The US Senate has voted to soften a 'buy American' plan in its $900bn stimulus bill after President Barack Obama expressed concern the original language could trigger a trade war.
Senators, on a voice vote, approved an amendment requiring the provisions be ‘applied in a manner consistent with US obligations under international agreements.’
The change gives Canada, Mexico, the EU and certain other major trading partners some comfort they would be exempt from a strict requirement in the bill that all public works projects funded by the stimulus package use only US-made iron, steel and manufactured goods.
The House of Representatives has passed a nearly identical Buy America provision without such a guarantee.
Republican Senator John McCain urged the Senate to go further and specifically bar any Buy American provision as part of the stimulus package. But senators rejected his amendment by a vote of 65-31.
The Emergency Committee for American Trade, an organisation of US-based corporations, and a coalition of more than 125 businesses and trade associations have warned the Buy American plan could trigger a string of trade restrictive measures around the world. They urged senators to kill it.
But Democrat Senator Byron Dorgan said all supporters of the Buy American plan were trying to do was to ensure US workers benefit the most from public works projects funded by the stimulus plan.
The US has made commitments under the North American Free Trade Agreement and the World Trade Organisation to provide trading partners such as Canada, Mexico, Japan and the EU with access to its government procurement market and has received similar commitments in exchange.
But other countries such as China, Russia, India and Brazil are not party to those pacts so would not have any protection from the language passed by the Senate.
