Welcome Developments on Trade

Yesterday, President Obama broke his long silence about the Buy American provisions in the congressional spending bills. In an interview with ABC’s Charlie Gibson, Obama expressed support in principle for removing the provocative language to expand Buy American provisions:

CHARLES GIBSON: A couple of quick questions. There are “Buy America” provisions in this bill. A lot of people think that could set up a trade war, cost American jobs. You want them out?

PRESIDENT OBAMA: I want provisions that are going to be a violation of World Trade Organization agreements or in other ways signal protectionism. *** I think that would be a mistake right now. That is a potential source of trade wars that we can’t afford at a time when trade is sinking all across the globe. (***Per the White House, President Obama misspoke and meant to say, “I want provisions that are not going to be a violation of World Trade Organization agreements or in other ways signal protectionism.” )

CHARLES GIBSON: What’s in there now? Do you think that does that? Do you want it out?

PRESIDENT OBAMA: I think we need to make sure that any provisions that are in there are not going to trigger a trade war.

And in an interview with Fox, the President said:

I agree that we can’t send a protectionist message…I want to see what kind of language we can work on this issue. I think it would be a mistake, though, at a time when worldwide trade is declining, for us to start sending a message that somehow we’re just looking after ourselves and not concerned with world trade. (my emphasis)

It looks like President Obama gets it, although I would be more convinced of that if his last statement didn’t seem to regard “world trade” and “just looking after ourselves” as mutually exclusive. More engagement in world trade is one of the best ways to look after ourselves.

Finally, just a word of caution to our friends in Europe and Canada, where this morning’s newspapers are gleeful about the development: even though the U.S. president opposes the Buy American restrictions, the Congress still needs to strip out those provisions. If Congress keeps those provisions in a final spending bill, which passes both chambers of Congress, it’s going to be very tough for the President to veto the legislation.