Stimulus Package and the Buy America Controversy

Controversy has been bubbling in Congress about possible Buy America provisions in the proposed stimulus package. The House passed an $819 billion dollar package that stipulated that American steel and iron be used in infrastructure projects that result from the American Recovery and Reinvestment Act of 2009. The proposed Senate version initially included even stronger Buy America provisions, though it looks as though these will be watered down because of the dispute.

Opponents of the proposed provisions – including many European nations – believe such provisions violate trade rules and that it amounts to a declaration of war against free trade. Senate opponents including John McCain are trying to strip the bill of the Buy America provisions.

Supporters believe that a stimulus package aimed at reviving the US economy must focus its spending on US products so as to maximize the creation of American jobs. Thomas Gibson, president of the American Iron and Steel Institute stated, "What we're saying is that this is a stimulus package to promote American jobs. We ought to maximize every dollar in that bill toward that end. If you were building a bridge in West Virginia, you wouldn't bring in German workers to do it. Materials should be no different." Supporters also point out that many of the countries opposing the provisions themselves have procurement policies that violate WTO rules in similar ways. Some Congressional supporters threatening to oppose the bill if the Buy America provisions are removed.

President Obama has not yet taken a firm stand, though has said he wants to "make sure that any provisions that are in there are not going to trigger a trade war.” This issue is being seen as a test of whether President Obama is willing to reject the traditional free trade mantra in the aim of encouraging job creation and economic recovery. Stay tuned.

Chinese Currency and Trade Policy Debates

Obama's pick for Treasury Secretary Timothy Geithner recently accused China of "manipulating its currency." These allegations are not new, but are escalating recently. China is in part to blame for the credit bubble and the housing boom of 2004-07, by undervaluing its currency to keep its products cheap. Surplus cash was then available as cheap loans, some of which were used to take on the sub-prime mortgages that sparked the current economic downturn. Many economists say that China's currency is undervalued by at least 20 percent. Geithner's comment could lead to a formal complaint under US law. The US, however, does not have much leverage to force China to revalue its currency; trade protectionism could be attempted instead, which could in turn push China towards a less cooperative role in global issues. The US's huge trade deficit is nearly entirely due to China, petroleum and automotive products.  

In other China-related news there was a mixed victory for the US as the World Trade Organization ruled that China must destroy counterfeit software or movies that are confiscated by authorities and provide more legal protection to foreign products. Companies like Microsoft, Walt Disney CO and Vivendi SA have lost an estimated 3 billion in 2007 sales alone due to illegal copying of movies, music and software. The Obama administration has cited that intellectual property protection and enforcement will become a higher priority. The increasing debates about business and trade practices in China are almost certain to be an important focus of the new administration.

Coalition news and coming events

The Washington Fair Trade Coalition is happy to welcome our most recent member organization – IBEW local 191! We are pleased to have them as part of our (now 41-member) team.

Event: EFCA workshops, Feb 10^th and 11^th

The Society of Professional Engineering Employees in Aerospace (SPEEA) is hosting a workshop on Tuesday February 10^th and Wednesday February 11^th to educate people about the Employee Free Choice Act (EFCA). EFCA aims to amend the National Labor Relations Act to establish an easier system to enable employees to form, join, or assist labor union and to provide for mandatory injunctions for unfair labor practices during organizing efforts. Dinner is provided.

Event information:
Tuesday, Feb 10^th 5-7pm. Seattle Hall (15205 52nd Ave S., Tukwila WA 98188)
Wednesday, Feb 11^th, 4:30-6:30pm. Everett Hall (2414 106th St SW, Everett WA 98204)
RSVP: (425) 355-2883

Event: Mexico Unconquered, Feb 19th

Journalist and activist John Gibler will give a short talk about his new book, Mexico Unconquered: Chronicles of Power and Revolt.  The event will also include the watching a clip from the documentary, "Un Poquito de Tanto Verdad." Film-maker Jill Friedberg in attendance; Photo Exhibit: 2007 Oaxaca Uprising and the Zapatista Other Campaign; Music by Correo Aereo and Sin Fronteras. Food & Drink available!  English to Spanish interpretation available. Admission FREE. 

Event information: Feb 19^th, 7-10pm

Location: Central Cinema (1411 21st Avenue, Seattle WA 98122)

Valentines Day- The Fair Trade Way

Those looking for an opportunity to spread love and social justice this Valentine's Day might consider Fair Trade gifts for your sweetheart. Products such as Fair Trade flowers, chocolates and wine guarantee workers, farmers and others fair wages and work environments. You could make a difference in the life of workers from around the world while showing your special someone you care. The Fair Trade Federation and TransFair USA are great resources to find shops near you or to order online.

For further reading

'Buy American' Rider Sparks Trade Debate

US-Peru Trade Deal to Enter Force Despite Labour Objections

"Obama's post-recovery move" – An article discussing how President Obama may address the question of Chinese currency manipulation

"Yes, we can renegotiate NAFTA" - Canadians Push for NAFTA Renegotiation

U.S. Records Huge Trade Deficit