THE US Senate has approved a diluted version of a “Buy American” plan following warnings from the European Union of a possible trade war.
Senators agreed a requirement that all iron, steel and manufactured goods for an economic stimulus plan should come from US companies will be “applied in a manner consistent with US obligations under international agreements”.
The amendment means the EU, Canada, Mexico and other countries that have signed a World Trade Organisation (WTO) government procurement agreement with the US could be exempt from the “Buy American” requirement.
Senators agreed to modify the Bill’s language after the US president Barack Obama said he wanted to avoid signalling a drift towards protectionism or triggering a trade war.
However, Illinois senator Dick Durbin said yesterday the Senate was right to retain the “Buy American” element of the economic plan, even if the language was modified.
“Because, frankly, I want to buy American. I want Americans to go to work. I can’t be any more blunt than that,” Mr Durbin said.
“The purpose of this programme, asking taxpayers to sacrifice, is really not to create jobs in the European Union. I want to create jobs in Illinois.”
EU trade commissioner Catherine Ashton welcomed the Senate climbdown, urging Mr Obama to turn his attention to completing the Doha round of trade talks.
“What President Obama has said is really good. This is not the time for a trade war,” Baroness Ashton said.
“If you are a new American president, looking to be a global player, outward-facing, giving industry support, you end up saying: ‘we have to get a global trade agreement’.”
Canadian trade minister Stockwell Day said the Senate’s move demonstrated “the power of diplomacy” after a concerted lobbying effort against the “Buy American” plan by the EU and Canada.
Mr Day warned, however, that Washington’s trading partners must keep up the pressure to ensure that the final version of the stimulus Bill approved by Congress does not threaten international trade agreements.
“Im not saying it’s over,” Mr Day told the Toronto board of trade.
“We still want to fully understand its implications. So there’s still work to do, but progress has been very positive.”
The Senate was close last night to a vote on the economic stimulus package but the Senate’s version of the Bill must be reconciled with that approved last week by the House of Representatives.
A final version would then go to both houses of congress for a final vote before being signed into law by the president.
