'Buy American' US stimulus bill stirs protectionism debate

(WASHINGTON) - The mega US economic stimulus bill passed by the House of Representatives Wednesday contains a "Buy American" provision that is raising hackles in Europe.

The controversial amendment would prohibit most purchases of foreign iron and steel used in the infrastructure projects to be funded by the 819 billion dollar stimulus.

President Barack Obama's urgent push for the stimulus to revive the moribund economy with a package of tax cuts and spending in hopes of creating millions of jobs has moved to the Senate, where lawmakers are working on their own version of the plan.

Obama, who took office last week after campaigning for renegotiation of international US trade agreements, had already raised concerns in the US and abroad that the world's biggest economy, mired in recession for more than a year, would construct trade barriers to help protect jobs.

The European Union's trade commissioner, Catherine Ashton, preemptively voiced concern about the US measure.

"We are looking into the situation. ... Before we have the final text ... it would be premature to take a stance on it," Ashton's spokesman, Peter Power, said in Brussels.

"However, the one thing we can be absolutely certain about, is if a bill is passed which prohibits the sale or purchase of European goods on American territory, that is something we will not stand idly by and ignore," he said.

The US provision bars spending of the funds made available by the legislation on any infrastructure project "unless all of the iron and steel used in the project is produced in the United States."

Exceptions would be made if the head of the federal department or agency determines that applying the provision "would be inconsistent with the public interest"; there was an insufficient quantity US iron and steel of satisfactory quality; and inclusion of US iron and steel would increase the cost of the overall project by more than 25 percent.