Obama Stokes Trade War Fires With ‘Buy American’ Provision In Massive Spending Bill

“Buy American.” It sounds great and obviously, given the choice, I’d pick something off the shelf that I knew was made in America versus an import. But the Pelosi-Reid-Obama Spending Bill has include a “Buy American” provision that, just hours after passing the House, set off international concern of a new wave of Trade Wars.

The House-approved plan’s “Buy American” provision generally prohibits the purchase of foreign iron and steel for any infrastructure project in the bill.

The European Union’s trade commissioner, Catherine Ashton, pre-emptively voiced concern about the US measure.

“We are looking into the situation. … Before we have the final text … it would be premature to take a stance on it,” Ashton’s spokesman, Peter Power, said in Brussels.

“However, the one thing we can be absolutely certain about, is if a bill is passed which prohibits the sale or purchase of European goods on American territory, that is something we will not stand idly by and ignore,” he said.

Canada’s government said it is concerned about US protectionism in the economic stimulus and its diplomats were lobbying US makers against the “Buy American” drive.

“We’re always concerned when there are protectionist pressures in the United States,” Industry Minister Tony Clement told public broadcaster CBC.

“At the same time the United States has treaty obligations,” he said, citing US membership in the World Trade Organization and the North American Free Trade Agreement (NAFTA).

“And we expect the United States to live up to its treaty obligations of open and fair trade.”

Hot Air points out the dangerous similarities betwee the “Buy American” provision and the Smoot-Hawley Tariff Act which helped deepen the Great Depression:

The Smoot-Hawley Tariff Act was an act signed into law on June 17, 1930, that raised U.S. tariffs on over 20,000 imported goods to record levels. In the United States 1,028 economists signed a petition against this legislation, and after it was passed, many countries retaliated with their own increased tariffs on U.S. goods, and American exports and imports plunged by more than half. In the opinion of some economists, the Smoot-Hawley Act was a catalyst for the severe reduction in U.S.-European trade from its high in 1929 to its depressed levels of 1932 that accompanied the start of the Great Depression.

While targeting domestic receipt of this so-called economic stimulus plan is a key idea, the new administration must be more careful in its approach and execution. The history is there and can’t be ignored. Or at least it shouldn’t be ignored.

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