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FooJay
Joined: Apr 09, 2005
Posts: 1769
Status: Offline
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 Posted:
Jan 29, 2009 - 09:55 PM |
 
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| Post subject: More Protectionism? Oh Lovebox.. |
I'm sure you will love this:
House approves "Buy America" steel measure
By Doug Palmer Doug Palmer Wed Jan 28, 7:25 pm ET
WASHINGTON (Reuters) – The U.S. House of Representatives on Wednesday approved a controversial "Buy America" steel provision as part of an $825 billion package to help pull the U.S. economy out of recession.
The provision requires public works projects funded by the bill to use only U.S.-made iron and steel.
House leaders included the language despite strong objections from the U.S. Chamber of Commerce and other business groups which said it would set a bad example for other countries considering their own economic stimulus plans.
But after a boom period driven by infrastructure projects in China and other developing countries, some U.S. steelmakers have cut production and could see losses in the first quarter as the global economic slump saps demand.
"We've got manufacturing in America in a total and complete freefall. ... It's about time we had some economic patriots," said Leo Gerard, president of the United Steelworkers union.
House members also approved an amendment requiring the Transportation Security Administration to purchase only U.S.-made uniforms, similar to a current requirement on the Department of Defense.
"We're going to put Americans to work, making uniforms for those that protect us. It's a good use of tax money," said Rep. Larry Kissel, a North Carolina Democrat.
The stimulus package contains about $90 billion for highway, rail and other infrastructure projects. The Buy America steel measure specifically covers airports, bridges, canals, dams, dikes, pipelines, railroads, multiline mass transit systems, roads, tunnels, harbors and piers.
It sailed through the House Appropriations Committee earlier this month on a 55-0 vote.
EXPANDED VERSION
Senators are working on an expanded version that would also include other materials such as cement, Sen. Sherrod Brown, an Ohio Democrat, told reporters.
"As we are losing jobs in record numbers, we obviously need to devote these funds to direct creation of American jobs. To do that, we must ensure that federal funds are used to buy American products and to help promote manufacturing in our country," Brown said.
European Union officials said they were closely examining the provision to see whether it violates a World Trade Organization agreement on government procurement.
The EU is excluded from Buy America provisions already in U.S. law. Whether the new measure breaks WTO rules could depend on how it is implemented, the officials said.
Some WTO members, such as China or India, are not members of the government procurement agreement and thus would not be entitled to protection under the pact.
The legislation allows the U.S. government to sidestep the measure if it would raise the cost of any project by over 25 percent or is deemed "inconsistent with public interest."
It also can be waived if U.S. steel is not available in sufficient quality or quantity.
Even so, the provision will increase costs and could cause delays by requiring contractors to legally ensure they are not using foreign steel, said Chris Braddock, director of procurement policy at the US Chamber of Commerce.
(Additional reporting by Steve James in New York) |
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LoveBoxStorage
Raver
Joined: Sep 25, 2008
Posts: 381
Location: Shanghai
Status: Offline
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Jan 30, 2009 - 08:41 AM |
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LOL - Would you be disappointed if I told you that (based on what I know) the buy U.S.-produced steel provision of the bill doesn't bother me?
This is not protectionism. Protectionism is erecting trade barriers that make imported products more expensive. Rather, this is a consumer (the U.S. government) expressing its preference. It does not affect the price of imported steel - in fact, it may keep the price of imports lower (all other things being equal).
In the lead-up to the 2004 election, the Bush administration instituted punitive tariffs on imported Chinese steel. The Chinese government brought its complaint to the WTO arbitration panel, which all but laughed out our (the U.S.') defense. That was protectionism.
What's also important is that there is no bellicose toward China (as far as I know) language in the bill, or accompanying press conferences. Lots of countries produce steel, and the bill singles out none of them. Rather, it's part of a broad package meant to create jobs in the U.S. (hopefully without protectionism).
That said, if this breaches the WTO agreement, then clearly the provision should not stand.
The issue with the Rep and the gift shop is that 1) there is no economic benefit if the Capitol gift shop buys American, and 2) the proper way to handle this policy change would have been institute it silently. Instead, the distinguished gentleman chose to use his standing as a platform from which to bash China, and attempt to whip up protectionist sentiment - at definitely the wrong time.
There is an argument that this provision in the bill is effectively a government subsidy, which is unfair trade. That may be a valid argument, but at least there's a cap on the subsidy of 25%. I'm no fan of government subsidies, but they're more common than protectionist measures, and don't seem to provoke trading partners to react as extremely as tariffs and quotas do. |
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