Sunday, February 15, 2009

Buy American Clause in Stim.

"WASHINGTON (AFP) — The Consumer Electronics Association (CEA) has warned that "Buy American" provisions in the economic stimulus bill could make the United States vulnerable to a trade war.
"The 'Buy American' provisions in the stimulus bill will signal to our trading partners around the world that the United States is returning to the bad old days of protectionism and economic nationalism," CEA president Gary Shapiro said in a statement.
"Rather than stimulate the American economy, these provisions will lead to retaliation from abroad and cost precious jobs in the United States," said the head of the association representing some 2,200 electronics companies.
"The promise that the 'Buy American' provisions keep with the letter of World Trade Organization commitments is a meaningless gesture -- it contradicts recent statements by both President (Barack) Obama and G-20 leaders to avoid protectionism, which exacerbate the global economic crisis," Shapiro said.
"If we close our borders to international trade and artificially prop up our own industries, we deepen the global recession and further make ourselves vulnerable to a trade war," he added.
The US House of Representatives on Friday passed a 787-billion-dollar stimulus package and the Senate was poised to follow suit.
Canadian Prime Minister Stephen Harper was among those expressing concern on Friday over provisions in the bill that would require the use of US iron, steel and manufactured goods in public works projects funded by the bill. "

My Response:

By limiting ourselves to the "buy american" standard
laid out in the stimulus package, we open ourselves
up to multiple counter intuitive senarios
1. The first senario leads Obama to undermine his integrety. By accepting the "Buy American" clause, he will be going back on his word to the internationalcommunity. Part of the change Americans voted forwith obama was in his apparent honesty. Hopefully, Obama is just niaeve and is suddenly realising thatpolititions have to break promises, rather thanbeing a subversive liar.
2. One unfortunate part of the "Buy American" clauseis that this includes may raw materials that are minedin America. Why is this unfortunate? This is dueto the unions. Ther is nothing inherently wrong withunions, but rather their leadership. Much of the money that will go to union labor turns up in leadershipdues. Leadership dues in turn then go to support political candidates, which tend to be democraticcandidates. This is another issue which should beconsidered by the obama administration when focusingon the "change" in the business as usuial in washington.
3. The last few years, the United States' world oppinion has been quite tarnished. This was supposedlypolished up with the election of Obama, a trustworthyman of integrity and honesty. By discluding the restof the world, in an attempt to grow American GDP, andgoing back on his promise to the internationalcommunity, Obama has managed to show the world thatbusiness is in fact back to usuial in Washington.
4. By the United States passing this clause in the stimulus package, it will cause hostility in the international market. The freedom of trade betweeninternational markets is what will help bring us outof recession. This is not a national recession, but rather an international recession. It can not be solved only at home, and expect it to go away. Thisis something that needs international cooperation.This, also, is cause for other markets to passprotectionary measures as well. This could lead tointernational isolationisim.
This is not unlike the passing of the Corn Laws in Great Britain in 1815. At the close of the NapoleonicWars, Many continental farmers went back to work. A sudden influx of cheep grain suddenly was available on the international market. In an effort to protectBritish farmers, Parlement passed the Corn Laws, whichput a high tarrif on cheep grain from mainland Europe.This kept grain prices unnaturally high for may yearsin England, and led to the starvation of millions asa result the expense of grains and the failure ofIreland's potatoe crop.
Hopefully this is not the future for America.

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