Special Report: Global Financial Crisis
WASHINGTON, Feb. 17 (Xinhua) -- The "Buy American" provisions in the
787-billion-U.S. dollar economic stimulus bill, which U.S. President Barack
Obama signed into law Tuesday, will hurt developing world and trigger a global
trade war.
According to the legislation, the "Buy American" provision, which prohibits
the purchase of foreign iron, steel and manufactured goods for any
stimulus-funded infrastructure project, will be "applied in a manner consistent
with U.S. obligations under the international agreement."
That is further explained in separate report language on the bill to
clarify that it requires the U.S. to comply with obligations under the WTO's
government procurement agreement and under the North American FTA and other U.S.
free trade accords.
European nations, Canada and Mexico signed the trade deals that guarantee
their ability to bid on U.S. government contracts, with the exception of
transportation, said David Phelps, executive director of the American Institute
for International Steel.
However, goods from China, India, Brazil and over 100 developing economies,
which are not members of the government procurement agreement or do not have
free trade deals with the U.S., will be excluded from any stimulus-funded
infrastructure projects.
"The thing we know about protectionism is in the end it protects nobody,
least of all the poor," warned British Prime Minister Gordon Brown recently at
the World Economic Forum in Davos, Switzerland when referring to the "Buy
American" clause.
"It would be short-sighted at this time to renege on promises we've made to
the poor," he noted.
Many leading U.S. business groups and economists also scolded the "Buy
American" provision, warning it would delude the bill's impact and lead to a
global trade war.
"The 'Buy American' provision ... 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," Gary Shapiro, president of the Consumer Electronics
Association said in a statement released last week.
"The promise that the 'Buy American' provisions keep with the letter of WTO
commitments is a meaningless gesture -- it contradicts recent statements by both
President Obama and G-20 leaders to avoid protectionism, which exacerbate the
global economic crisis," he warned.
"Rather than stimulate the American economy, these provisions will lead to
retaliation from abroad and cost precious jobs in the United States," he added.
Burton G. Malkiel, a professor of economics at the Princeton University,
charged that the "Buy American" momentum is "bad economics," and by threatening
to destabilize trade and capital flows, "it risks turning a global recession
into a 1930s-style depression."
In 1930, just as the world economy was sinking, the U.S. Congress passed
the Smoot-Hawley Tariff Act, which essentially shut off imports into the U.S.,
he recalled.
"Our trading partners retaliated, and world trade plummeted," said Malkiel.
"Most economic historians now conclude that the tariff contributed importantly
to the severity of the world-wide Great Depression."
"Later, as one of his last acts, President Herbert Hoover made the
situation even worse by signing a 'Buy America Act' requiring all federal
government projects to use American materials," said the Princeton professor,
the author of "A Random Walk Down Wall Street."
"We must avoid repeating the disastrous mistakes of the past," he warned.
Douglas A. Irwin, an economics professor at Dartmouth, agreed that the U.S.
should learn lessons from the past.
"That might sound reasonable, but history has shown that 'Buy American'
provisions can raise the cost and diminish the effect ofa spending package,"
said Irwin.
In an article published by The Wall Street Journal, Irwin stated that in
rebuilding the San Francisco-Oakland Bay Bridge in the 1990s, the California
transit authority complied with state rules mandating the use of domestic steel
unless it was at least 25 percent more expensive than imported steel.
A domestic bid came in at 23 percent above the foreign bid, and so the more
expensive American steel had to be used, he stated.
"Because of the large amount of steel used in the project, California
taxpayers had to pay a whopping 400 million dollars more for the bridge," he
said.
"While this is a windfall for a lucky steel company, steel production is
capital intensive, and the rule makes less money available for other
construction projects that can employ many more workers," he stressed.
The two professors' words were also echoed by former U.S. Trade
Representative Carla Hills.
"I am very disappointed by 'Buy American' provision ... because I think,
actually, they diminish the number of jobs we can create if our states and
counties have to pay more for the steel and other products and they will have
less money to spend on creating jobs," she told Xinhua.
"I am very much against protectionist measures. Already too many countries
raised tariffs ... and regulatory restrictions," said Hills. "This is just the
wrong way to go."
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
