(Adds quotes, background)
WASHINGTON, Feb 10 (Reuters) - The Senate has taken a step in the right direction by softening a “Buy American” provision of an economic stimulus bill, the majority leader of the U.S. House of Representatives said on Tuesday.
“They certainly went a substantial way in the Senate to softening the adverse impact that total adherence to Buy American would have had,” said Representative Steny Hoyer, a Maryland Democrat.
But the measure will “continue to be an item of discussion” between the House and Senate as talks begin on a final version of the economic recovery package, Hoyer said.
Canada, the European Union and other U.S. trading partners are closely watching congressional deliberations on the Buy American plan, which exists in the House and the Senate economic stimulus bills in different versions.
The Senate bill requires all public works projects funded by the stimulus bill to use only U.S.-made iron, steel and manufactured goods.
But in a step toward address some foreign concerns, senators added language last week requiring the provision be applied in a manner consistent with U.S. obligations under international agreements.
That would help trading partners such as the European Union and Canada which have reciprocal government procurement agreements with the United States, but not countries such as China, India, Brazil and Russia which do not.
The House Buy American provision is narrower than the Senate version by not covering manufactured goods.
At the same time, it does not have the Senate stipulation that the provision be implemented in a manner that complies with U.S. commitments under trade pacts.
Representative Pete Visclosky, an Indiana Democrat who chairs the Congressional Steel Caucus and author of the House Buy American provision, has indicated his willingness to accept the Senate’s version of the measure in the final stimulus bill.
Still, business groups such as the Emergency Committee for American Trade would like to see the provision weakened further if not dropped completely.
They argued it sends a “protectionist” signal to the rest of the world a time countries need to be cooperating to restore economic growth. (Reporting by Susan Cornwell and Doug Palmer; Editing by Cynthia Osterman)