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VANCOUVER (Reuters) - Alaska can use an existing British Columbia ferry terminal for several more years if Canada enforces an order blocking so-called "Buy America" purchasing rules from being applied to its reconstruction, a state official said on Tuesday.
A $15 million plan to overhaul the Prince Rupert ferry terminal, which is located in Canada, has escalated into a trade dispute with the United States.
Alaska has refused to seek a waiver to the controversial law, designed to protect U.S. companies from foreign competition in transportation infrastructure projects.
That prompted Canada on Monday to fight back by invoking rarely used anti-sanction laws that would prevent bidders on the project from agreeing to use only U.S.-made iron and steel, potentially delaying construction.
Bidding for the contract opens on Wednesday.
"If there is some inordinate delay, the Alaska Marine Highway System can maintain its Prince Rupert operations at normal standards over the next several years until we sort this out," said Patricia Eckert, associate director of international trade for Alaska.
Eckert did not elaborate on how long the current facilities could be used, but noted they are well maintained. The demolition and reconstruction of the terminal, located on the outskirts of the coastal city of Prince Rupert, is currently expected to be completed by March 2016.
Eckert added that the contract is open to Canadian companies and Canadian workers stand to benefit.
An undated call for bids posted on an Alaska government website clearly states that project falls under Buy America provisions, as it is partially funded by the U.S. Federal Highway Administration.
Ottawa has called the rules "protectionist" and had lobbied Alaska to seek a waiver so that Canadian iron and steel products could also be used.
Rudy Husny, a spokesman for Canada's International Trade ministry, said once the contract is awarded, the federal government will present the winning bidder with the order stating that the Buy America provisions cannot be followed.
"If the company decides to go ahead and ignore this, they will be contravening the order," he said, adding that possible violations will be investigated by the Royal Canadian Mounted Police.
If found guilty, companies and individuals could face steep fines, along with jail time.
Alaska operates the Prince Rupert ferry terminal as part of its Alaska Marine Highway System. The reconstruction of the terminal and marine facilities are part of its long-term lease with the Prince Rupert Port Authority.
Editing by Lisa Shumaker