Is 'Buy American' Campaign The First Rumbling of a Global Trade War?

03 February 2009

BRUSSELS: European Union officials have warned that the United States will not go unopposed if it extends the 'Buy American' protectionist measures contained in its domestic economic rescue plan.

Among the commodities already slated to receive preference is US-made steel – a move that appears to automatically bar imports from the EU.

According to European Commission spokesman Peter Power: "The one thing we can be absolutely certain about is that if a bill is passed which prohibits the sale or purchase of European goods on American territory, that is not something we will stand idly by and ignore."

The US House of Representatives last week inked a $819 billion (€639bn; £573bn) infrastructure stimulus package designed to lift the nation's moribund economy out of its worst recession since World War II.

But among the former free trade evangelist's provisions is a plan to extend the so-called 'Buy American' provision, originally enacted in 1933 to ban foreign-made iron and steel from most of the new infrastructure projects.

Although not yet enshrined in US law – the bill has yet to go  before the Senate – its provisions could become even more draconian than those mooted by the House.

A version of the text due to be discussed by the Senate next week goes to the very limit, barring all foreign-made goods from being used in all stimulus-funded initiatives.

No-one knows which way the Senate will vote; nor is there public knowledge of the behind-the-scenes manoeuvrings currently taking place between those concerned.

But there is already a palpable sense of fear that the world is about to hear the opening shots in what could become a global trade war.

Data sourced from Deutsche Welle (Germany); additional content by WARC staff