WASHINGTON - AFTER passing a 'Buy America' provision in the country's massive economic stimulus plan, US legislators could next be pushing for a 'Hire American' clause that might further stir fears about protectionism.
Two senators are reported to be demanding that businesses benefiting from the rescue plan certify their workers' citizenship so that newly created jobs go to Americans instead of illegal immigrants, according to the Wall Street Journal.
It is unclear how much support this latest provision enjoys in the Senate, though it is certain to amplify concerns that the US actions are setting the stage for retaliatory measures by other countries, which would worsen the current economic slump.
'(President Barack Obama) should keep in mind that it was a wave of protectionist trade measures, triggered by the infamous Smoot-Hawley tariff in the United States and quickly emulated by most Europeans, which contributed mightily to the Great Depression,' Dr C. Fred Bergsten, director of the Peterson Institute for International Economics, wrote in a note on the think-tank's website.
The 'Buy America' provision in the US$819 billion (S$1.2 trillion) economic stimulus plan, which the US House of Representatives passed on Thursday, has already drawn sharp protests from major trade partners like Canada and the European Union.
Major domestic business groups and industrial giants who thrive on their access to the global market have also openly opposed the measure.
The provision, which builds on the Buy American Act in 1933, states that all public works projects financed by the economic rescue package must be built with US iron and steel.
The Senate, which will begin deliberating its own version of the stimulus package next Monday, is said to be readying plans to expand this 'Buy America' provision to ensure all government-funded projects use mostly products made in the US.
However, passage of the 'buy and hire American' provisions is not yet a certainty. A team of negotiators from the House and Senate will meet next month to smooth over their differences in the stimulus package before presenting the final version to Mr Obama.
Observers said the impact of the provisions would also depend on how they were interpreted and implemented. The 'Buy America' provision, for instance, can be side-stepped if it increases the cost of any project by over 25 per cent.
It can also be waived if deemed to be 'inconsistent with public interest', or if US steel is not available in sufficient quality or quantity.
The United States imports about 20 per cent to 25 per cent of steel used domestically, according to the American Institute for International Steel, an amount domestic producers are unlikely to make up for in the short term.
Much also depends on the interpretation of the specific terms. For instance, would steel produced by the US-based mills of foreign companies be considered 'US steel'?
The 'Hire America' provision might also be self-defeating in the end as freshly unemployed American office workers may not all want the new construction jobs on offer.
Two senators are reported to be demanding that businesses benefiting from the rescue plan certify their workers' citizenship so that newly created jobs go to Americans instead of illegal immigrants, according to the Wall Street Journal.
It is unclear how much support this latest provision enjoys in the Senate, though it is certain to amplify concerns that the US actions are setting the stage for retaliatory measures by other countries, which would worsen the current economic slump.
'(President Barack Obama) should keep in mind that it was a wave of protectionist trade measures, triggered by the infamous Smoot-Hawley tariff in the United States and quickly emulated by most Europeans, which contributed mightily to the Great Depression,' Dr C. Fred Bergsten, director of the Peterson Institute for International Economics, wrote in a note on the think-tank's website.
The 'Buy America' provision in the US$819 billion (S$1.2 trillion) economic stimulus plan, which the US House of Representatives passed on Thursday, has already drawn sharp protests from major trade partners like Canada and the European Union.
Major domestic business groups and industrial giants who thrive on their access to the global market have also openly opposed the measure.
The provision, which builds on the Buy American Act in 1933, states that all public works projects financed by the economic rescue package must be built with US iron and steel.
The Senate, which will begin deliberating its own version of the stimulus package next Monday, is said to be readying plans to expand this 'Buy America' provision to ensure all government-funded projects use mostly products made in the US.
However, passage of the 'buy and hire American' provisions is not yet a certainty. A team of negotiators from the House and Senate will meet next month to smooth over their differences in the stimulus package before presenting the final version to Mr Obama.
Observers said the impact of the provisions would also depend on how they were interpreted and implemented. The 'Buy America' provision, for instance, can be side-stepped if it increases the cost of any project by over 25 per cent.
It can also be waived if deemed to be 'inconsistent with public interest', or if US steel is not available in sufficient quality or quantity.
The United States imports about 20 per cent to 25 per cent of steel used domestically, according to the American Institute for International Steel, an amount domestic producers are unlikely to make up for in the short term.
Much also depends on the interpretation of the specific terms. For instance, would steel produced by the US-based mills of foreign companies be considered 'US steel'?
The 'Hire America' provision might also be self-defeating in the end as freshly unemployed American office workers may not all want the new construction jobs on offer.
