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| US Senate eases 'trade war' bill | US Senate eases 'trade war' bill |
| (about 2 hours later) | |
| The US Senate has voted to soften a controversial "Buy American" clause in an economic recovery package, after warnings it might spark a "trade war". | The US Senate has voted to soften a controversial "Buy American" clause in an economic recovery package, after warnings it might spark a "trade war". |
| The clause had sought to ensure only US iron, steel and manufactured goods were used in projects funded by the bill. | The clause had sought to ensure only US iron, steel and manufactured goods were used in projects funded by the bill. |
| But senators approved an amendment requiring that provisions in the bill comply with international trade agreements with Canada and the EU. | But senators approved an amendment requiring that provisions in the bill comply with international trade agreements with Canada and the EU. |
| Earlier President Barack Obama said the US should avoid seeming protectionist. | Earlier President Barack Obama said the US should avoid seeming protectionist. |
| The BBC's Jonathan Beale in Washington says the climb-down by the US Senate follows warnings from the EU and Canada that the stimulus bill could spark a trade war. | The BBC's Jonathan Beale in Washington says the climb-down by the US Senate follows warnings from the EU and Canada that the stimulus bill could spark a trade war. |
| The White House has said it supports giving preference to domestic manufacturers in public works programmes - but only if it does not violate existing trade agreements, our correspondent says. | |
| There will be a sigh of relief from many people at the Senate's move, he adds, but it remains to be seen whether the House of Representatives will back the watered-down version of the bill. | |
| Retaliatory moves | Retaliatory moves |
| US senators voted overwhelmingly late on Wednesday to require the "Buy American" provisions "be applied in a manner consistent with US obligations under international agreements". | |
| However, an amendment put forward by Republican Senator John McCain which would have removed the clause altogether was defeated. | |
| I think we need to make sure that any provisions that are in there are not going to trigger a trade war Barack Obama Will stimulus trigger trade war?Obama diary: First 100 daysDire warnings about protectionismProtectionism 'wasn't the problem' Speaking before a vote on that amendment, Mr McCain warned that if the provisions were passed it would "only be a matter of time before we face an array of similar protectionism from other countries - from 'Buy European' to 'Buy Japanese' and more". | |
| European and Canadian ambassadors to Washington had already warned that the clause could provoke protectionism and trigger retaliatory moves. | European and Canadian ambassadors to Washington had already warned that the clause could provoke protectionism and trigger retaliatory moves. |
| The EU had said the clause in the $800bn (£567bn) US economic recovery package would send "the worst possible signal". | |
| A European Commission spokesman said the EU would launch a complaint with the World Trade Organization (WTO) if the clause remained. | A European Commission spokesman said the EU would launch a complaint with the World Trade Organization (WTO) if the clause remained. |
| Canada's ambassador to the US, Michael Wilson, had also urged the US Congress to drop the provision. | Canada's ambassador to the US, Michael Wilson, had also urged the US Congress to drop the provision. |
| Global decline | |
| The economic rescue plan has been approved by the US House of Representatives and is under discussion this week in the Senate, which could sign it off before the weekend. | The economic rescue plan has been approved by the US House of Representatives and is under discussion this week in the Senate, which could sign it off before the weekend. |
| In TV interviews on Tuesday, Mr Obama said he did not want to include measures that would signal protectionism at a time of declining world trade. | |
| "I think we need to make sure that any provisions that are in there are not going to trigger a trade war," he told TV network ABC. | "I think we need to make sure that any provisions that are in there are not going to trigger a trade war," he told TV network ABC. |
| In another interview with Fox News, he said: "I think it would be a mistake though, at a time when worldwide trade is declining, for us to start sending a message that somehow we're just looking after ourselves and not concerned with world trade." | In another interview with Fox News, he said: "I think it would be a mistake though, at a time when worldwide trade is declining, for us to start sending a message that somehow we're just looking after ourselves and not concerned with world trade." |
| In addition to the opposition from the EU and Canada, some senior US Republicans had cautioned that the Buy American measure could start trade wars. | In addition to the opposition from the EU and Canada, some senior US Republicans had cautioned that the Buy American 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. |
| It is unlikely that the package will be able to pass the Senate without Republican support. | It is unlikely that the package will be able to pass the Senate without Republican support. |