Remember the olden days when a president got panned for “acting unilaterally”? Here’s a huge faux-pas, and only in the first two weeks of the new administration:
President Obama to water down ‘Buy American’ plan after EU trade war threat
The European Union warned the US yesterday against plunging the world into depression by adopting a planned “Buy American” policy, intensifying fears of a trade war.
The EU threatened to retaliate if the US Congress went ahead with sweeping measures in its $800 billion (£554 billion) stimulus plan to restrict spending to American goods and services.
Gordon Brown was caught in the crossfire as John Bruton, the EU Ambassador to Washington, said that “history has shown us” where the closing of markets leads — a clear reference to the Depression of the 1930s, triggered by US protectionist laws.
Last night Mr Obama gave a strong signal that he would remove the most provocative passages from the Bill.
“I agree that we can’t send a protectionist message,” he said in an interview with Fox TV.
Well, if you put into law “buy American” clauses, what would you the US’s foreign partners will think about it? It is protectionism.
It’s come to the point where the EU is lecturing the US against protectionism, and rightly so:
The EU warnings came in letters to US political leaders in Congress, Timothy Geithner, the Treasury Secretary, and Hillary Clinton, the Secretary of State. Mr Bruton urged them to respect the decision taken by the G20, the world’s leading economic nations, in Washington last November to resist protectionism as a defence against the crisis. They are expected to meet again in London in April.
“Failing this risks entering into a spiral of protectionist measures around the globe that can only hurt our economies further,” he wrote.
“Open markets remain the essential precondition for a rapid recovery from the crisis, and history has shown us where measures taken contrary to this principle can lead us.”
Let me repeat that:
“Open markets remain the essential precondition for a rapid recovery from the crisis, and history has shown us where measures taken contrary to this principle can lead us.”
Under the “Buy American” clause passed by the US House of Representatives, American iron and steel must be used in construction projects that form part of the recovery plan. The US Senate wants to extend the scope of the clause before the Bill goes to the White House for approval.
The European Commission’s powerful trade department, a bastion of open markets formerly headed by Lord Mandelson, said yesterday that the “Buy American” clause was “the worst possible signal” that could be sent to world trade.
A spokesman said: “We are particularly concerned about the signal that these measures could send to the world at a time when all countries are facing difficulties. Where America leads, many others tend to follow.”
Smoot-Hawley Fiasco Averted, at least for now.
Or, as Gina Cobb put it, Pardon, But President’s Obama’s Training Wheels Are Showing
UPDATEMatt Welch lets it rip:
The bad news: What kind of historically illiterate, economically retrograde, and bogusly populist jerktards would even CONSIDER, for just one second, that a reasonable approach to this Great Depression 2.0 they keep telling us about is reviving the ghost of Smoot-Hawley? Not only are Democrats and their already unbearable apologists grossly misusing the analogy of Herbert Hoover (much in the way many continue to pretend that George W. Bush was a deregulation zealot), they’re now going ahead and aping the 31st president’s worst policies.
And don’t let Obama’s above-it-all filibustering fool you: As Reason has been documenting for two years, the president ran and won a campaign that on a daily basis bashed trade agreements, particularly with troubled Mexico and anxious China. And his party found success swapping its pro-trade stance of the mid-’90s for cheapjack “Buy American” bullshit in the late aughts.
