WASHINGTON (Reuters) - The U.S. Senate planned to vote late on Wednesday on a softened “Buy American” plan as part of its nearly $900 billion economic stimulus bill, after President Barack Obama expressed concern the original language could trigger a trade war.
The proposed amendment adds language requiring that Buy American measures that have upset Canada, the European Union and other trading partners be “applied in a manner consistent with U.S. obligations under international agreements.”
The Senate was also expected to vote on an amendment offered by Senator John McCain, an Arizona Republican, that would prohibit any of the stimulus package funds from being subject to a Buy American requirement.
Obama, asked about the Buy American provisions 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 network.
The Senate package would allow only U.S.-made iron, steel and manufactured goods to be used in public works projects funded by the bill. That is broader than the House stimulus bill passed last week, which just required the use of U.S.-made iron and steel in public works projects.
Canada and the European Union have pressed Congress not to approve either version of the provision, which critics say could violate the North American Free Trade Agreement and a World Trade Organization government procurement pact.
Senator Byron Dorgan, a North Dakota Democrat who crafted the Senate’s original Buy American provision, worked with Senate Finance Committee Chairman Max Baucus, a Montana Democrat, to come up with the new language.
“I share President Obama’s goal, which is to create as many U.S. jobs as possible, consistent with our international trade agreements,” Dorgan said in a statement.
White House spokesman Robert Gibbs said Obama supported Buy American provisions already in U.S. law that give preferences to domestic manufacturers in public works projects, but wanted to avoid an expansion that violates trade commitments.
“Obviously, the president has heard concerns, but believes that a balance can be struck that ensures the laws of our country are upheld, but we can also do that in a way that’s consistent with the WTO and trade agreements,” Gibbs said.
Lawmakers from steel-producing states insisted on Wednesday that the “Buy American” plan approved in the House remain part of the huge U.S. economic stimulus bill.
“If it’s not in, I‘m not supporting this package and I’ll bring a lot of votes with me,” House of Representatives Transportation Committee Chairman James Oberstar, a Minnesota Democrat, said after a Congressional Steel Caucus hearing.
Steel company executives, who saw demand plummet in the last half of 2008 as the recession deepened, argued vigorously at the hearing for the provision, which they said opinion polls showed had 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 “complete 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 closed their public works projects to U.S. exports.
That study, noting the political difficulty of completely removing the provision, recommended it be scaled back to the original House version and lawmakers add language exempting NAFTA partners Canada and Mexico and members of the WTO procurement pact, such as the European Union and Japan.
That would still restrict steel imports from countries that are not members of the government procurement agreement -- such as China, Russia, India and Brazil -- encouraging them to discriminate against U.S. exporters, the study said.
A coalition of more than 125 business groups and associations released a letter on Wednesday urging Senate leaders to eliminate the Buy American provisions, which they predicted would “backfire on the United States.”
Editing by Peter Cooney