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:
Senators, on a voice vote, approved an amendment requiring the Buy American provisions be "applied in a manner consistent with U.S. obligations under international agreements."
The change gives Canada, Mexico, the European Union and certain other major trading partners some comfort they would be exempted from a strict requirement in the bill that all public works projects funded by the stimulus package use only U.S.-made iron, steel and manufactured goods....
The United States has made commitments under the North American Free Trade Agreement and the World Trade Organization 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 on Wednesday.
This is better than the House bill, but it would have been better still if the Senate had adoped the amendment offered by Senator McCain, which rejected any Buy-America provision. But this lost 65 to 31.
"The Buy American provisions ... have echoes of the disastrous Smoot-Hawley tariff act," McCain said, referring to 1930s legislation often blamed for prolonging the Great Depression. "It sends a message to the world that the United States is going back to protectionism."
The House version of the bill still has an unqualified steel domestic-purchase requirement; this is one of the items that will have to be worked out in conference committee.
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