German Econ Min:US Stimulus' 'Buy American' Clause 'Bad Model'

Germany's economics minister said Tuesday that the so-called "Buy American" provision in the newly enacted U.S. economic stimulus package could serve as a "bad model" for other countries.

The clause stipulates that companies purchase "steel, iron and other manufactured goods" made in the U.S. unless certain exceptions apply. The clause could cause concerns among the U.S.'s trading partners ahead of next month's summit of leaders from the Group of 20 nations in London.

Noting that the U.S. is a "major player" in world trade, Karl-Theodor zu Guttenberg, Germany's federal minister of economics and technology, said the Buy American clause could encourage other nations to include similar measures in economic stimulus plans, possibly hurting global trade.

"I feel the Buy American clause could serve as a bad model" for stimulus programs in other countries, zu Guttenberg said at a luncheon hosted by the Peterson Institute of International Economics in Washington.

He added, "It is only natural that it [the U.S.] should comply with its own trade commitments."

He also called on the U.S. to take a leading role in revitalizing the Doha round of trade talks, and set a goal of completing the talks by the end of 2009. "I look to the U.S.A. for its support," zu Guttenberg said. An agreement in the Doha round "won't happen without it."

Zu Guttenberg also defended Germany's actions to combat the global economic crisis, saying that the country has enacted programs "providing a fiscal stimulus" of $125 billion, or 4% of its gross domestic product. He rejected criticism that Germany hasn't done enough to combat the crisis.

"There are some rumors floating around the city here as well that attempt to state other things, and we have to state this is not true," zu Guttenberg said.

-By Josh Mitchell, Dow Jones Newswires; 202-862-6637; [e-mail]

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(Christopher Conkey of the Wall Street Journal contributed to this story)