America will lose tit-for-tat trade war

By JOHN MURPHY

WASHINGTON — In February, the Senate agreed to revise a controversial “buy American” provision in the stimulus bill. The change ensured that the United States won’t violate trade rules that we not only pledged to uphold, but actually helped write. Such violations could have triggered a tit-for-tat trade war with our allies around the world.

The debate earlier this year showed how easy it is to demagogue the “buy American” issue. In the end, if we refuse to buy foreign-made goods our trading partners will probably refuse to buy from us. Since the United States is the world’s largest exporter, we have more to lose from a trade war than anyone.

This is why the U.S. Chamber of Commerce has long advocated a “buy American, sell American” strategy. We believe many “Made-in-USA” goods and services are the best in the world. We just want the 95 percent of the world’s consumers who live outside the United States to buy them, too.

Reneging on our promises would have been the equivalent of hanging a “closed for business” sign on the country’s front door. It would say we don’t welcome the foreign firms who employ more than 5 million Americans at good wages, for a total payroll of more than $350 billion.

The U.S. Chamber helped lead the opposition to “buy American” mandates in the economic stimulus, and we caught a lot of flak for it. So we were especially pleased when President Obama also warned of the danger posed by “buy American” rules.

International commitments

In the end, the Senate unanimously approved an amendment to ensure any “buy American” mandates respect our commitments under international agreements. This action may have helped avert a trade war.

However, the final bill did include some “buy American” requirements. Even as amended, they threaten to drive up the cost of government projects.

For instance, “buy American” rules similar to those in the stimulus added $400 million to the cost of reconstructing the Bay Bridge in the 1990s. Who foots the bill? American taxpayers do.

“Buy American” rules also spawn red tape that can delay “shovel-ready” projects and dampen job creation. This is why the Chamber is working with regulators to see these provisions implemented in a way that limits waste and delay.

Another part of a “buy American, sell American” strategy is to encourage other countries to join the same international agreements President Obama urged the Congress to respect. The most important of these is the World Trade Organization’s Government Procurement Agreement.

Countries such as China, India and Brazil have not signed the GPA, so U.S. businesses are often excluded from procurement opportunities. China, for instance, has a strategy to promote “indigenous innovation,” and U.S. companies are often not allowed to bid on government contracts.

By contrast, the United States has chosen to reject such protectionism and lead by example. As for these countries, they now have an excellent chance to take their own advice, join the GPA, and create a level playing field for American companies.

X John Murphy is vice president for international affairs at the U.S. Chamber of Commerce, Washington, D.C. Distributed by McClatchy-Tribune Information Services.