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Senate OKs softened 'Buy American' plan

(Agencies)
Updated: 2009-02-05 22:14

WASHINGTON -- The US Senate voted on Wednesday to soften a "Buy American" plan in its $900 billion stimulus bill after President Barack Obama expressed concern the original language could trigger a trade war.

A construction worker balances on a steel beam at 8th Avenue and 42nd Street in New York in this April 21, 2008 file photo. The US Senate voted on Wednesday to soften a "Buy American" plan in its $900 billion stimulus bill after President Barack Obama expressed concern the original language could trigger a trade war. [Agencies]

Senators, on a voice vote, approved an amendment requiring the Buy American provisions be "applied in a manner consistent with US obligations under international agreements."

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The change gives Canada, Mexico, the European Union and certain other major trading partners some comfort they would be exempted from a strict requirement in the bill that all public works projects funded by the stimulus package use only US-made iron, steel and manufactured goods.

The House of Representatives has passed a nearly identical Buy America provision without such a guarantee.

Sen. John McCain, an Arizona Republican, urged the Senate to go further and specifically bar any Buy American provision as part of the stimulus package. But senators rejected his amendment by a vote of 65-31.

"The Buy American provisions ... have echoes of the disastrous Smoot-Hawley tariff act," McCain said, referring to 1930s legislation often blamed for prolonging the Great Depression. "It sends a message to the world that the United States is going back to protectionism."

The Emergency Committee for American Trade, an organization of US-based corporations, and a coalition of more than 125 businesses and trade associations have warned the Buy American plan could trigger a string of trade restrictive measures around the world. They urged senators to kill it.

But Sen. Byron Dorgan, a North Dakota Democrat, said all supporters of the Buy American plan were trying to do was to ensure American workers benefit the most from public works projects funded by the stimulus plan.

"Twenty thousand people a day are losing their jobs. ... We're going to shovel a lot of money out the door of this Congress in support of economic recovery. The question is are we going to try to put people back to work," Dorgan said.

The United States has made commitments under the North American Free Trade Agreement and the World Trade Organization to provide trading partners such as Canada, Mexico, Japan and the EU with access to its government procurement market and has received similar commitments in exchange.

But other countries such as China, Russia, India and Brazil are not party to those pacts so would not have any protection from the language passed by the Senate on Wednesday.

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