(Mostly) Good News on Trade Front in Stimulus Compromise

February 13, 2009
Although we still do not have all the details, CQ Politics is reporting that most of last week's compromise on Trade Adjustment Assistance made it back into the stimulus bill. It had been pulled from the Senate version because of demands from Senator Kyl (R-AZ) that TAA reform be linked to a date certain for voting on the free trade agreement with Colombia. While that issue was not definitively resolved, conferees apparently agreed that the expansion of TAA, summarized in Randall Soderquist's blog earlier this week, was an appropriate response to the economic crisis, as well as necessary to begin to rebuild bipartisan support for an open trade policy. Unfortunately, that signal was muddied by the retention of the Buy American provisions as expanded in the Senate (all manufactured goods, rather than just the iron and steel in the House version). It is welcome that President Obama did finally speak out against protectionist measures in the stimulus bill and that the provision was amended to make it clear that the purchasing restrictions should not be implemented in a way that would violate any international agreements to which the United States is a party. But most developing countries are not a party to those agreements and there is still a risk that aggressive implementation of Buy American provisions could trigger retaliation from our trading partners and wipe out job gains. On a positive note, World Trade Organization members agreed in a meeting of the Trade Policy Review Body on Monday that countries should do better at promptly reporting the implementation of new measures that could affect trade. Although Director-General Pascal Lamy's efforts to track and report on such measures had triggered controversy among members, they agreed that the Director-General's office should continue to monitor and report on new, potentially trade-distorting measures. Transparency and vigilance are perhaps our strongest tools at this point and this is a positive, if small, step in the right direction.


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