5 February 2009

U.S. Senate agrees to soften 'Buy American' plan

The following is excerpted from the 5 February 2009 edition of “globeandmail.com”.

The U.S. Senate has defanged the "Buy American" provision contained in a huge economic recovery bill, watering down the controversial measure that threatened to ignite a cross-border trade war just two weeks before President Barack Obama's visit to Canada.

The multi-billion-dollar economic stimulus package now includes a requirement that international trade agreements must not be violated as a result of the Buy American provision.

The softening of Buy American came late Wednesday night, just 24 hours after Mr. Obama warned senators about the dangers of protectionism in the face of a global economic meltdown.

Canada, the European Union and several prominent U.S. corporations had complained bitterly about the provision, saying it risked violating world trade agreements and could spark a litany of global trade skirmishes…

The news came only hours after the United Steelworkers pleaded Canada's case to lawmakers from steel-producing states.

A written submission to the congressional steel committee from the Steelworkers' president, Canadian Leo Gerard, asked that legislators exempt Canada from the provision.

"Because we are an international union, and because Canadian and U.S. manufacturing is so integrated, we encourage you and other members of the steel caucus to approach your counterparts in Canada to discuss a co-ordinated approach," Mr. Gerard's submission read.

Such an approach would allow "the North American industry to strengthen its ability to create and preserve these good jobs in both countries," he said.

The House has already passed its own version of the bill, which contained the requirement that all steel and iron used in the package's infrastructure projects are American-made.

But the Senate bill, currently being debated, went even further, stating that any and all goods used for those projects be made in the U.S.

That the Senate, with legislators who were more hard-line on the Buy American stance than House leaders, agreed to water down the bill is good news for Canada since it likely won't be toughened up again.

Mr. Obama took to the airwaves Tuesday to warn senators that leaving protectionist measures in the package would be folly during a global economic meltdown.

"I think that would be a mistake right now," he said in an interview with ABC News.

"That is a potential source of trade wars that we can't afford at a time when trade is sinking all across the globe. I think we need to make sure that any provisions that are in there are not going to trigger a trade war."…