Does 'buy American' send the wrong message?

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.

Whatever the case, Americans are still buying substantially more foreign goods and services than they are producing and selling abroad. The US current account, the broadest measure of international commerce, was about $700 billion in the red last year. This amounts to almost $2 billion a day. That deficit is "clearly unsustainable," says Charles McMillion, a Washington economic consultant. He calls for direct action to reduce imports and describes the Buy American clause in the stimulus package as "absolutely essential" to creating more jobs at home.

In contrast, a bipartisan report by 22 of the nation's top trade experts was distributed to key members of Congress last week in an attempt to persuade them that protectionism would damage US interests and could stir up countermeasures by US trading partners.

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