The Custom-House

Gary Locke for Commerce Secretary?

The Wall Street Journal reports that Gary Locke, formerly governor of Washington State, is under consideration for Secretary of Commerce: Obama Likely to Tap Locke for Commerce.  Foreign trade is relatively important to Washington State, and the Journal article bills Locke as a free trader:

A lawyer by training, Mr. Locke moved to an international law firm, Davis Wright Tremaine LLP, focusing on Chinese trade.

Mr. Locke long has been an advocate of free trade, supporting former President Bill Clinton's effort to make China a member of the World Trade Organization, and supporting the North American Free Trade Agreement. While he was governor, Mr. Locke paid two visits to China to promote trade, once touring an ancestral village. Mr. Locke is likely to be grilled on his views on trade during his confirmation process.

A Locke nomination would follow abortive Commerce selections of fair trader Bill Richardson, and free trader Judd Gregg.

Trade policymakers: turnover and sharp elbows

Doug Palmer reports rumors that the Senate Finance Committee could hold hearings on Ron Kirk's USTR nomination next Wednesday: Hearing seen next week on U.S. trade nominee. Palmer also reports that Tim Reif, Trade Staff Director on the House Ways and Means Committee is in line for the position of General Counsel at USTR: U.S. trade bulldogs' aide in line for key USTR post:

The Stimulus Bill and Homeland Security Uniforms

The stimulus bill requires the Department of Homeland Security to purchase   International Trade Law News has the details: Stimulus Bill Contains Overlooked "Buy American" Provision Covering DHS Uniforms, Body Armor and Textiles.

While a great deal has been written on the "Buy American" provision in the stimulus bill (Section 1605 of H.R. 1) that covers iron, steel, and manufactured goods, it turns out that the bill also contains another "Buy American" provision that applies to uniforms, body armor and other textile products purchased by the Department of Homeland Security....

The provision must be "applied in a manner consistent with United States obligations under international agreements."

The Stimulus Bill and H-1B Visas

The Stimulus Bill makes it harder for banks getting financial help from the government to employ temporary foreign workers under H-1B visas: Hire American calls raise protectionist fears:

The provision prevents companies supported by the troubled asset relief programme (Tarp) from applying for H-1B visas for highly skilled foreign workers if they have recently laid off US employees.

What else is in that stimulus bill?

Doug Palmer reports that House and Senate leaders had agreed on a large set of changes in U.S. Trade Adjustment Assistance programs to be included in the stimulus bill.: Lawmakers agree to expand trade adjustment aid:

The proposal reauthorizes the TAA program through the end of 2010 and increases funds for worker training by nearly 160 percent to $575 million.

It triples funding to $50 million for a program that helps business cope with foreign competition and authorizes $230 million to help mostly small and medium-sized communities adjust to trade-related job losses.

The reforms also allow coverage for workers whose companies have shifted production to China, India and other countries, even if they do not a have trade pact with the United States which previously had been the requirement.

Hat tip to Jonathan Dingel at Trade Diversion.

On a different topic, this is a concern:  Palmer also reports (Congress agrees on "strong" Buy American plan) that:

As of Thursday evening, congressional appropriations committees with jurisdiction over the Buy American provision still had not released details of the final version.

But apparently Congress will be voting on it Friday (Congress readies final vote on $790B stimulus bill):

Senate Majority Leader Harry Reid said Friday that Congress is nearly finished with a massive, $790 billion economic stimulus plan giving President Barack Obama a big victory, but not everything he wanted.

The Nevada Democrat said as debate resumed that the Senate would likely vote on the package of spending and tax cuts later in the day and that both the Senate and House would do the work necessary to quickly get the emergency legislation to Obama's desk.

If the national emergency is so great that this can't wait until early next week, why didn't Congress act last fall?  What odd things are we going to find in there as time passes?

Feb 15: Clive Crook - who thinks the bill that passed was better than no action - points to some of the items we're beginning to find: Fiscal stimulus: repent at leisure:

It will be interesting to see what is hiding in those 1,400 pages. Some disturbing early discoveries have already been reported. For instance, the bill appears to reverse or at any rate undermine the Clinton welfare reforms. It appears to ban the hiring of skilled immigrants in much of the finance industry. It appears to cap finance-industry pay much more aggressively than the Obama administration has proposed. Even if you don’t think these ideas are harmful or unworkable or both, as I do, you have to admit that they deserved more of an airing than they received–which is virtually none–before they became law.

The final version of "Buy America"

Doug Palmer reports on the version of "Buy America" that came out of the conference committee: Congress agrees on "strong" Buy American plan:

...requires public works projects funded by the plan to use only U.S.-made goods, including iron and steel, a lobbyist said on Thursday.

The final provision also includes language that requires the United States to implement the provision consistent with its trade commitments, said Scott Paul, executive director of the American Alliance for Manufacturing, whose members include major U.S. steel companies....

...Both the House and Senate bills contained language allowing the Buy American provision to be waived in cases where it is deemed inconsistent with the public interest, U.S. supplies are not available or it would increase costs more than 25 percent.

The final provision also allows a general waiver for products not made in the United States, instead of having to get an individual waiver for each project, Paul said.

Simon Lester has the final text of the Buy America section, here: The Final "Buy America" Provisions in the Stimulus Bill.

Edit: link to text added on Friday evening.

New York Times "Buy America" Debate

Graphic from New York Times blog (Photo: Maurizio Gambarini/European Pressphoto Agency)

I'm reading the New York Times blog on "That 'Buy American' Provision" while I wait to see what the conference committee did on this issue.   There are eight short contributions, four in favor of the provision, and four against. 

Robert Scott of the Economic Policy Institute argues that the provision will enhance the multiplier effect of the stimulus bill:

The next step in the evolution of "Buy America"

The House stimulus bill included a "Buy America" provision for steel; the Senate version applied the provision more broadly to manufactured goods, but required it to be applied consistently with U.S. trade agreements.  In practice the Senate version means it would only apply to countries that hadn't entered into government procurement agreements with us.

Now the differences between the two versions are being resolved in conference committee: U.S. Steel Companies Press for Buy America Plan.

Neither version will generate many (if any) jobs: Buy American: Bad for Jobs, Worse for Reputation.   Either creates additional red tape for stimulus projects (Reuters):

Cal Cohen, president of the Emergency Committee for American Trade, said many U.S. companies outside the steel sector believe the Buy American provision would "defeat the basic objective of the stimulus package which is to ensure the quick release of funds to create jobs."

Before work could begin on a project, government agencies would have to first issue rules to ensure that purchases comply with the Buy American measures, he said.

Under the Senate language, many U.S. manufactured goods also would not be eligible because they contain some foreign component, Cohen said.

Today's McCain Amendment

Senators from the states in blue voted for John McCain's amendment to strip the "Buy America" provisions from the stimulus bill (GovTrack). 

The names of the Senators who supported the amendment are below the fold. 

It looks like every Democrat who voted, voted against it.  However, the Senate did vote to qualify its version of the "Buy America" provision so that it only applies when it is consistent with our international obligations - a big step forward; Senate Democrats who are sympathetic to liberal trading rules would have known that that option was available.

The Senate's gentler "Buy America" requirement

The Senate approved an amendment to the stimulus bill today with a modified version of the "Buy America" provision.  Under the Senate's amendment, Buy-America only applies if it is not in conflict with our international obligations.  Doug Palmer reports for Reuters: Senate OK's softened "Buy American" plan: