WASHINGTON – U.S. senators were unmoved by the ongoing objections of America’s trading partners Thursday as they prepared to pass judgment on their version of a massive economic stimulus package aimed at pulling their country out of a devastating recession.
An effort to defuse the controversy over the bill’s protectionist “Buy American” provisions by requiring it to respect existing international trade agreements did little to placate European steel producers, who continued to insist the measures be removed entirely.
But senators, keen to see the US$800-billion package’s full economic impact brought to bear on the economic crises unfolding in their own backyards, were showing little sympathy.
“The purpose of this program, asking taxpayers to sacrifice, is really not to create jobs in the European Union,” said Senator Richard Durbin (D-Ill.), the No. 2 ranking Democrat in the Senate.
“I want to create jobs in Illinois.”
The Senate agreed to an amendment late Wednesday to the bill requiring that trade agreements not be violated by the push to have the bill’s infrastructure projects constructed with goods, especially steel and iron, made in the United States.
Obama urged legislators on Thursday to “rise to the moment” and get the package passed as soon as possible as senators worked to heed the president’s pleas and get the bill down to about US$800 billion.
It had been ballooning with every passing hour, at one point exceeding $900 billion.
“Each day we wait to begin the work of turning our economy around, more people lose their jobs, their savings and their homes,” Obama said in an op-ed column in Thursday’s Washington Post.
“And, if nothing is done, this recession might linger for years …. our nation will sink deeper into a crisis that, at some point, we may not be able to reverse.”
Speaking Thursday in Toronto, International Trade Minister Stockwell Day expressed cautious optimism about the change.
But European steelmakers called for the provision to be stripped entirely from the bill as Japan and Australia also voiced their opposition. Mexican President Felipe Calderon also vowed to fight any protectionist moves by Americans.
One Canadian international trade lawyer said Thursday the alteration doesn’t mean much at this point.
“This deal and these measures will not be final until they are final, so we are still well into the game in terms of potential changes,” Christopher Kent, a veteran of Canada’s long-standing dispute with the U.S. over softwood lumber, said from Ottawa.
“There is still a very strong protectionist lobby at work in the U.S., there are people in Congress who are pushing very hard for this language and for ‘Buy American’ without the caveat.
“Do not under-estimate the steel belt, for example. And as we’ve learned from years of softwood lumber, what is superficially there on paper may differ dramatically from what happens in reality.”
Durbin is among the senators who remains staunchly pro-“Buy American,” despite President Barack Obama’s warning earlier this week that there should be nothing in the bill that sparks trade wars.
Asked on Thursday why the Senate didn’t strip the measure entirely from the bill, Durbin replied: “Because, frankly, I want to buy American. I want Americans to go to work. I can’t be any more blunt than that.”
The U.S. has made deals under the North American Free Trade Agreement and the World Trade Organization to give trading partners such as Canada, Mexico, Japan and the European Union access to its government procurement market. In exchange, it’s received similar commitments from those countries.
But other nations such as China, Russia, India and Brazil are not party to those agreements, and so lack any protection from the amendment.
The original “Buy American” clause barred stimulus spending on a project unless all of the iron, steel and manufactured goods involved are made in the United States in a vote late Wednesday.
The diluted language says the provision must be “applied in a manner consistent with United States obligations under international agreements.”
Kent warned such language can be open to interpretation.
“What is consistent with international obligations will be subject to domestic interpretations in the U.S. … the real test is going to be in the interpretation.”
Once the bill is passed by the Senate, senators and House legislators have to get to work to reconcile their two versions of the bill. They’re working under a tight deadline – Obama has said he wants the bill on his desk and ready to sign into law by Feb. 16.