EU and Canada encouraged by weakened Buy America plan

Thu Feb 5, 2009 1:40pm EST
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By Darren Ennis and John McCrank

BRUSSELS/TORONTO (Reuters) - A U.S. Senate move to dilute the "Buy American" provision in its $900 billion economic stimulus package was cautiously welcomed on Thursday in Europe, Canada and by the head of the World Trade Organization.

But trading powers opposed to the clause favoring U.S.-made goods remained tight-lipped on whether Wednesday's vote to soften the original language met their concerns and would be enough to avoid a threatened trade war.

European steelmakers said they were not satisfied with the vote in Washington, and Japan and Australia also voiced their opposition. Mexican President Felipe Calderon has vowed to fight any U.S. move to introduce protectionist measures in the region as a way to combat the economic slowdown.

The "Buy American" provision passed by the House of Representatives last week required that all public works projects funded by the stimulus package use only U.S.-made iron, steel and manufactured goods.

But under the Senate amendment, the watered-down provision must be "applied in a manner consistent with U.S. obligations under international agreements."


The move was aimed at appeasing the European Union, Canada and other trading partners fearing the possible loss of lucrative U.S. exports by exempting them from the strict requirement.

Canadian Trade Minister Stockwell Day told reporters it was "a great step forward," German Chancellor Angela Merkel said it was "a good signal" by Washington, and WTO chief Pascal Lamy, who previously criticized the provision, said he welcomed the latest move.   Continued...