"Buy American" Language Generates Growing Angst Abroad

From Rachel Sessa on Thursday, June 11, 2009 12:23 PM

The frustration and fear of the Administration’s drive toward a more protectionist American economy has gone global. Countries including Brazil, Japan, Australia, the European Union, and Canada in particular are voicing serious concerns over “Buy American”, a policy thought to have been rendered after language was added ensuring the U.S. still honors its international treaty obligations. However, U.S. cities, and some states are not obligated to follow such rules. Instead, hundreds of municipalities and several state legislatures have passed “Buy American” resolutions instructing state-wide companies to only use American steel.

As if this wasn’t enough, the “American Clean Energy and Security Act of 2009” has a sneaky “Buy American” provision under Title I – Section C that stipulates financial aid for automakers. Under this provision, automakers can only receive financial aid if the cars, including the manufacturing plug-ins, and the batteries used to power electric cars, are made in the U.S. This provision is extremely unrealistic when taken into account that most car parts aren’t manufactured within the U.S. but merely shipped in. According to MIT’s Technology Review, currently almost all advanced batteries for cars are made overseas, mainly in Asia.

The U.S.’ major trading partners are making noise of possible retaliation if the Administration does not address their growing concerns. Canada, who sends 75 percent of its exports to America and owns half of GM and Chrysler, has already had measures of retaliation and boycotting of U.S.-made products at the municipal level. Ironically, protectionism was deemed a failed practice after it only worsened conditions during the Great Depression in the 1930s.

Americans for Tax Reform sent a letter to Congress warning members of the grim outcome protectionist policies promises and urging them to oppose all “Buy American” language.

Click here to view PDF version of ATR’s letter to Congress

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"Buy American" Language Generates Growing Angst Abroad

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