• USA Today, Wednesday, February 4, 2009 10:45 AM

A "Buy American" provision in the economic stimulus package is stirring up a contentious debate that's spreading from Washington to trading partners around the world. The Senate is considering an $885 billion bill that requires all "manufactured goods" purchased with stimulus money to be made in the U.S. The House approved a narrower bill mandating the use of domestic iron and steel.

To supporters, a "Buy American" requirement is just common sense at a time of economic crisis and rising unemployment, writes David J. Lynch. But opponents say it could breach U.S. trade commitments and ignite a disastrous round of retaliation. Both the European Union and Canada have already warned the administration against the consequences of resurgent economic nationalism. U.S. exporters such as Caterpillar and Boeing could lose lucrative foreign sales. And in a Fox News interview, President Obama cast doubt on the measure, saying, "We can't send a protectionist message."

Taro Aso, Japan's prime minister, also condemned the proposal as a violation of established norms of international trade, Mure Dickie reports in Financial Times. And Takeo Kawamura, Japan's chief cabinet secretary, said protectionism could cause the world economy to "atrophy."

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