Barry Parker- Opinion March 2009

Obama’s Rust-belt campaign rhetoric about limiting imports was on the minds of politicians as they attempted to insert “Buy American” provisions into portions of legislation dealing with infrastructure spending.

In theory, this might help keep jobs in America. Never mind that coastal areas, which will benefit from road and bridge repairs, typically consume non US-made steel, in part, because it’s cheaper to move it on ships from thousands of miles away, rather than through surface transport (from shorter distances).

As comments from California’s Port of Stockton suggest, movements of steel, through US ports, are an important cargo. Preliminary 2008 data suggests that some 22m tonnes of finished steel products moved through US seaports. Several million more tonnes of semi-finished steel (for example, slabs to be re-rolled into higher value products) were imported.

But the pejorative and even toxic implications of “Buy American” extend way beyond cargoes of steel coming in from China, Korea, the European Union and the Ukraine – to name some major seaborne origins. The looming danger is that trading partners (already dealing with their own nationalistic sentiments at home) could impose restrictions on US goods.

The economic dramas of 2008 have shown how unpredictably and violently that matters can lurch out of control. So, in a networked and globalised trading system, restrictions would possibly multiply as a trade war erupts. Ports all over the world, already suffering from reduced flows across the commodity and finished goods spectrum, would be the losers in all this.

Happily, President Obama has eased up on the protectionist sentiments – but he can only prod, not command. Law-makers, still thrashing through the exact provisions of the stimulus package, are confronted with grim employment statistics. Another US war, this time battled out on the trade front, might actually back-fire, costing even more American jobs.

Globalisation (fuelled by free trade) is here to stay. Port interests should be vociferous in pointing this out to their legislators.