U.S. Senate retains "Buy American" provision in stimulus plan

Special Report:Global Financial Crisis

WASHINGTON, Feb. 4 (Chinese media) -- The U.S. Senate on

Wednesday chose to retain "Buy American" provision in its roughly

900-billion-dollar economic stimulus plan despite of criticism from the nation's

major trade partners and warnings of an international trade war.

With a vote of 65-31, the Senate rejected an

amendment by Republican Senator John McCain which would have stripped the

stimulus package of the provision.

"Should we enact such a provision, it will only be a

matter of time before we face an array of similar protectionism from other

countries -- from 'Buy European' to 'Buy Japanese' and more," McCain warned

before the vote.

Lawmakers who support the provision argued that it

would ensure stimulus dollars do not head overseas.

But McCain noted that the provision violated U.S.

obligations under international trade pacts and would only serve to spark trade

wars and deepen the global recession.

The controversial "Buy American" provision, included

in the 819-billion-dollar stimulus bill the House passed on Jan. 28, generally

prohibits the purchase of foreign iron and steel for any stimulus-funded

infrastructure project.

The Senate is expected to vote on the massive tax

cuts and spending package this week.

Leading business interests have warned that such

provisions could trigger trade wars that only will exacerbate the slump in trade

volumes and economic growth stemming from the global financial crisis.

The provision also raised worries in Canada, the

United States' biggest trading partner, as well as in Europe.

It will set a bad example for other countries and

could trigger a trade war, economists warned.