Australia to check U.S.-Australia FTA for American protectionism

Special Report:Global Financial Crisis

CANBERRA, Feb. 5 (Chinese media) -- Australia will examine its free trade deal with the United States to see if Washington is flouting its obligations under the pact if the United States adopts a "Buy American" clause for new stimulus projects.

America's key trading partners are alarmed at the clause, which seeks to ban the use of foreign steel and iron in major U.S. infrastructure projects.

Australian Prime Minister Kevin Rudd warned on Thursday that a reversion to protectionism was a "spear at the heart" of the Australian economy because so many jobs are generated by export markets.

If the U.S. congress passes the measure, Australia is expected to lose 500 million Australian dollars (315 million U.S. dollars) in steel exports to the United States.

Australia's Trade Minister Simon Crean, who has warned such protectionism by the U.S. will only prompt retaliation by other countries, urged the U.S. Senate to reverse its decision.

"Make no mistake, this call by the U.S. Senate to save jobs is nothing more than a reversion to protectionism and will not work," Australian Associated Press quoted Crean as saying.

"The benefits from the U.S. fiscal stimulus package will be undermined by retaliation from other nations," he warned.

Australia, which struck a free trade deal with the U.S. in 2004, is looking at whether the U.S. could be breaching its obligations under the agreement.