the measures on jobs in the U.S. iron and steel sector and other industries," said the study conducted by Gary Hufbauer and Jeffrey Schott, both economists at the Peterson Institute for International Economics.  Full story

Canada deeply concerned about U.S. "Buy American" policy

    OTTAWA, Feb. 2 (Xinhua) -- Canada is greatly worried about a pending U.S. policy barring foreign steel in public projects covered by a stimulus package and officials have been vigorously lobbying their U. S. counterparts to change it.

    International Trade Minister Stockwell Day said Monday that the United States had promised to consider Canada's concerns but there is no guarantee the result would be in Canada's favor.  Full story

Obama imposes $500,000 cap on executive pay in bailouts

    WASHINGTON, Feb. 4 (Xinhua) -- The Obama administration on Wednesday imposed a pay cap of 500,000 U.S. dollars for top executives at companies that receive the government bailout money to weather the current financial crisis.

    The new rule came out amid rising public fury about huge pay packages for executives at financial companies being propped up by federal tax dollars.  Full story

19 U.S. governors support economic recovery act

    LOS ANGELES, Feb. 3 (Xinhua) -- California Governor Arnold Schwarzenegger joined 18 other governors on Tuesday in voicing support for the American Recovery and Reinvestment Act.

    "We are writing to express our support for the American Recovery and Reinvestment Act (ARRA), which passed last week in the House and is under consideration currently in the Senate," the governors said in a letter to President Barak Obama.  Full story

Obama pushes stimulus plan forth as Senate debate continues

    WASHINGTON, Feb. 3 (Xinhua) -- U.S. President Barack Obama worked hard to push his massive stimulus plan forward on Tuesday as the Senate continued the debate on the over 800 billion U.S. dollar spending bill.

    One day after expressing optimism that action on the massive plan will be finalized soon, Obama Tuesday accepted interviews with all five major U.S. television news outlets -- ABC, CBS, NBC, CNN and Fox News, a move to seek public support.  Full story

Obama says stimulus plan should not send protectionist message

    WASHINGTON, Feb. 3 (Xinhua) -- U.S. President Barack Obama said Tuesday that the United States cannot send a protectionist message to the rest of the world.

    He cautioned Congress that any protectionist provisions that could trigger a trade war should not be included in the final version of the economic stimulus plan.  Full story

Obama nominates Republican senator as Commerce Secretary

    WASHINGTON, Feb. 3 (Xinhua) -- U.S. President Barack Obama on Tuesday nominated Republican Senator Judd Gregg as commerce secretary in his cabinet.

    If confirmed, Gregg, a senator from New Hampshire in his third term, will become the third Republican Obama enrolled in his cabinet, following Defense Secretary Robert Gates and Transportation Secretary Ray LaHood. Full story

U.S. House passes Obama's economic stimulus plan

     WASHINGTON, Jan. 28 (Xinhua) -- The Democratic-controlled U.S. House of Representatives on Wednesday approved President Barack Obama's 819-billion-dollar economic stimulus plan, which melds new spending and tax cuts to jump-start the economy.

     The House measure combines roughly 275 billion dollars in temporary tax cuts for both individuals and businesses along with about 544 billion dollars for job-creating investment projects, health industry improvements, expanded aid for the poor and unemployed, and improving education.  Full story

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