Thursday, January 29, 2009

Buy American Controversy in Stimulus

It seems the Obama Administration is about to walk into its first test on trade policy. The House-passed stimulus package includes a provision requiring that certain materials (including steel) used in stimulus-funded infrastructure programs come from the US. This is an expansion of existing rules under the Buy American Act. Specifically, Section 1110 says:
USE OF AMERICAN IRON AND STEEL. 7 (a) IN GENERAL.—None of the funds appropriated or otherwise made available by this Act may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron and steel used in the project is produced in the United.
The Senate plan apparently has even tougher rules that require the equipment used on the projects be American.

While this strikes some as a simple measure intended to ensure that stimulus money stay in the US, others are concerned that it is a step toward protectionism. Further, it likely violates our commitments under the WTO agreement on government procurement and the procurement provisions of several free trade agreements.

Here is a story from the Washington Post with more detail. Should you have an interest, you can read the whole of the plan at http://readthestimulus.org/.

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