February 12, 2009 / 4:52 AM / 10 years ago

U.S. legislators reach deal on "Buy American"

WASHINGTON (Reuters) - Congressional negotiators have reached a deal on controversial “Buy American” provisions of a huge economic stimulus bill that address concerns of some U.S. trade partners, a senior Democratic lawmaker said on Wednesday.

Canada, the European Union and Japan last week welcomed the softened language of the “Buy American” provisions, pushed by President Barack Obama over concerns the initial plan could start a trade war.

But other countries such as China, India, Brazil and Russia remain affected by the revised U.S. public works plan created by the $789 billion (549 billion pound) stimulus bill.

The Senate version of the provision had required all public works projects funded by a huge economic stimulus package to use only U.S.-made iron, steel and other goods.

The House version covered just U.S. iron and steel, but lacked an amendment added last week in the Senate that mandated the provision be implemented in a manner consistent with Washington’s obligations under international trade agreements.

It was “modified, pretty much along the Senate lines,” House Democratic Leader Steny Hoyer told reporters. More details on the package were not immediately available.

U.S. steel companies, suffering from a huge slump in demand as a result of the recession, have pushed for a strong Buy American provision to create jobs.

The modified version gave Canada, the European Union, Japan and a short list of other trading partners some comfort they would still be able to share in the expanded U.S. public works market created by the stimulus bill.

But other countries that do not have government procurement pacts with the United States would not get increased access. Among those countries are China, India, Brazil and Russia.

CONCERNS ABOUT PROTECTIONISM

The International Business Daily, a Chinese-language newspaper run by the country’s Ministry of Commerce, said the “Buy American” provisions of the law had aroused strong international opposition.

“Before Obama picks up his pen to sign this, he must seriously weigh that ‘buying national goods’ may ‘bring a national calamity’,” it said.

Japanese trade and foreign ministry officials have said that while Japan would not be affected, others would be and this could signal a move towards U.S. protectionism.

The U.S. Chamber of Commerce and many other groups were also opposed on the grounds that it would boost the cost of stimulus package projects and encourage other countries to adopt measures that shut out American goods.

One of the many companies who fought the Buy American provision was Caterpillar.

The European Union made a last minute appeal to Congress on Wednesday to provide further assurances that EU companies would not be disadvantaged by the Buy American provisions.

Editing by Jeremy Laurence

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