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MONTREAL (Reuters) - A nonbinding decision by Canadian municipalities to back those towns that impose trade restrictions on the United States reflects genuine concern about U.S. policies but is not dangerous, Finance Minister Jim Flaherty said on Monday.
A meeting of mayors from towns and cities across Canada on Saturday voted for the proposal in response to a provision in the economic stimulus package passed by Congress in February. It stipulates that public works projects should use iron, steel and other goods made in the United States.
Canada complains this will bar companies from billions of dollars in business.
"I don't think it's dangerous. It's a motion at a meeting. I think it expresses a degree of concern that is felt by many of the mayors," Flaherty told reporters.
Mayors at the meeting agreed to suspend implementation of the measure for 120 days to give Canadian trade officials more time to work on the issue.
Canada sends 75 percent of its exports to the United States and would be devastated by anything resembling a trade war.
"Protectionism is bad for Canada and bad for the United States. It's bad for cities, it's bad for provinces, it's bad for American states," said Flaherty.
"I think it's a genuine concern on the parts of the mayors that they want to avoid protectionism, but I think the way to do it is to work on the issues and make sure that the Americans realize -- just as I hope most Canadians realize -- that we actually want to trade with each."
Reporting by Rita Devlin Marier, writing David Ljunggren