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There is evidence that President Barack Obama and the Democratic Congress are taking steps to shut out imports by putting a "Buy American" clause in $825 billion stimulus package. The American Steel First Act is drawing the attention of a coalition of American exporters, concerned that it will boomerang.
Boeing, Caterpillar and General Electric are trying to stop the "Buy American" clause being included in the stimulus package. Their concern is a reflection of the European Commission (EC) and Euofer, the association of European steelmakers which is urging the European Union (EU) to challenge the clause in the package.
A spokesman for the EC was quoted as saying "We would be entitled to retaliate and would certainly do so if the U.S. withdrew from the World Trade Organization (WTO) treaty." The treaty is aimed at ensuring fair access access to state investments programs. Meanwhile, the World Bank has warned that trade volumes would contract in 2009 for the first time since 1982.
Trade bodies such as the U.S. Chamber of Commerce, the National Foreign Trade Council and the Aero-space Industries' Association have sent a letter to House Speaker Nancy Pelosi warning that "If the United States further restricts access to our market (overseas consumers), these other countries will certainly follow our lead, shutting out U.S. exporters and their workers out of hundreds billions of dollars of new business....we urge you to bear in mind...is the vitally important role that inter national markets play in sustaining U.S. jobs and the role they will play in economic recovery. Without sales abroad and access to inputs, many U.S. workers would be out of a job." (The Times, 01/26/2009)
Protectionism has proven to be a failure in the past and one wonders why Obama is repeating acts that have failed. The only response to the "Buy American" program will be retaliation by foreign governments. It can only deepen the current recession and perhaps bring on the dreaded "D" word.
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