The U.S. Senate on Wednesday chose to retain "Buy American" provision in its roughly 900-billion-dollar economic stimulus plan despite of criticism from the nation's major trade partners and warnings of an international trade war.
With a vote of 65-31, the Senate rejected an amendment by Republican Senator John McCain which would have stripped the stimulus package of the provision.
"Should we enact such a provision, it will 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," McCain warned before the vote.
Lawmakers who support the provision argued that it would ensure stimulus dollars do not head overseas.
But McCain noted that the provision violated U.S. obligations under international trade pacts and would only serve to spark trade wars and deepen the global recession.
The controversial "Buy American" provision, included in the 819-billion-dollar stimulus bill the House passed on Jan. 28, generally prohibits the purchase of foreign iron and steel for any stimulus-funded infrastructure project.
The Senate is expected to vote on the massive tax cuts and spending package this week.
Leading business interests have warned that such provisions could trigger trade wars that only will exacerbate the slump in trade volumes and economic growth stemming from the global financial crisis.
The provision also raised worries in Canada, the United States' biggest trading partner, as well as in Europe.
It will set a bad example for other countries and could trigger a trade war, economists warned.
(Xinhua News Agency February 5, 2009)