U.S. steel companies press for Buy American plan

WASHINGTON (Reuters) – U.S. steel companies urged congressional leaders on Tuesday to maintain a strong "Buy American" provision as part of a final economic stimulus bill sent to President Barack Obama.

The plea came as major U.S. exporters like Caterpillar and Microsoft pushed for either eliminating or substantially weakening the measure, which they say would raise the cost of public works projects funded by the stimulus bill and send a protectionist signal to the rest of the world.

Canada, the European Union and other U.S. trading partners are also closely watching congressional negotiations on the Buy American plan, which would give preference to domestic steel companies and possibly other U.S. manufacturers.

"Procurement of competitively priced steel products and specialty metals from competitive domestic sources will not cost the U.S. taxpayer more," the American Iron and Steel Institute said in a letter to congressional leaders.

"It will in fact generate payroll and income tax returns to the U.S. government as a result of stimulating American jobs," the steel companies said, adding the United States has various Buy American provisions on the books for years without causing a trade war.

House Majority Leader Steny Hoyer, a Maryland Democrat, said the Buy American provision would "continue to be an item of discussion" as the House and Senate negotiate a final version of the economic recovery package.

The Senate took a step in the right direction last week by "softening the adverse impact that total adherence to Buy American would have had," Hoyer said.

The Senate bill requires all public works projects funded by the stimulus bill to use only U.S.-made iron, steel and manufactured goods. But in a step to address some foreign concerns, senators approved an amendment requiring the provision be applied in a manner consistent with U.S. obligations under international agreements.

That would help trading partners like the European Union and Canada which have reciprocal government procurement agreements with the United States, but not countries such as China, India, Brazil and Russia which do not.

Cal Cohen, president of the Emergency Committee for American Trade, said many U.S. companies outside the steel sector believe the Buy American provision would "defeat the basic objective of the stimulus package which is to ensure the quick release of funds to create jobs."

Before work could begin on a project, government agencies would have to first issue rules to ensure that purchases comply with the Buy American measures, he said.

Under the Senate language, many U.S. manufactured goods also would not be eligible because they contain some foreign component, Cohen said.

The House Buy American provision is narrower than the Senate version because it does not cover manufactured goods.

At the same time, it does not have the Senate stipulation that the provision be implemented in a manner that complies with U.S. commitments under trade pacts.

Even some lobbyists who oppose the Buy American measure say they are skeptical that lawmakers will drop it from the bill sent to Obama. They think it is more likely that congressional negotiators will agree on language close to the Senate version.