In the midst o the greatest nancial crisis since the GreatDepression, the U.S. Congress passed the $787 billion
American Recovery and Reinvestment Act
), andPresident Barack Obama signed it into law. The Buy America provisions contained within the
drew animmediate response rom Canada, the European Union,China, and other countries that condemned the provisionsas “protectionist,” claiming they would “lead to retaliatory measures” and even “trade wars.” These alarmist reactionsneed to be seen or what they really are—warning signsabout everything that has gone wrong with trade and eco-nomic policy. It is time to step back and use this responseas a learning moment—to come to grips with the manu-acturing crisis, a dangerously unbalanced trading systemthat is out o step with economic and political reality, andthe potential confict over climate change.
and Buy aMerica
As both the U.S. and the international economy implodedin 2008, the American Federation o Labor and Congresso Industrial Organizations (AFL-CIO) and the CanadianLabour Congress joined unions across the world to urgetheir governments to move aggressively on economicstimulus measures designed to generate employmentstability. In the United States the AFL-CIO worked withCongress and the Bush and Obama administrations tosupport the largest stimulus investment in our history.The
investments are designed to be the leading edgeo a new environmental economic development policy designed to reduce carbon emissions and create good jobs.To ensure, as U.S. taxpayers have every right to expect,that public dollars are recycled to maximum eect in theU.S. economy, Congress included Buy America languagein the Act.The language rearms and strengthens existing well-established legal precedents, dating back to the
Buy American Act
o 1933. The Department o Deense hashad Buy America provisions since 1941, and the FederalHighway Administration, Federal Transit Administration,and Federal Railroad Administration all have long-standing provisions. The
Buy America requirementsimply states that, or the publicly unded projects, “allo the iron, steel, and manuactured goods used in theproject[s] are produced in the United States.” It also allowsor reasonable waivers.Most notably, the
requires that the Buy America provision be “applied in a manner consistent with U.S.obligations under international agreements.” It is impor-tant to note that negotiated trade agreements allow ordomestic preerences under a number o circumstances.These preerences were negotiated or a reason, andthey are all perectly legal. The United States would beirresponsible not to use them to the ullest extent possible, just as Canada and our other trading partners do.
the pot caLLing the KettLe BLacK
While Canada, the European Union, and China havebeen vocierous critics o the Buy America provision,each one o them has its own ar-reaching domesticpreerences. China, which is not a member o the WorldTrade Organization (WTO) Government Procurement Agreement (GPA), can discriminate against importedproducts in its $586 billion economic stimulus package,and, in addition, it has imposed an 80 percent domesticcontent requirement. The EU and its member states areGPA members but have excluded signicant sectors romcoverage, including all ederal and sub-ederal
transporta-tion, telecommunications, and energy contracts. They arethereore ree to discriminate against imported goods inthese government projects.Canada is also a GPA member, and it has excludedsignicant sectors rom coverage—even broader exceptions
econoMic reaLity and aLarMist rhetoric:getting reaL aBout Buy aMerica