Free trade

The "Buy American" provision in the $787 billion stimulus bill is causing our allies and trading partners to complain about protectionist measures here which could lead to others instituted abroad in retaliation.

The provision requires stimulus-funded projects to use goods and equipment made in America to give the funds the greatest impact on restoring or maintaining jobs here. Taxpayer dollars, supporters say, should stay in the United States to create jobs at home.

Canada and other nations object to Buy American as a violation of free trade agreements and a protectionist measure that prevents them from doing business in the United States.

As an example of possible repercussions, Canadian mayors passed a nonbinding resolution that would keep U.S. companies from bidding on city contracts.

Canada's Industry Minister Tony Clement has pressed the Obama administration to reverse Buy American. "If this continues, it's going to be injurious to us, but it's also going to be injurious to them," he said.

John Bruton, the European Union Commission's ambassador to Washington, also expressed concern about "protectionist measures being introduced under the guise of other measures."

Citing other legislation favoring U.S. companies, Mr. Bruton said, "There is a real sense that this approach has now become the default position."

As the recession is felt globally, other nations are looking for ways to help their industries and save jobs, which would close off export opportunities for American businesses.

The Buy American requirement, though, has also hurt U.S. companies whose overseas subsidiaries cannot bid on projects.

Dawn Champney, president of the Water and Wastewater Equipment Manufacturers Association, a Washington-based industry group, said, "Buy American has had a completely stifling impact for our market so far."

The Obama administration must take steps to prevent a trade war and ensure other nations that the United States intends to live up to its free trade agreements.