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Does 'buy American' send the wrong message?

An economic stimulus package clause raises concerns of repercussions by US trading partners.

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Many officials in the United States and abroad fear the global economic slump will revive protectionism. The immediate cause for concern is a "Buy American" clause in the $900 billion economic stimulus package now moving through Congress.

A probable casualty of the recession already is the Doha Development Round. The goal of these worldwide negotiations, started in 2001, is to further reduce barriers to international trade and commerce.

But this round just went into "a deep freeze," says Harald Malmgren, a Washington economic consultant who helped negotiate the successful 1964-67 Kennedy Round of trade talks. It's "virtually impossible" to liberalize trade in a synchronized world recession, he adds. World trade and shipping are now declining.

In an attempt to revive the stalled Doha talks, key trade ministers met last month on the sidelines of the World Economic Forum in Davos, Switzerland. But the private session "ended in acrimony," says Mr. Malmgren.

Afterward, Pascal Lamy, director-general of the World Trade Organization, issued a statement expressing hope that an April 2 meeting in London of the Group of 20, which includes the world's biggest trading nations, will "provide further impetus" to the negotiations. Malmgren suspects the talks have been frozen so often they have "freezer burn," and will be just dumped in the garbage.


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