US state and local governments going all Smoot-Hawley

Telegraph:

Business leaders have told the Daily Telegraph their members have reported dramatic drops in US business because of the protectionist clauses in the president's $787 billion plan to boost the US economy.

Others have been forced to withdraw from bidding to supply stimulus-funded projects in the US, because they cannot meet state and local government requirements that projects should use only American-made products.

President Obama guaranteed the federal government would not contravene its commitments to free trade as a member of the World Trade Organisation after an international outcry over "Buy American" during the debate over the stimulus bill in February.

But state and local governments are not bound by such obligations, unless they have signed the WTO's government procurement agreements.

Rhian Chilcott, head of the Confederation of British Industry in Washington, said British companies were struggling to meet the requirements.

She said: "We have companies not bothering to go for contracts in areas such as office supplies, school supplies and heavy equipment for infrastructure spending.

"People are shrugging and walking away. They don't think it's worth the effort."

Anthony Smallwood, spokesman for the European Commission in Washington, said: "We have had companies reporting business is down and some are absolutely convinced it is because of Buy American.

...

Protectionism is a mistake. It drives up the cost of projects and hurts our ability to sell goods and service to our trading partners. I think unions are the main blame for this nonsense. This kind of kamikaze protectionism is also hurting union workers at plants that supply goods for foreign sales.