Why We Need Buy American

From Economy In Crisis

Published 02/04/09
Dustin Ensinger
www.economyincrisis.org

Amid intense criticism from trade partners, interest groups, multinational corporations and congressional Republicans, President Obama used two separate television interviews on Tuesday to signal his disapproval of language of the “buy American” clause in the nearly $900 billion stimulus package.

The house version of the bill would require public works projects associated with the bill to purchase domestically manufactured iron and steel. The senate is considering an even more stringent version of the bill, requiring that all manufactured goods used be made in America.

Those proposals have come under intense criticism from foreign governments, leaders of trade organizations, American businesses and congressional Republicans. The common refrain is that the clause could possibly be a violation of international trade agreements of which the U.S. is a party to as well as having the potential to spark a trade war in which America’s trade partners would respond with retaliatory protectionist measures.

Based on the president’s remarks on Tuesday it appears that he has sided with the fear-mongers.

"I think that would be a mistake right now," he told ABC News. "That is a potential source of trade wars that we can't afford at a time when trade is sinking all across the globe."

President Obama fails to realize that the U.S. is already engaged in a trade war, that it is losing at an alarming rate. Many of America’s trade partners that are currently crying foul over the “buy American” clause have long histories of violating international trade rules to protect their own industries at the expense of American businesses. For instance, China is well-known for undervaluing its currency, making its products cheaper than they should be, and making it difficult for American companies to compete. In addition, China along with Russia, is frequently accused of “dumping” steel products into foreign markets and illegally driving the price down. India has passed tariffs protecting its own steel industry. France has subsidized its fruit and car industry and is in the process of propping up domestic media outlets by offering free newspaper subscriptions to citizens turning 18. Britain has recently nationalized its banks and forced them to lend to British citizens and businesses before considering foreign entities for loans. The Asian economic powerhouses of Japan and Korea are notorious for their trade barriers that keep American automobiles out of their markets.

Those are just a few examples of the protectionist measures utilized by America’s trade partners that turn the idea of “free trade” completely on its head. A “buy American” clause would simply begin to level a completely uneven playing field in international trade.

Any attempt by President Obama to strip the stimulus package of the “buy American” clause could result in a prolonged battle with congressional Democrats who heavily favor including the provision in the bill, including prominent party leaders like Senate Majority leader Harry Reid. The comments by Obama have the potential to alienate congressional allies just at the time when he is trying to court republicans to vote for the bill in order to give it a more bipartisan feel.

Congressional Democrats need to remain steadfast in their support of the provision that would create an estimated 77,000 jobs across America. Please contact your congressional representatives and the White House and demand that they not only include the “buy American” provision in the stimulus package, but that they strengthen it to more closely resemble the senate version that requires all procurements to be domestically manufactured products. As Rep. Tim Ryan (D-OH) says, we must ensure that this astronomical amount of taxpayer money is being spent in America to the benefit of Americans.

"We're going to spend this money in Youngstown, Warren, Akron" he says. "Not Beijing, Mumbai or Dubai."

Source Wall Street Journal:

President Barack Obama risked a backlash within his own party by criticizing "Buy American" provisions in the huge stimulus bill that would ensure that most of the big infrastructure money goes to U.S. suppliers.
The measures, highly popular among congressional Democrats and trade unions, have come under heavy criticism from U.S. trade partners, some of whom threatened this week to file legal actions against the U.S. if the measures become law.
Asked his views on the furor, Mr. Obama said in separate television interviews Tuesday that he wanted to avoid any steps would "signal protectionism" or risk fueling trade tensions.