Senate OK's softened "Buy American" plan

The Senate voted on Wednesday to soften a "Buy American" plan in its $900 billion stimulus bill after President Barack Obama expressed concern the original language could trigger a trade war.

Senators, on a voice vote, approved an amendment requiring that provisions that upset Canada, the European Union and other trading partners be "applied in a manner consistent with U.S. obligations under international agreements."

The underlying Senate bill had required that all public works projects funded by the stimulus package use only U.S.-made iron, steel and manufactured goods -- potentially putting the United States in violation of its commitments under the North American Free Trade Agreement and the World Trade Organization's government procurement agreement.

Obama, asked about the Buy American provisions in television interviews on Tuesday, said the United States had to be careful not to include any provisions in the stimulus bill that could "trigger a trade war."

"I think it would be a mistake ... at a time when worldwide trade is declining, for us to start sending a message that somehow we're just looking after ourselves and not concerned with world trade," Obama said on the Fox network.

But U.S. steel companies and workers who have seen demand plummet as result of the recession have pressed hard for a Buy American provision, arguing U.S. tax dollars to fund public works projects should be used to create American jobs.

The House of Representatives included a Buy American provision for U.S.-made iron and steel in its $825 billion stimulus package last week, triggering an intense effort by other business groups to have it removed or watered down before the final bill reaches Obama's desk.

John Bruton, the EU ambassador to the United States, told Reuters in an interview this week that approval of the measure would damage Obama's global leadership and could lead to a string of protectionist measures around the world.

Canada's ambassador to the United States, Michael Wilson, also has urged Congress to drop the provision.

Senator Byron Dorgan, a North Dakota Democrat who crafted the Senate's original Buy American measure, worked with Senate Finance Committee Chairman Max Baucus, a Montana Democrat, to come up with the new language.

"I share President Obama's goal, which is to create as many U.S. jobs as possible, consistent with our international trade agreements," Dorgan said in a statement.

White House spokesman Robert Gibbs said Obama supported Buy American provisions already in U.S. law that give preferences to domestic manufacturers in public works projects, but wanted to avoid an expansion that violates trade commitments.

"Obviously, the president has heard concerns, but believes that a balance can be struck that ensures the laws of our country are upheld, but we can also do that in a way that's consistent with the WTO and trade agreements," Gibbs said.

Lawmakers from steel-producing states insisted on Wednesday that the "Buy American" plan approved in the House remain part of the huge U.S. economic stimulus bill.

"If it's not in, I'm not supporting this package and I'll bring a lot of votes with me," House of Representatives Transportation Committee Chairman James Oberstar, a Minnesota Democrat, said after a Congressional Steel Caucus hearing.

http://www.reuters.com