Feb 12 (Reuters) - The U.S. Senate has watered down "Buy American" provisions in its $900 billion stimulus bill to ensure they are consistent with U.S. obligations under international agreements.
Critics of the provisions had feared they could trigger a trade war by prompting other countries to enact similar measures shutting American firms out of their markets, fuelling protectionism as countries respond to the economic crisis.
The discussion centres on government procurement -- purchases by governments such as for infrastructure.
NAFTA AND WTO
The Senate move is seen as ensuring that provisions requiring that any manufactured goods purchased under public works projects are made in the United States does not conflict with U.S. agreements under the North American Free Trade Agreement (NAFTA) and World Trade Organisation (WTO).
The three NAFTA partners -- the United States, Canada and Mexico -- agreed to provide each other with access to their government procurement markets.
THE WTO'S GOVERNMENT PROCUREMENT AGREEMENT
The WTO's 153 members have agreed not to discriminate against each other, or favour domestic producers of goods and services over foreign competitors.
But rules covering government procurement are subject to a separate, voluntary agreement, which so far only 40 members have signed up to. China and India are not among them -- and so could be shut out of U.S. infrastructure projects even under the revised Senate provisions.
The WTO estimates that government procurement (before the stimulus packages now under discussion) accounts for 15-20 percent of gross domestic product in developed countries. But only a part of this is covered by the WTO agreement.
MEMBERS OF THE WTO PROCUREMENT AGREEMENT
Taiwan is the most recent WTO member to sign up to the accord, in December last year.
The others are the Dutch territory of Aruba, Canada, the European Union and its 27 member states, Hong Kong, Iceland, Israel, Japan, Liechtenstein, Norway, Singapore, South Korea, Switzerland and the United States.
Albania, China, Georgia, Jordan, Kyrgyzstan, Moldova, Oman and Panama are currently negotiating their membership.
Armenia, Croatia, Macedonia, Mongolia, Saudi Arabia and Ukraine also agreed to negotiate membership of the procurement agreement when they joined the WTO.
-- For a related news story, please click on [nN12436678] (For more on the WTO procurement agreement, go to: http://www.wto.org/english/tratop_e/gproc_e/gproc_e.htm ) (Reporting by Jonathan Lynn; Editing by Jon Boyle)