* * *
Several commentators celebrated the so-called retreat of the American Congress on the protectionist measures included in the US recovery plan. During the adoption process, a subparagraph was added to the " Buy American" clause stipulating that it has to respect international trade engagements of the United States . So far, so good: the commentators were delighted!
However here are two elements which, with my great astonishment! , were ignored by most of the "economic" commentators:
(1) At the beginning, only iron and steel industries were covered by the " Buy American" clause. Now, all the manufacturing industry is covered! While adding a subparagraph prohibiting protectionism, the Congress thus extended the policy of local purchase to a major part of the US economy!
(2) In the US, federal government have no power over municipal and State expenditures. The " Buy American" clause thus launch the idea of protectionist policies, without imposing the respect of international engagements to all levels of government. In short, the States and the American cities will be able to privilege the American suppliers with the detriment of the Canadian companies.
You can go to consult the complete text of the legislation. The clause " Buy American" is in first document pdf…