''Buy American'' plans could break international agreements

2 February 2009

02 February 2009 | Paul Snell

The US could violate its World Trade Organisation commitments, damage the efficiency of procurement and harm US suppliers, if it includes clauses to favour domestic suppliers in its proposed economic stimulus package.

In a letter sent to Democratic and Republican leaders in both Congress and the Senate, fifteen trade associations have urged the government to reject calls for "buy American" clauses to be included in the proposed $825 billion (£576 billion) stimulus package being debated by politicians.

It follows a call from the Steel Manufacturers' Association to ensure domestic products are favoured to upgrade the nation's infrastructure (News, 22 January 2009).

The open letter said the move would have "several major adverse consequences" for US industry, its workers and even the nation. It said the inclusion of "restrictive provisions" could lead other countries to adopt similar domestic favouritism. This would in turn prevent US suppliers winning vital contracts abroad. "Congress should be taking actions to promote US exports, not undermine them."

It added it would contradict earlier commitments not to raise barriers to foreign trade. The clauses may also harm the country's membership of the WTO Government Procurement Agreement, which guarantees to open domestic contracts to foreign suppliers.

There would also be a reduction in competition for bids, which the groups said would lower quality and efficiency of projects. "Such provisions would undermine the economic recovery we all seek," the group concluded.

SMfeb2009

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