Monday

4th Jul 2022

EU wary of US protectionism threat

  • The US Senate is currently debating the bill (Photo: EUobserver)

The EU is watching closely to see whether a "Buy American" provision relating to steel will make it into the final version of the US stimulus plan bill to be signed by Barack Obama, fearing it will affect European exports.

The provision forcing contractors to use only US-made steel in development projects funded by the proposed $825 billion (€630 billion) stimulus plan is contained in a version approved by the House of Representatives on Wednesday (28 January). The Senate is currently debating the bill.

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Speaking at a daily press briefing on Thursday, spokesperson Peter Powell said trade commissioner Catherine Ashton was monitoring the situation.

"We are looking into the situation. ...Before we have the final text ...it would be premature to take a stance on it," he said.

"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 continued.

Under the current proposal, foreign steel can only be used for infrastructure projects funded by the stimulus plan if the head of a federal department decides that using solely US steel would increase costs by more than 25 percent.

The European Confederation of Iron and Steel Industries, Eurofer, demanded that the EU contest the provision in the World Trade Organization, saying it was clearly in breach of current trade rules.

Speaking at the World Economic Forum in Davos, WTO chief Pascal Lamy said he was concerned that countries would increasingly turn to protectionist measures during the economic downturn.

"It is natural in such a crisis that there is a big call for protection. But that does not mean there should be protectionism," he said.

He also urged world leaders to use April's G20 meeting in London to help conclude the Doha round of trade talks.

Fears of increasing protectionism in the face of the global crisis have also been raised elsewhere.

Earlier this week, a group of 19 states - known as the Cairns Group - criticised the EU for its recent decision to re-start export subsidies on dairy products.

"This is not the leadership we require from key economies at this point in time," said the group, which includes Australia, Brazil, Canada, South Africa and Indonesia.

The EU dairy sector is currently facing severe difficulties due to plummeting milk prices.

Agriculture commissioner, Mariann Fischer Boel, warned last week that many EU farmers were facing bankruptcy.

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