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Will the "Buy American" Provision Mean More Ohio Jobs?

Blast furnace being tapped
Blast furnace being tapped

Patrick Gallagher became a union man more than 30 years ago. He started as a laborer for Republic Steel. A lot has changed since then.

GALLAGHER: "At one time, there were nine blast furnaces in Cleveland. Today I believe there are two"

Gallagher is a United Steelworkers official in Northeast Ohio. He believes the "Buy American" provision in the stimulus will bring back some of the jobs Ohio lost to foreign competition.

The provision mandates that American-made steel and manufactured goods are used in public works projects funded by the stimulus plan. Democratic Congresswoman Betty Sutton of Copley Township is a strong supporter.

SUTTON: "It just ensures that American tax dollars are supporting American workers doing the work that we need to have done."

Sounds pretty reasonable, right? But the provision has fueled international tension. Brazil is threatening to challenge the measure's legality at the World Trade Organization. Chinese officials say it will "poison the world economy." They could retaliate with trade restrictions of their own.

So at President Obama's behest, the provision was softened in its final form. It won't apply if doing so violates trade agreements, raises a project's cost by 25 percent or if there are not enough American products available.

That change comforted Michael Bryant. Ontario's Minister of Economic Development says Canadians initially worried that "Buy American" would hurt their steel industry, which sends 40 percent of its product south to the U.S.

BRYANT: "There was some nervousness when the protectionist impulse reared its head, but there was a lot of anticipation and relief with the president stepped up and said we have to strike a balance and meet our trade agreements."

The United Kingdom issued warnings about the damaging protectionist spiral that could result from actions like the U.S. has taken. But Congresswoman Sutton says its time to level the playing field with countries like China.

In recent years China subsidized its steel industry. It then dumped steel at prices far below market value into the U.S. From Pittsburgh to Lorain - the steel industry is still struggling to find its footing.

SUTTON: "U.S. Steel in Lorain was forced to lay off 120 workers. The Republic plant was forced to lay off approximately 900 workers as they lost orders. This provision isn't about far off theories and ideas. It has a real impact on our friends and neighbors."

If nothing else, Sutton says the provision could help stop the hemorrhaging of more jobs in her district.

But according to some experts, history proves that even small protectionist measures can have huge, negative, long-term impacts. Cleveland State public policy professor Mark Rosentraub:

ROSENTRAUB: "The economic protection that countries went into after the start of the Great Depression lead to the greatest conflict in world history. That's why you need a world wide solution that ties countries together but doesn't isolate them."

Rosentraub and other experts say economic nationalism is a slippery slope. Already France and Italy are subsiding automakers to keep jobs in country. When one country institutes protectionist measures, others follow suit. And that - Rosentraub says - was precisely what deepened the Great Depression and helped cause World War II. For now, the "Buy American" provision is being received by most countries as more protectionist symbol than substance.

Caitlin Johnson, 90.3