EU on US "Buy American": Cut It Out or We Fight

The United States has been slapped around by its European trade partners over the former's ridiculous plan to tape a big "Kick Me in the WTO" sign on its back. The EU pointed out that, well, it was prepared to kick the US in the WTO should it attempt to block foreign steelmakers from bidding in infrastructure contracts. There is also something else to this story non-British readers should note. Prime Minister Gordon "British Jobs for British Workers" Brown is currently being pummelled for previously making that flat out xenophobic appeal drawn straight from the playbook of right-wing nationalists concerning the employment of British labor. It serves the Anglophone good job Brownie right that he now has to calm local trade unions walking off the job in protest of allowing Portugese and Italian energy workers to ply their trade in Blighty. Which, of course, they are perfectly entitled to as EU member citizens. That should teach the Brits not to make these blatantly racist appeals to protectionism. "British jobs for British workers," right?

It's a festival of protectionism, I tell you. Worse, Brown is handcuffed by the "special relationship" from calling incipient US protectionism a spade. International economic diplomacy sure is interesting circa 2009. From the Times:

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. “I want to see what kind of language we can work on this issue. 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.”

Mr Brown does not want to join criticism of President Obama’s stimulus proposals, which he sees as vindicating his own, but the Prime Minister remains strongly anti-protectionist, resisting calls yesterday for more safeguards for British workers.

Trade unions demanded a tightening of the law on the use of foreign workers as hundreds again walked out at the Lindsey oil refinery in protest at the hiring of Italian and Portuguese workers, and energy workers around the country followed suit.

A spokesman for the Prime Minister refused to condemn the “Buy American” clause. When pressed, the spokesman said that Mr Brown had repeatedly made clear that he was opposed to protectionist measures. He would not say, however, whether Britain was lobbying the new Administration to drop the clause. Mr Brown remained in favour of President Obama’s decision to inject cash into the economy. “We are supportive of the approach in the US in terms of their fiscal policy...”

The Commission believes that the US move would violate international trade rules policed by the Geneva-based World Trade Organisation (WTO). The Commission also made clear that it was keeping an equally vigilant eye on protectionist moves within Europe as France prepared to insist that its motor manufacturers buy their parts only from French companies.

UPDATE: In response to complaints from trading partners, the US Senate has made this change in the wording:

Senators, on a voice vote, approved an amendment requiring the Buy American provisions be "applied in a manner consistent with U.S. obligations under international agreements."