Obama wants to avoid 'trade war'

Barack Obama is hoping to get the stimulus package approved this week

US President Barack Obama has said he wants to avoid economic stimulus measures that would signal protectionism or spark a trade war.

Mr Obama was responding to international criticism of a "Buy American" clause in the $800bn (�567bn) US economic recovery package.

The clause seeks to ensure that only US iron, steel and manufactured goods are used in projects funded by the bill.

The EU said the clause would send "the worst possible signal".

A European Commission spokesman said the EU would launch a complaint with the World Trade Organization (WTO) if the clause remained.

Working the language

European and Canadian ambassadors to Washington had already warned that the clause could provoke protectionism and trigger retaliatory moves.

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The rescue plan has been approved by the US House of Representatives and is under discussion in the Senate this week, which could sign it off before the weekend.

But in TV interviews on Tuesday aimed at drumming up support for the stimulus package, Mr Obama said he did not want to include measures that would signal protectionism at a time of declining world trade.

"I think we need to make sure that any provisions that are in there are not going to trigger a trade war," he told TV network ABC.

In another interview with Fox News, Mr Obama said he wanted "to see what kind of language we can work on this issue".

"I think it would be a mistake though, at a time when worldwide trade is declining, for us to start sending a message that somehow we're just looking after ourselves and not concerned with world trade," he said.

On Monday, EU Ambassador to Washington John Bruton said that, if passed, the measure could erode global leadership on free trade.

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"We regard this legislation as setting a very dangerous precedent at a time when the world is facing a global economic crisis," he said.

Australian Trade Minister Simon Crean welcomed President Obama's assurance to world leaders that America does not want to engage in a trade war:

"I think it's a very important signal from the President, because not only does it show that he's heard the concerns that we and others have raised about the buy America campaign.. But his statement shows a real commitment to openness in world trade."

Republican worries

In addition to the opposition from the EU and Canada, some senior US Republicans have cautioned that the Buy American measure could start trade wars.

The White House has said it is reviewing the Buy American part of the stimulus bill, although Vice-President Joe Biden said last week that it was legitimate to have some portion of it in the final measure.

Mr Obama has urged the US Congress not to delay his stimulus plan over modest differences.

It is unlikely that the package will be able to pass the Senate without Republican support.

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