‘Buy American’ hotly debated

The first of what might be many trade disputes during the Obama presidency erupted on his first full day in the White House.

On Jan. 21, the House Appropriations Committee voted 55-0 for an amendment increasing the “Buy American” mandate for infrastructure projects funded by the $819 billion stimulus bill.

The amendment, introduced by Rep. Peter J. Visclosky, an Indiana Democrat who chairs the Congressional Steel Caucus, would require the use of American-made iron and steel for infrastructure projects funded by the stimulus bill.

Sen. Byron L. Dorgan, North Dakota Democrat, has introduced an even more restrictive “Buy American” mandate in the Senate.

“If we are going to expend such a massive sum of money, it must be spent on American products and workers,” said Mr. Visclosky, who noted that the U.S. steel industry is operating at 44 percent of capacity.

The next day, the U.S. Chamber of Commerce, the Business Roundtable and more than a dozen other business trade associations wrote to congressional leaders, warning that the “Buy American” provisions would undermine the ability of American companies and workers to export goods and services.

They said it would shut U.S. companies and their workers out of the economic-stimulus programs being initiated in other countries. It also violated America’s international trade commitments, the business groups said.

“The ‘Buy American’ provision is bad news,” said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics.

He predicted that repercussions would be much broader than the projects themselves.

“It’s moral approval for forgetting about obligations you have undertaken in the past,” he said. “It will echo around the world. People in other countries who want to restrict trade will use this as a reason.”

Some say the new provision doesn’t go far enough.

“The ‘Buy American’ provision should be extended to all manufactured products for government procurement,” said Alan Tonelson, research fellow at the U.S. Business & Industry Council Educational Foundation, a Washington research organization.

Taxpayer money “should be spent on the purchase of U.S.-made goods and services to ensure that the economic benefits remain in the United States,” he said.

Foreign countries don’t need incentives from the United States to restrict trade, Mr. Tonelson said.

“India recently raised tariffs on steel, and China just increased subsidies on 7,000 categories of export products,” he said. “In that sense, the trade war is on. What U.S. government officials must decide is what they’re going to do about it.”

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