Commentary: "Buy American" Sets Dangerous Example

    The international trade environment might exacerbate rapidly amid rising protectionism and the global battle with the nose-diving economy -- which might become the worst since the World War II if the International Monetary Fund predictions come true -- could be prolonged.

    As many governments pursued all reasonable means available in effort to reverse the downward trend, the specter of trade protectionism started to haunt. Quality standards and anti-dumping measures are being more frequently used these days to build up trade barriers.

    The "Buy American" clause, if anything, has brought out in the open the U.S. government's stance of curbing imports to retain jobs and demand on home turf.

    Yes, the wording of the final provision was softened by including language that required the U.S. to implement the clause consistent with its trade commitment. But the watered-down wording happened to reflect the tough balance the government might barely strike between protecting domestic manufacturing and avoiding retaliation from major trade partners.

    Nearly two years after the outburst of the Wall Street sub-prime crisis, de-globalization has evolved into a significant menace to the current world economy. It seems the sentiment of sweeping the snow from one's own doorsteps and shifting troubles to others has gained popularity among politicians.

    The "Buy American" provision may start a bad trend that gives more countries excuses to throw out restrictions and build up trade barriers.

    President Obama's endorsement would indicate that in front of the unprecedented financial crisis, the U.S. government -- pilot of the world's biggest economy and long-time advocate of free trade -- lacked the sincerity to tide over the tough times with the rest of the world.

    By wielding its "Buy American Law" when the economy was difficult, the U.S. government showed its skills and seasonedness in the use of international trade rules and its prime objective to securing national interests from cultivating global trade arena.

    But we also recognized its selfishness because job losses, nose-diving economy, shrinking investment and confidence decline have become the common challenges plaguing the world after Wall Street sub-prime mortgage crisis evolved into credit crises for both individual consumption and corporate manufacturing.

    Although the American economy at the epicenter of the financial crisis has been seriously hit, the government's global clout and economic strength remain unrivaled. There are many smaller and less wealthy countries facing much worse situations.

    After the U.S. officially announced last December its economy had slipped into recession, a dozen of economies reported contraction for two consecutive quarters -- a widely accepted gauge in economics for recession.

    In the Euro Zone, voices for hiring local, buying local, forbidding factory outsourcing and imposing higher imports tariffs were loud after the economy registered contraction for three consecutive quarters in the fourth quarter of last year.

    The Financial Ministers of Group-7 vowed on Feb. 14 in their Rome summit to avoid trade protectionism. We have every reason to worry that with the pressure on job expansion rising, many governments might follow the trail of the U.S. to chance with a deteriorating trade environment.

    There is no need to go into the details of the jeopardy of the Smoot-Hawley Tariff Act passed by the American Congress in the 1930s. Many economists concluded that the sweeping trade wars it triggered afterward contributed heavily to the decade-long Great Depression.

    As the wheel of history has turned into the 21st century, international trade has taken a much larger percentage in its contribution to the world economy. The destructive power of protectionism is broader geographically and deeper in time.

    Burying a "buy local" provision into economic stimulus packages was nothing but a stopgap which would harm both others and oneself in the long term, because protection would hamper industrial innovation and hurt the interests of domestic consumers and importers.

    Moreover, the global outsourcing of business for capital and materials also made it increasingly difficult to define "indigenous enterprises" and "homemade products," which would no doubt weaken the implementation of government stimulus plans as remedy should come fast.

    We are proud to see that the Chinese government has taken its action with an open mind. Although weakening external demand has closed down its factories and pushed up its employment pressure, China did not embed a "Buy China" provision into its four-trillion-yuan stimulus package. Government subsidies for home appliances to be sold in the rural areas cover all brand names that have won public bids including foreign names such as Panasonic, Nokia and Siemens.

    Facing the crisis, no nation can pursue a better life alone. Collaboration, opening up and pushing forward multi-lateral trade system are the only way for the world economy to cast off the shadow of recession. For big economies with global influence, such foresight is particularly crucial.