Call to curb Buy American law as retaliation hurts US workers


The Financial Times (UK)
By Sarah O’Connor in Washington
May 26, 2009

The Obama administration faces mounting pressure to wind back Buy American measures passed by Congress this year amid growing concerns that they hurt some US workers they were designed to help.

The measures, which were in the $787bn US stimulus bill, require any project funded with stimulus money to use only US-made steel, iron and manufactured goods.

An outcry from the US’s trading partners saw the bill amended at the last minute as the White House urged that it not contravene existing trade agreements. Some businesses and officials say that amendment is proving virtually meaningless in practice.

More than a third of the stimulus money is being disbursed by states and local authorities, which are not party to free trade accords such as the North American Free Trade Agreement.

Canadian manufacturers complain that their goods are being shut out of contracts funded by the US stimulus even though Canada is party to NAFTA, which prohibits discrimination.

In retaliation, some Canadian municipalities have passed "do not buy American" resolutions to shut out US-made goods. That has rattled some exporters. Texas manufacturer JCM Industries told the Financial Times that it might have to lay off workers if the situation worsened.

Pennsylvania-based steel company Duferco Farrell has warned it might lay off 600 workers after its biggest client said it would cancel orders because Duferco’s goods, some of which have to be partly produced abroad, were not Buy American compliant.

Canada’s government fears the problems could worsen, according to Tony Clement, the country’s industry minister. He warned that protectionism was seeping into the US’s long-term laws after the House of Representatives added Buy American provisions to two ordinary non-stimulus bills, a move he called "a distressing trend".

The US Chamber of Commerce last week wrote to President Barack Obama asking him to use "specific regulatory guidance" and the "bully pulpit of the presidency" to instruct state and local officials to act in line with free trade agreements in the same way the federal government does.

Jennifer Psaki, White House spokeswoman, said the president was committed to creating jobs and global engagement with US trading partners and "does not see any contradiction between those two goals".

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