Do Not Let the Protectionism Chain Start from the U.S.
Published in Nikkei Shinbun
(Japan) on 02 February 2009
by (link to original)
(Japan) on 02 February 2009
by (link to original)
Translated from
by Yota Mukaiyachi.
Edited by Louis Standish.
Given the global downtown, protectionism has risen inside the U.S., evidenced by the House of Representatives passing the economic stimulus legislation which included the "Buy American" clause. If this were approved, protectionism would precariously spread around the world with a domino effect.
This clause contains discriminatory provisions like limiting iron, steel and textile supplies intended for public enterprise to be those only made in America, shutting foreign products out of the U.S. market. American President Barack Obama should press the Congress to revise the legislation in a determined manner.
Every country is watching the new Obama administration's trade policy. The president himself expressed a need for the provision to be re-examined, but he was not explicit enough to mention use of his veto power against that clause. Some point out that he has not made up his mind because he is afraid of sharp opposition from Congress.
The "Buy American" clause was added onto the original proposal which was revised by some Congressional members. A Democratically-led iron and steel lobbying group played a central role in this. It was clear that the provision was pushed strongly by the U.S. steel industry, which all of a sudden suffers from shrinking demand.
One new Democratic representative also proposed another clause that the textiles used for uniforms of the baggage inspectors in U.S. airports should be made in the country. In addition, the Senate is discussing a bill which expands the “But American” provision to be applied on industrial products in general.
The reality in U.S. politics has been that congressmen try to gain short-term popularity as if that is normal. There is no doubt that the rapid deterioration among U.S. corporations and fear over unemployment has been inviting protectionism into the U.S. Congress.
Affected by low demand under the financial crisis, there are a not-so-small number of countries that feel seized by the temptation to pass protectionist measures. Russia raised its import tariff on cars from 25% to 30%. India also lifted the percentage of duties over steel and some food products. The trend of tariff rising has also arrived at countries in South America.
If they see that the U.S. is now inclined to protectionism, more countries will follow that trend. The “Buy American” scheme can trigger a negative chain reaction.
The Senate bill adds that the measure will be applied to the extent where it will not contradict international agreements. But that does not change the practical meaning of the clause. If the Senate’s passes it, the final legislative judgment will be on President Obama's hands. He should not compromise just because he needs to hurry in passing the stimulus bill.
President Obama, who burst in with high expectations of the U.S. and the world, is responsible for taming the protectionist establishment. He is expected to demonstrate strong leadership against it.
This clause contains discriminatory provisions like limiting iron, steel and textile supplies intended for public enterprise to be those only made in America, shutting foreign products out of the U.S. market. American President Barack Obama should press the Congress to revise the legislation in a determined manner.
Every country is watching the new Obama administration's trade policy. The president himself expressed a need for the provision to be re-examined, but he was not explicit enough to mention use of his veto power against that clause. Some point out that he has not made up his mind because he is afraid of sharp opposition from Congress.
The "Buy American" clause was added onto the original proposal which was revised by some Congressional members. A Democratically-led iron and steel lobbying group played a central role in this. It was clear that the provision was pushed strongly by the U.S. steel industry, which all of a sudden suffers from shrinking demand.
One new Democratic representative also proposed another clause that the textiles used for uniforms of the baggage inspectors in U.S. airports should be made in the country. In addition, the Senate is discussing a bill which expands the “But American” provision to be applied on industrial products in general.
The reality in U.S. politics has been that congressmen try to gain short-term popularity as if that is normal. There is no doubt that the rapid deterioration among U.S. corporations and fear over unemployment has been inviting protectionism into the U.S. Congress.
Affected by low demand under the financial crisis, there are a not-so-small number of countries that feel seized by the temptation to pass protectionist measures. Russia raised its import tariff on cars from 25% to 30%. India also lifted the percentage of duties over steel and some food products. The trend of tariff rising has also arrived at countries in South America.
If they see that the U.S. is now inclined to protectionism, more countries will follow that trend. The “Buy American” scheme can trigger a negative chain reaction.
The Senate bill adds that the measure will be applied to the extent where it will not contradict international agreements. But that does not change the practical meaning of the clause. If the Senate’s passes it, the final legislative judgment will be on President Obama's hands. He should not compromise just because he needs to hurry in passing the stimulus bill.
President Obama, who burst in with high expectations of the U.S. and the world, is responsible for taming the protectionist establishment. He is expected to demonstrate strong leadership against it.
You through the word “Protectionism” around rather loosely if you ask me. The U.S. is in no way heading back down that road, it’s simply a thing of the past and I’m certain that President Obama’s economic staff understands the importance of open and free market practices. The Obama Administration is however, attempting to stimulate the AMERICAN economy to whom he is obligated!!! The whole idea behind the iron and steel purchases being American only applies to projects under the “American Stimulus Plan,” which is in no way designed to stimulate Japan or any other foreign country. The domino affect that you referred to would better be applied to the fact that when the U.S. economy picks up, so will the rest of the world’s economies. Finally, instead of criticizing the Obama Administration the world should be thanking him for his leadership and willingness to attack this economic downfall head on.