The stimulus bill voted out of the House of Representatives contains provisions mandating that American products, specifically iron and steel, be used in the infrastructure projects funded by the bill. These “buy American” provisions, which may be expanded upon in the Senate, have created some real tensions with our trading partners. They may also be creating some tension within the Democratic Party. Yesterday President Obama seemed to signal that these provisions might not be a good idea. From the Wall Street Journal:
Asked his views on the furor, President Obama said in separate television interviews Tuesday that he wanted to avoid any steps would “signal protectionism” or risk fueling trade tensions.
“I think that would be a mistake right now,” he told ABC News. “That is a potential source of trade wars that we can’t afford at a time when trade is sinking all across the globe.”
The E.U. seems prepared to file complaints with the W.T.O. if these provisions are contained in a final bill:
EU officials said Tuesday that the trade bloc would likely file a complaint at the World Trade Organization if the U.S. stimulus plan contains language strongly favoring U.S. suppliers. The problem, these officials said, is that a clause forcing Washington to favor U.S. goods, as some lawmakers would like, might violate agreements within the WTO that limit discrimination in government spending.
“We would have to look at our all options, including a WTO case, if ‘Buy American’ passes,” an EU official said.
Whatever the result there will no doubt be retaliation if these provisions remain. It should force us as a country to re-examine some of the trade policies that have had some real bad effects on our economy. Free trade has not always been fair trade, and our manufacturing base has been decimated as a result. A real tough call for President Obama right off the bat.
Bill Manzi.com 
This is where the nationalist libertarian comes out in me, and I start thinking that Pat Buchanan has three brain cells to rub together.
What’s been called free trade hasn’t worked out well for American workers (though, it’s worked well for American consumers). There needs to be a better balance between the two, and it’s a choice that we can make. While we still are the world’s largest economy (and that won’t last my lifetime at this rate), we need to start discussing how we’re going to make those choices.
My opinions are that our trading partners are going to have to suck it up and not use American consumers to solve their problems until the trade pendulum swings the other way, and we become net exporters again. And we as consumers have to be willing to seek out and pay a little more for American made goods and services wherever possible. I’ve been doing this for a few years now, wherever possible.
I remember an old union bumper sticker from the 70’s: “Buy American: the job you save may be your own”. Looks like they had a point.
-FM
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Your Honor,
Obama has seemed to be making snap decisions without contemplation. First he signed a Gitmo closure order with out considering the disposition of the prisoners. Then he does the “buy America” thing with the stimulus package and gets in the chops by our upset allies. When combined with his cabinet problems it makes him look out of touch with the what’s happening.
For the countries sake, I hope he is a fast learner.
Jules
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