Stimulus "Buy American" Restrictions Called "Catastrophic" - Updated

[1/30/09 post bumped] Foreign leaders are decidedly puckered by the "buy American" restrictions in the Obama so-called "stimulus" plan, aka Porkzilla. A rider in the scheme blocks "the use of foreign-made iron, steel, textiles and manufactured products."

As China, India and the European Union warned that protectionist barriers would hinder world trade, Prime Minister Stephen Harper said Canada expects the United States to respect its free trade commitments as it moves to build new roads, railways, bridges, airports and housing. [...]

"I know that countries around the world are expressing grave concern about some of these measures that go against, not just the obligations of the United States but, frankly, the spirit of our G20 discussions."

Liberal foreign affairs critic Bob Rae said bluntly the position taken by the U.S. Congress is illegal.

"A country cannot bring in a measure that restricts international commerce and international activity in this way," he said.

Officials claim that Porkzilla's restrictions on trade are contrary to the North American Free Trade Agreement (NAFTA) and World Trade Organization (WTO) legal obligations. Also, according to International Trade Minister Stockwell Day,

"History shows clearly that you can't fall back into protectionist measures. That happened in the 1930s and what could have been a bad one- or two-year recession turned into, as we know, the Great Depression. So we want to curtail that."

It's also feared that protectionism by the U.S. will trigger similar measures internationally.

Based upon the reported international nervousness regarding the "stimulus" scheme, one could contend that nobody in the Obama administration nor Congress has actually read the proposal in its entirety or that those who are familiar with Porkzilla lack a workable familiarity with economics, history and international treaties.

Companion post at The Jawa Report.


[Update 2/5/09]

The "Buy American" provision has been tentatively revised.

Senators in a voice vote agreed to change a protectionist provision inserted into the U.S. government's economic stimulus bill with the addition of a crucial clause – that the bill be "applied in a manner consistent with U.S. obligations under international agreements."

The wording approved by the Senate appears to go a long way to meet the concerns of the Canadian government, which has argued that the United States should not enact laws that contravene its commitments to liberalized trading regimes under the World Trade Organization and the North American Free Trade Agreement.

Analysts said the amendment should restore calm in Canada, Europe and elsewhere in the orbit of American trade relations, where nerves had frayed amid concerns the world's largest economy was turning inward under the duress of a global downturn.

Heh.