EU exec, steelmakers warn U.S. over "Buy America"

By Darren Ennis

BRUSSELS (Reuters) - The European Commission signaled on Thursday it may contest a "Buy America" provision if it is included in the final version of an $825 billion package to kickstart the U.S. economy.

"If a bill is passed which prohibits the sale or purchase of European goods on American territory, that is not something we will stand idly by and ignore," Commission spokesman Peter Power told a regular news briefing.

Power said the European Union executive, which oversees trade policy for the 27-member bloc, "will be carefully studying the details of the bill before we can say that the U.S. are violating any trade agreement."

European steel confederation Eurofer called earlier for Brussels to tackle Washington over the issue at the World Trade Organization (WTO).

"Our view is that if passed this would be a clear violation of their WTO (World Trade Organization) commitments on government procurement rules," Eurofer said in a statement to Reuters.

The House of Representatives on Wednesday passed the provision, which requires public works projects funded by the bill to use only U.S.-made iron and steel.

House leaders included the language despite strong objections from the U.S. Chamber of Commerce and other business groups which said it would set a bad example for other countries considering their own economic stimulus plans.

"It is a protectionist measure which goes against the commitment made to the G20 to keep markets open," Eurofer said.

"It is against the interests of the U.S. consumer since the U.S. has a deficit in steel and must import to meet consumption needs."

After a boom period driven by infrastructure projects in China and other developing countries, some U.S. steelmakers have cut production and could see losses in the first quarter as the global economic slump saps demand.

The Buy America steel measure specifically covers airports, bridges, canals, dams, dikes, pipelines, railroads, multiline mass transit systems, roads, tunnels, harbors and piers.

(Additional reporting by Huw Jones; Editing by Dale Hudson)