By Doug Palmer
WASHINGTON (Reuters) - The U.S. Chamber of Commerce stepped up efforts on Friday to kill a popular "Buy American" provision before it reaches President Barack Obama's desk as part of an mammoth economic stimulus bill.
"Some have slammed the U.S. Chamber for opposing "Buy American" provisions, calling our position 'economic treason,'" the group's president Thomas Donohue said in a statement.
"Try economic patriotism. Such provisions would cost American jobs, trigger retaliation from our trading partners, slow economic recovery by delaying shovel-ready infrastructure projects and cede our leadership role as a longstanding proponent of free and fair trade and global engagement."
The House of Representatives approved the measure this week as part of a $825 billion bill to kickstart the U.S. economy. In the House version of the bill, the "Buy American" measure would require all public works projects funded by the stimulus package to use only U.S.-made iron and steel.
European steelmakers object, saying that would violate U.S. commitments under the World Trade Organization's government procurement pact. Other critics say that is less than clear cut and could depend on how the measure was implemented.
At the annual World Economic Forum meeting, British Prime Minister Gordon Brown warned of "financial mercantilism" where battered foreign banks could repatriate money and retreat from global finance.
"This, if we do nothing, will lead to a new form of protectionism, a retreat of globalization and a reduction of trade and cross-border activity," Brown said. "This will be followed quickly by the old trade protectionism of the past."
Indian Trade Minister Kamal Nath also sounded a warning.
"If there are protectionist measures, India will be compelled to also take commensurate measures against those countries which will be good for no one," Nath said.
'NOT A GOOD WAY TO BEGIN'
In Canada, the main opposition Liberal Party called on Conservative Prime Minister Stephen Harper to raise the issue with Obama when he visits on February 19 if the United States has not made clear that Canadian iron and steel will be welcome.
"I presume the prime minister will make this a very important issue when President Obama is here, because it has huge implications for the steel industry obviously but Canada-U.S. relations overall," Liberal House leader Ralph Goodale told reporters in Parliament.
"Certainly I would hope that the U.S. administration would like to get started on a good footing with Canada, and starting out getting into a hot spot on protectionism is not a good way to begin, and I think Canadians would generally would be disappointed if that's where the President goes."
Early in his first term, former President George W. Bush angered trading partners by imposing steep "safeguard" tariffs on steel imports to help U.S. producers climb out of a slump.
The Senate is expected to begin debate on its version of the stimulus bill next week. It includes a provision passed by the Senate Appropriations Committee that expands the House language of "Buy American" to include all manufactured goods.
"When you include all manufactured goods in these projects, you're talking about every shovel, every crane," said Chris Braddock, the U.S. Chamber of Commerce director of procurement policy.
"It's not just the steel going into bridges. Now it's the truck that is involved in building the bridge or the road."
Senator Charles Grassley, an Iowa Republican, "is looking into this situation to ensure that any 'Buy American' provisions in the stimulus bill are administered in a manner consistent with U.S. trade obligations," a spokeswoman said.
But that might not offer much comfort to major U.S. trading partners such as China, which have not yet joined the WTO's government procurement accord.
The best chance of killing or modifying the provision is in the negotiations between the House, Senate and White House on a final bill, Braddock said, adding it probably would be too difficult to persuade a majority of senators to vote for an amendment to strip the measure from the bill.
(Additional reporting by Randall Palmer in Ottawa; Editing by John O'Callaghan)
