News Room - Steel Industry

Posted on 06 Feb 2009

Australia to investigate 'Buy American'

TRADE Minister Simon Crean has welcomed an amendment to "Buy American" provisions that are set to be approved by US Congress, after warning yesterday the legislation was "a reversion to protectionism"

 

US Senators in a voice vote today approved an amendment requiring that the provisions are "to be applied in a manner consistent with the US obligations under international agreements".

 

Australia will examine its free trade deal with the US to see if Washington is flouting its obligations under the pact if it adopts the clause for new stimulus projects.

 

America's key trading partners, including Australia, are alarmed at the clause, which seeks to ban the use of foreign steel and iron in major US infrastructure projects.

 

A spokesman for Mr Crean said early today: "We welcome early indications that the US Senate will abide by international trade obligations with its proposed second stimulus package."

 

"We now look forward to the Congress confirming this position in its final legislation."

 

He said this represents a softening on the positions of hard-line Buy America proponents.

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Australia stands to lose $500 million in steel exports to the US if the Congress adopts the measure, part of the $US819 billion ($1.26 trillion) financial stimulus package.

 

Prime Minister Kevin Rudd is warning the measure is a "spear at the heart" of the Australian economy because so many jobs are generated by export markets.

 

US President Barack Obama has been talking down the Buy American push, warning it would be inappropriate to send a protectionist message in the current economic climate.

 

But on Tuesday the US Senate rejected an attempt by Republican John McCain to strip the bill of the Buy American clause.

 

Senator McCain warned the clause violated US obligations under international trade pacts and would only serve to spark trade wars and deepen the global recession.

 

Mr Crean yesterday warned that such protectionism by the US will only prompt retaliation by other countries.

 

"Make no mistake, this call by the US Senate to save jobs is nothing more than a reversion to protectionism and will not work," he said.

 

"The benefits from the US fiscal stimulus package will be undermined by retaliation from other nations.

 

"The Australian Government is examining the 'Buy American' clause with the respect to US obligations under the Australia-US Free Trade Agreement," Mr Crean said.

 

"Last year Australia exported $484 million worth of steel to the US and this could be jeopardised by the Buy American clause."

 

Australia struck a free trade deal with the US in 2004.