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'Buy American' meets formidable challenge

(Xinhua)
Updated: 2009-02-16 23:21

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

A electrical store holds a going-out-of-business sale in Los Angeles on February 2, 2009. [Agencies]

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 US, has repeatedly expressed its deep concern.

The country's Prime Minister Stephen Harper said on February 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 (US) 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 February 4, the US 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."

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