Steel-state lawmakers vow to save "Buy American"

WASHINGTON (Reuters) - Lawmakers from steel-producing states insisted on Wednesday that a Buy American provision remain in a huge economic stimulus plan after President Barack Obama said Congress should look at dropping or changing the measure to avoid starting a trade war.

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

Obama, in television interviews on Tuesday, said the United States had to be careful not to include any provisions in the stimulus plan 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 television network.

His comments came as the U.S. Senate debated a nearly $900 billion economic stimulus plan that allows only U.S.-made iron, steel and manufactured goods to be used in public works projects funded by the bill.

That built on a $825 billion stimulus plan passed last week by the House of Representatives that required the use of U.S.-made iron and steel in public works projects. That provision raised concerns among U.S. trading partners that the United States was moving toward increased protectionism.

The governments of both the European Union and Canada sent letters to Congress on Monday urging the provision be dropped.

House Majority Leader Steny Hoyer, a Maryland Democrat, said on Tuesday Canadian and European Union officials' concerns about the Buy American provision were justified. He said it would be a "matter for discussion" for House and Senate negotiators after the Senate bill is passed.

Steel company executives argued vigorously at Wednesday's hearing for the provision, which they said their own polling showed enjoyed widespread public support.

"The American people are with us and with you on this issue," Dan DiMicco, chief executive of Nucor Corp., told the steel caucus members.

He dismissed as "garbage" a study done by the Peterson Institute for International Economics that concluded the Buy American provision would create as few as 1,000 new jobs and possibly cost the United States many more if trading partners close their public works projects to U.S. exports.

The panel also heard from Louis Schorsch, president of Flat Carbon Americas, a division of ArcelorMittal, the world's largest steel company, who said his company "was a strong supporter of the measure here in the United States."

ArcelorMittal is based in Luxembourg City and has operations around the world.

Rep. Pete Visclosky, chairman of the Congressional Steel Caucus, told reporters he was confident the Buy American provision would survive, despite efforts to have it killed by many leading U.S. business groups worried about retaliation.

"I have no belief that it will be taken out or weakened," the Indiana Democrat said.

Many of the steel-state lawmakers argued it made sense that U.S. taxpayer-funded projects give preference to U.S. steel companies and other domestic manufacturers

"That is going to pass easily and overwhelmingly, and it's going to stay part of the package because that's the right thing to do," said Rep. Michael Doyle, an Pennsylvania Democrat.

(Reporting by Doug Palmer)