Page 66 - Accelerating out of the Great Recession

THE NEW REALITIES

U.S.-made iron, steel, and manufactured goods. International
criticism has led to the grant of exceptions and amendments in
order to comply with WTO guidelines.
Even in its watered-down version, however, the “Buy
American” clause is likely to distort trade. Already, local authori-
ties have been conveying the message that they assume that the
production of goods takes place in the United States if a company
wants to participate in projects funded by the government. This
has prompted some Canadian provinces to retaliate, and some
non-U.S. multinationals—even those employing several thou-
sand Americans in the United States—are grumbling about pro-
tectionist behavior (although they are doing so only in private
because they fear even more problems with future contracts).
The U.S. action has led to the adoption of similar clauses in
other countries, such as the following:

1. The Chinese government announced a “Buy Chinese”
clause in May 2009 for its $586 billion stimulus package.
The clause urges government investment projects to buy
domestically made products unless products or services
cannot be obtained easily in China. In addition, several
industries were defined as “core.” This meant that, in
effect, foreigners were forbidden from participating in
the domestic business.
2. The New South Wales state government in Australia has
adopted a “Buy Australian” policy.
3. Spain’s Ministry of Industry, Tourism and Trade has
urged Spaniards to buy more local products.

More evidence of the rise of protectionist tendencies lies in
the increased number of bailout packages for companies—espe-

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