Buy American, A Preference, Not Protectionism
by Charles Lemos, Tue Feb 03, 2009 at 09:21:28 PM EST
SEC. 1110. USE OF AMERICAN IRON AND STEEL.
(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 States.
(b) Exceptions- Subsection (a) shall not apply in any case in which the head of the Federal department or agency involved finds that--
(1) applying subsection (a) would be inconsistent with the public interest;
(2) iron and steel are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality; or
(3) inclusion of iron and steel produced in the United States will increase the cost of the overall project by more than 25 percent.
(c) Written Justification for Waiver- If the head of a Federal department or agency determines that it is necessary to waive the application of subsection (a) based on a finding under subsection (b), the head of the department or agency shall publish in the Federal Register a detailed written justification as to why the provision is being waived.
(d) Definitions- In this section, the terms `public building' and `public work' have the meanings given such terms in section 1 of the Buy American Act (41 U.S.C. 10c) and include airports, bridges, canals, dams, dikes, pipelines, railroads, multiline mass transit systems, roads, tunnels, harbors, and piers.
Yet from Davos to Ottawa to Seoul to Washington, this smacks of protectionism and must be stricken. Even the President seems to thinks so. From Marc Ambinder:
CHARLES GIBSON: A couple of quick questions. There are "Buy America" provisions in this bill. A lot of people think that could set up a trade war, cost American jobs. You want them out?
PRESIDENT OBAMA: I want provisions that are not going to be a violation of World Trade Organization agreements or in other ways signal protectionism. I think that would be a mistake right now. That is a potential source of trade wars that we can't afford at a time when trade is sinking all across the globe.
CHARLES GIBSON: What's in there now? Do you think that does that? Do you want it out?
PRESIDENT OBAMA: I think we need to make sure that any provisions that are in there are not going to trigger a trade war.
These "Buy America" provisions are not tariffs and do not alter any of the various free trade agreements currently in force. The provisions articulate a sound public policy goal, the creation of high-paying jobs in America's foundries and steel mills. This bill is, after all, an American fiscal stimulus bill not one to spur the economies of China, South Korea, Brazil or Luxembourg.
Since 1982, US steel and iron producers have had preferences in federal highway and transportation projects, although exceptions to use foreign materials are granted under certain conditions including cost and the need for specialty steels. These preferences would be extended to all infrastructure projects in the House version of the American Recovery and Reinvestment Act from fixing schools to modernizing the electric grid and repairing water systems.
Senator Byron Dorgan (D-North Dakota) has included an even broader measure in the Senate version of the bill that would require that all materials and equipment used in the projects be US-made.
But major US export-oriented manufacturers, including GE and Caterpillar, are lobbying against the measure, warning that foreign nations will raise trade barriers, hurting their exports. Sure enough, the European steel confederation Eurofer called earlier for Brussels to tackle Washington over the issue at the World Trade Organization. But as Thomas Gibson, president of the American Iron and Steel Institute, a trade group, notes that the preferences for US steel- and iron-producers in federal transportation projects have been on the books since 1982 without leading to a major trade war.
I am hoping that when the decision is made, it's the Vice President who is the last man in the room.
"I don't view that as some of the pure free-traders view it, as a harbinger of protectionism," Biden told CNBC. "I don't buy that at all. So I think it's legitimate to have some portions of Buy American in it."
This is not protectionism, we are not revising tariffs nor requiring that US steel be used. It simply states a goal that reflects the desired social and economic utility for the nation, creating jobs.