by MONITOR
SUDDENLY, President Obama is having a baptism of fire. His problem with the tax-evasion misdemeanours of some of his nominees for senior posts is serious but probably not lasting. Of much greater importance is his trouble with the “buy American” provisions of his fiscal stimulus Bill now being considered by Congress. How the requirement that “all manufactured goods paid for with taxpayers' money should be produced domestically” ever got into the Bill is mystifying. The provision would range from iron and steel to a wide range of items of everyday use. It is more difficult to think of what would be excluded than of what would be covered. After protests from Canada, the European Union and many other nations with which the United States has trading agreements, President Obama persuaded congress to use different language - “the provision should be applied in a manner consistent with US obligations under international agreements” -- but it is not difficult to see a lot of wriggle-room in that vague formulation.

It is only six weeks since the then President-elect Barack Obama indicated his acceptance of the resolution passed by the G20 meeting in Washington that specifically spoke of the “critical importance of rejecting protectionism” in trade. Mr Obama has form in this area; during his election campaign he spoke in favour of a rethink on the North American Free Trade Agreement with Canada and Mexico. He must now think very clearly about the international implications of a “Buy American” policy.