Protection of your own is defensible, Mr President

Feb 5 2009 by Peter Jackson, The Journal

A YEAR ago – give or take a couple of weeks – I wrote in this column about haggis. It was nothing to do with Burns Night, but rather to point to a danger facing the world economy.

Scotland was lobbying the US to lift a ban on haggis, imposed in the wake of the Mad Cow Disease outbreak. Using that improbable springboard, I warned of the danger that, as their economies worsened, countries would find pretexts for discouraging imports.

I pointed out that if countries around the world sought to shore up their domestic economies at the expense of their neighbours, it would, in the long run, deal a body blow to world trade and damage everybody.

While nobody other than the Scots were really worried about the US treatment of haggis, the “Buy American” clause in the US$800bn economic recovery package now before congress is causing more widespread concern.

The clause has been inserted to ensure that only US iron, steel and manufactured goods are used in any projects funded under the terms of the bill.

An EU Commission spokesman has said this sends out the worst possible signal and that if the clause remains, the EU will complain to the World Trade Organisation. The Canadian and EU ambassadors also warned that this could spark retaliation.

I am not minded to be well- disposed to the new US administration but it does strike me that the reasoning behind this clause is defensible.

Imagine the reaction of the hard-pressed US taxpayers if any material proportion of this $800bn was spend on imports.

The motives lying behind it are not unlike those behind this paper’s laudable Think North East First campaign and are certainly much less cynical than the motives behind Gordon Brown’s “British Jobs for British Workers” pledge.

But we have increasing cause to be worried. During the US presidential election campaign, Obama made noises about revisiting the North American Free Trade Agreement and he will come under pressure to deliver on that.

The dispute at the Lindsey Oil Refinery in North Yorkshire shows how quickly domestic pressure for protection can grow and I suspect we’ll see over the coming days just how hard it can be to resist.

Peter Jackson is a freelance writer and former business editor of The Journal – p.jackson77@btinternet.com