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The Obama Stimulus package includes a "Buy American" provision that could violate trade deals

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2009-01-29 06:35

Picka
Colorado Springs, CO

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From the Washington Post, Jan 29, 2009: 'Buy American' Rider Sparks Trade Debate

The stimulus bill passed by the House on January 28th inludes a "buy American" provision that would bar foreign steel and iron from infrastructure projects. Proponents include steel and iron manufacturers and labor unions that argue for creating jobs at home and not overseas. Opponents, including companies like Caterpiller, General Electric, and the aeorspace industry, with substantial overseas contracts say it is a "declaration of war against free trade" which could spark retaliation against U.S. companies and exacerbate the global financial crisis.

Should Obama insist that the "Buy American" provision in the stimulus package be removed?

2009-01-29 07:16

Picka
Colorado Springs, CO

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Further to the discussion of protectionism in the stimulus package, this January 29 article by Shikha Dalmia in Business Week, Obama's China Trade Test, addresses the consequences of a global trade war:

"Protectionism is exactly the wrong remedy for a global economic slump—as the 1930 Smoot Hawley tariffs amply demonstrated. Historians widely credit the tariffs—and the global trade war they unleashed—for prolonging and deepening the Great Depression."
"China, like Japan previously, has become a convenient target for protectionists. Now that Geithner has won confirmation, it is time to put the anti-China saber back in its sheath. Obama needs to unequivocally signal that the U.S. plans to stay open for business during the recession—and expects the rest of the world to do the same. Otherwise, he might well invite "Herbert Hoover time.""

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