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EU attacks 'Buy American' clause EU attacks 'Buy American' clause
(about 4 hours later)
The EU has increased its pressure on the US to reconsider the "Buy American" clause in the $800bn (£567bn) economic recovery package now before Congress.The EU has increased its pressure on the US to reconsider the "Buy American" clause in the $800bn (£567bn) economic recovery package now before Congress.
The clause seeks to ensure that only US iron, steel and manufactured goods are used in projects funded by the bill.The clause seeks to ensure that only US iron, steel and manufactured goods are used in projects funded by the bill.
A European Commission spokesman said it was the "worst possible signal" the Obama administration could send out. A European Commission spokesman said it was the "worst possible signal".
The EU will launch a complaint with the World Trade Organisation (WTO) if the clause remains, the spokesman said. However, German Chancellor Angela Merkel said President Obama had assured her the US would not follow protectionist policies.
The EU and Canadian ambassadors to Washington have already warned that the clause could promote protectionism and trigger retaliatory moves. "He stressed that," she said.
The rescue plan has already been approved by the US House of Representatives and is under discussion in the Senate this week. The rescue plan has already been approved by the US House of Representatives and is under discussion in the Senate this week, who could sign it off before the weekend.
Mixed trade signals Criticism
"There isn't a great deal of scope for doing much more but if America went ahead and did this we would have to take it up with the World Trade Organisation," the European Commission trade spokesman, Peter Power, told the BBC's Chris Mason in Brussels. The EU spokesman said Europe would launch a complaint with the World Trade Organization (WTO) if the clause remained.
British Conservative Members of the European Parliament warned of the dangers of "a new economic iron curtain" being drawn across Europe. We regard this legislation as setting a very dangerous precedent at a time when the world is facing a global economic crisis John Bruton EU ambassador to Washington class="" href="/1/hi/world/americas/7861299.stm">Obama diary: First 100 days class="" href="/1/hi/business/davos/7855438.stm">Dire warnings about protectionism
We regard this legislation as setting a very dangerous precedent at a time when the world is facing a global economic crisis John Bruton EU ambassador to Washington class="" href="/1/hi/world/americas/7861299.stm">Obama diary: First 100 days class="" href="/1/hi/business/davos/7855438.stm">Dire warnings about protectionism The clause "sends a terrible protectionist signal to the rest of the world, and particularly the EU", said Syed Kamall, the Conservative international trade spokesman in the European Parliament. "There isn't a great deal of scope for doing much more, but if America went ahead and did this we would have to take it up with the World Trade Organization," the European Commission trade spokesman, Peter Power, told the BBC's Chris Mason in Brussels.
The White House has said it is reviewing the Buy American part of the stimulus bill, although Vice-President Joe Biden said last week that it was legitimate to have some portion of it in the final measure. European and Canadian ambassadors to Washington have already warned that the clause could provoke protectionism and trigger retaliatory moves.
Barack Obama's signals as a presidential candidate on the campaign trail last year that he could rip up the North American Free Trade Agreement were seen as a political gesture to win round the sceptical white working class vote, says the BBC's Jonathan Beale, in Washington.
Perhaps that has become more important with the economic crisis, but it leaves one wondering where the Obama administration really stands on free trade, our correspondent adds.
'Retaliatory risk'
EU Ambassador to Washington John Bruton said that, if passed, the measure could erode global leadership on free trade.EU Ambassador to Washington John Bruton said that, if passed, the measure could erode global leadership on free trade.
"We regard this legislation as setting a very dangerous precedent at a time when the world is facing a global economic crisis." "We regard this legislation as setting a very dangerous precedent at a time when the world is facing a global economic crisis," he said.
Barack Obama says he expects a "difficult few days"Canada's ambassador to Washington warned Senate leaders that if Buy American was in the final legislation, it would set a negative precedent with global repercussions. 'Under review'
"The United States will lose the moral authority to pressure others not to introduce protectionist policies," Michael Wilson wrote in a letter to the senators. The White House has said it is reviewing the Buy American part of the stimulus bill, although Vice-President Joe Biden said last week that it was legitimate to have some portion of it in the final measure.
Canada was hoping to be exempted from any Buy American measures, said International Trade Minister Stockwell Day. Barack Obama says he hopes the bill will be passed quickly
"These protectionist measures, in a time of recession, only make things worse," he told broadcaster CBC. In addition to the opposition from the EU and Canada, some senior US Republicans have cautioned that the Buy American measure could start trade wars.
"It can only trigger retaliatory action and we don't want to go there."HAVE YOUR SAY At times like this of course a domestic government should encourage the consumption of home produced goods Robert Feal-Martinez, Swindon, UK Send us your comments
There is also opposition from some senior US Republicans who say the measure could start trade wars.
Mr Obama has urged the US Congress not to delay his stimulus plan over modest differences.Mr Obama has urged the US Congress not to delay his stimulus plan over modest differences.
The Democratic leader in the Senate, Harry Reid, has said he hopes the stimulus can be approved by the end of the week.The Democratic leader in the Senate, Harry Reid, has said he hopes the stimulus can be approved by the end of the week.
It is unlikely that the package will be able to pass the Senate without Republican support.Meanwhile, Mr Obama is expected to name Republican Senator Judd Gregg as commerce secretary. It is unlikely that the package will be able to pass the Senate without Republican support.
Mr Obama will hope that Mr Gregg's nomination can help secure approval for the stimulus package, our Washington correspondent says. 'Nationalistic trend'
Mr Gregg would be the third Republican in Mr Obama's cabinet. The continuing wrangles over the Buy American clause come as hundreds of workers at UK power stations continue wildcat strike action in protest at the employment of Italian and Portuguese workers at a Total oil refinery.
The president's first choice for the post, New Mexico Governor Bill Richardson, withdrew following questions about his links to big business. class="lp" href="http://news.bbc.co.uk/1/hi/talking_point/default.stm">HAVE YOUR SAY At times like this of course a domestic government should encourage the consumption of home produced goods Robert Feal-Martinez, Swindon, UK class="" href="http://newsforums.bbc.co.uk/nol/thread.jspa?forumID=5995&edition=2&ttl=20090203114346">Send us your comments
Union leaders have denied accusations that the strikers are guilty of xenophobia.
Instead they say the UK workers are unfairly being denied the right to carry out work, because contracts are being awarded to foreign firms who bring in their own staff.
Despite this argument, the Italian and Portuguese governments have called for an end to the protests.
"We want to underline the responsibility of government to avoid this protectionist, xenophobic, nationalistic trend," said Portugal's Foreign Minister Luis Amado.