WASHINGTON The U.S. House of Representatives on Wednesday approved a controversial "Buy America" steel provision as part of an $825 billion package to help pull the U.S. economy out of recession.
The provision 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.
But 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.
"We've got manufacturing in America in a total and complete freefall. ... It's about time we had some economic patriots," said Leo Gerard, president of the United Steelworkers union.
House members also approved an amendment requiring the Transportation Security Administration to purchase only U.S.-made uniforms, similar to a current requirement on the Department of Defense.
"We're going to put Americans to work, making uniforms for those that protect us. It's a good use of tax money," said Rep. Larry Kissel, a North Carolina Democrat.
The stimulus package contains about $90 billion for highway, rail and other infrastructure projects. The Buy America steel measure specifically covers airports, bridges, canals, dams, dikes, pipelines, railroads, multiline mass transit systems, roads, tunnels, harbors and piers.
It sailed through the House Appropriations Committee earlier this month on a 55-0 vote.
Senators are working on an expanded version that would also include other materials such as cement, Sen. Sherrod Brown, an Ohio Democrat, told reporters.
"As we are losing jobs in record numbers, we obviously need to devote these funds to direct creation of American jobs. To do that, we must ensure that federal funds are used to buy American products and to help promote manufacturing in our country," Brown said.
European Union officials said they were closely examining the provision to see whether it violates a World Trade Organization agreement on government procurement.
The EU is excluded from Buy America provisions already in U.S. law. Whether the new measure breaks WTO rules could depend on how it is implemented, the officials said.
Some WTO members, such as China or India, are not members of the government procurement agreement and thus would not be entitled to protection under the pact.
The legislation allows the U.S. government to sidestep the measure if it would raise the cost of any project by over 25 percent or is deemed "inconsistent with public interest."
It also can be waived if U.S. steel is not available in sufficient quality or quantity.
Even so, the provision will increase costs and could cause delays by requiring contractors to legally ensure they are not using foreign steel, said Chris Braddock, director of procurement policy at the US Chamber of Commerce.
(Additional reporting by Steve James in New York)