Sen. Dorgan wants ‘Buy American’ clause in stimulus bill

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Protectionist winds are a-blowin’, in the U.S. and abroad, as the global economy stumbles.

Sen. Byron Dorgan (D-N.D.) wants the final economic stimulus bill in Congress to include a ‘Buy American’ provision, giving ‘preference to American-produced materials and products,’ such as steel, when tens of billions of dollars of stimulus money is spent on infrastructure projects.

The U.S. Business and Industry Council is throwing its weight behind Dorgan’s efforts. ‘By including the full range of manufactured goods in the stimulus bill’s Buy American provision, the Dorgan amendment represents a major step forward in the use of the federal government’s massive purchasing power to promote domestic manufacturing,’ the council said in a statement today.

‘Any attempts to remove the amendment by multinational, outsourcing special interests should be defeated,’ said Kevin Kearns, president of the council.

Plunging demand for goods and services worldwide inevitably forces consolidation within industries and the need to slash excess production capacity, notes Richard Bernstein, chief investment strategist at Merrill Lynch & Co. in New York.

The natural response of governments is to want someone else to cut capacity. So policymakers respond with plans to protect their own industries (and jobs), at what they hope will be other nations’ expense.

The risk is that this snowballs into full-force protectionism, slashing trade.

Bernstein noted that, just as the U.S. is giving financial aid to automakers, Japan also this week announced plans to use public funds to provide capital boosts for companies.

And the Taiwanese government is in talks to use taxpayer funds to shore up the country’s struggling computer chip industry.

‘The protectionist trend is gaining strength much faster than we thought even just a few weeks ago,’ Bernstein wrote in a note to clients today.

At the World Economic Forum in Davos, Switzerland, today, the former head of the World Trade Organization pleaded for progress in the so-called Doha round of global trade talks, which have been stalled for eight years.

‘The world badly needs a confidence boost,’ said Paul Sutherland. ‘It also needs an antidote to the protectionism which is already evident in the responses to the global slowdown.’

-- Tom Petruno