MFG 2.0

To Buy American, Or Not To Buy American -- That Is Obama's Question

In his post Get Your Made In USA Stamp, Jon says:

First the president tried to squeeze (Buy American provisions) into his stimulus plan, requiring that only U.S.-made products be included in projects funded by the bill before the Senate eventually softened the clause to ease international anxiety over the plan.

Not sure where he got that narrative from, but a fairly cursory search will reveal that President Obama has come out quite publicly against the Buy American provision in the stimulus, as he feels it would likely constrict the interlinked, crisis-ridden global economy at a fairly critical time.

Here's a representative quote (freely available, like a lot of other information, on the internet):

President Obama has come out against a Buy American provision that would require stimulus-funded projects to use U.S.-made materials.

"I think that would be a mistake right now," Obama said on ABC News on Tuesday. "That is a potential source of trade wars that we can't afford at a time when trade is sinking all across the globe."

So to set the record straight on this particular issue, both the House and Senate have seen fit in their collective wisdom to introduce provisions of this nature into the stimulus legislation. And yes, the Senate eventually softened their language to respect international trade agreements.

Not to mention, to come out "for" or "against" this type of economic protectionism is reductionist and misleading in itself. Unlike what you read about in Congressional rantings, or in blogs, global trade is a fiendishly complex issue. (If you'd like a free headache, here's a Cato Institute rundown on Buy American provisions over the years -- let's just say that there's a reason most legislation cracks the 500 page barrier.) And despite the globe-spanning mess we're in right now, the global trade game will probably continue to be played going forward the same way everyone has always played it in the past -- you protect some strategic industries (usually dependent upon the lobbying power of an industry), while you let others float freely on the global markets. That said, even for someone like myself that is deeply skeptical of how a number of our bilateral agreements are written, anything that sends a overly strong protectionist signal to global markets right now is bad policy.

President Obama's team is too smart to not get that.

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