Canada, EU warn USA against protectionism
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Canada and the EU warned US lawmakers against protectionist measures Monday, responding to a "Buy American" amendment passed by the US House of Representatives as part of President Barack Obama's $819bn stimulus plan.
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AFP - The European Union ratcheted up pressure Monday against US President Barack Obama's Buy American stimulus plan, sending letters to the White House and Congress in protest.
EU ambassador to Washington John Bruton told AFP he had written Monday to congressional leaders and the Obama administration expressing concerns about government legislation to restrict procurement to American goods, including steel and textiles.
"We regard this legislation as setting a very dangerous precedent at a time when the world is facing a global economic crisis," said Bruton, the head of the European Commission delegation to the United States.
The Senate is considering an 888-billion-dollar stimulus plan that restricts stimulus-funded infrastructure projects to use only US manufactured goods.
The House of Representatives last week approved an 819-billion-dollar version of the bill with a more narrow Buy American restriction to US iron and steel.
Bruton said the Buy American provision, if signed into law, could spur other countries to set up protectionist barriers and ultimately cost American jobs.
The current economic crisis is global in nature and "if it needs to be solved, it needs to be a global solution and that global leadership comes together in the G20," he added.
Bruton recalled that the Group of 20 developed and developing countries, at a November crisis summit in Washington, had pledged not to introduce new protectionist measures between then and the next G20 summit, to be held on April 2 in London.
"More important ... is the confidence effect. The public in the world at the moment are looking to be assured that somebody is in charge of the global economy and that global leaders are working together to fix the global economy," he said.
"If we have a series of protectionist measures introduced, then the possibility of real global leadership is put at risk."
And protectionist barriers would "defeat the whole purpose of stimulus," he said.
Bruton said he had received no response to the letters he sent Monday to the White House and the majority and minority leaders of the House and Senate.
"Obviously we'd be hoping that the administration express its views on this. I think the election of President Obama and the response in the world to him is a tremendous economic and political advantage of the United States. It gives the United States the capacity to lead the world by example."
Bruton said there was a "real danger" that a Buy American initiative would "diminish that possibility."
Canada, the United States' largest trade partner, warned Monday that the Buy American provision could result in a global depression.
US protectionism "can only trigger retaliatory action," Canada's trade minister Stockwell Day said.
"These protectionist measures, in a time of recession, only make things worse," Day told public broadcaster CBC.
"It can only trigger retaliatory action and we don't want to go there ... We do not want to see that happen.
"In the 1930s, when the world was headed into a significant recession, it was US protectionist legislation that resulted in retaliatory legislation around the world and really plunged things into a depression," he added.