“Buy American” clause prompts global trade war fears

It looks like the concerns expressed on Stormont Live by economist Mike Smyth were well founded. The US Stimulus Bill passed by Democratic Party representatives, 11 of them joined Republicans in opposing it, contains a “Buy American” clause for public infrastructure projects. Alex Singleton identifes the old protectionist problem at the Telegraph blog and concerns of a trade war are already being expressed by the Canadian government and by the European Commission – the US Chamber of Commerce are also reported to be concerned. Magical unicorn fairyland, indeed.
From the CBC report

As passed by the House, Section 1110 of the American Recovery and Reinvestment Act of 2009 says, “None of the funds appropriated or otherwise made available by this act may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron and steel used in the project is produced in the United States.”

The exceptions to the rule are if “the head of the federal department or agency involved finds that” the rule “would be inconsistent with the public interest,” there is insufficient U.S. iron and steel of satisfactory quality, or including U.S. iron and steel will increase the cost of the project by more than 25 per cent.

This language won’t necessarily be in the bill when it gets to Obama’s desk for signing, but the final version could be even worse from the point of view of U.S. trading partners.

The Washington Post reported Thursday that a Senate version of the bill, yet to be acted upon, goes further, requiring, with few exceptions, that all stimulus-funded projects use only U.S.-made equipment and goods.