Senate Dilutes 'Buy American' Plan

The Senate has voted to water down the "Buy American" clause in the economic stimulus package amid fears it could trigger a trade war, Reuters reports. The requirement that stimulus-funded projects use American-made iron, steel and manufactured goods now includes the proviso that it only be applied in a manner that doesn't violate existing trade agreements. The House version contains no such guarantee.

The change would mean Canada, Mexico, the EU and some other major trading partners would be protected from the "Buy American" requirement, although it would still apply to imports from China and India, which are not covered by the same trade pacts. Sen. John McCain's call for the "Buy American" clause to be eliminated from the bill was rejected. Some Democratic lawmakers from steel-making states vowed to withdraw support for the entire package if the change stays.
(More Senate stories.)