That ‘Buy American’ Provision

[Omaha Steve]

http://roomfordebate.blogs.nytimes.com/2009/02/11/that-buy-american-provision/



(Photo: Maurizio Gambarini/European Pressphoto Agency)

“Buy American” is a familiar cry in Washington, even though the vast majority of American economists and policy makers oppose anything that hints at protectionism. President Obama has said that “we can’t send a protectionist message,” and the Senate softened a buy-American provision in the stimulus bill it passed by stipulating that any government procurement policies comply with World Trade Organization rules. But business interests argued that the language favoring American producers should have been removed altogether.

Why is the buy-American idea objectionable, or, alternatively, under what circumstances should it be promoted?

* Robert E. Scott, Economic Policy Institute
* Jagdish Bhagwati, professor of economics and law
* Roger Simmermaker, author and local union official
* Burton Folsom Jr., historian
* Ha-Joon Chang, an economist
* Gary Clyde Hufbauer, Peterson Institute for International Economics
* Sherrod Brown, Democratic senator
* Anne Krueger, professor of international economics

What Trade Treaty Violation?
Robert E. Scott

Robert E. Scott is the senior international economist at the Economic Policy Institute.

The buy-American rule in the stimulus bill is smart policy that won’t run afoul of any of our trade treaties.

When the government buys steel for a bridge, for example, it has several objectives. Minimizing costs is one, but when the economy is in recession, there is added incentive to stimulate domestic employment. And when steel is purchased from a domestic producer the workers’ wages generate further spending, which supports yet more jobs in the domestic economy.

Although the United States and 38 other countries have signed World Trade Organization procurement codes prohibiting restrictions on government purchases between member countries, the act does not violate these commitments. Indeed, the House version of the act implicitly exempts these countries from the buy-American clause, and the Senate version does so explicitly.

Some of the loudest protests about buy-American provisions have come from self-interested American companies like Caterpillar and General Electric that manufacture overseas. Foreign ministers from China and Russia, which haven’t signed the procurement codes, have also complained, but these countries simply want something for nothing. Giving them access to stimulus spending will dilute the impact of the recovery bill and eliminate all incentives for them to sign the codes.

FULL article at link.

[ananda]

1. One reason why Buy America is shunned.

It would hurt the outsourcing industry
and force manufacturers back into
America, where they'd have to hire
Americans and deal with people who
want to work decent hours, for a
decent wage, under safe conditions.

[Hello_Kitty]

2. Buy America and Buy American are 2 separate laws that have been on the books since the 30s

Neither violates any trade agreement. This whole "protectionism" alarm smells like a smokescreen being thrown up by people who want to repeal the laws entirely.

Read more: http://www.citizen.org/trade/offshoring/government/federal/articles.cfm?ID=18343 This piece by Public Citizen shows how protecting American iron and steel in gov't projects is standard practice and perfectly compliant with trade pacts. The whole site is a great resource for trade and labor issues.