June 9, 2009 / 5:29 PM / 8 years ago

Canada, U.S. businesses assail "Buy American" rules

<p>A large "Buy American" sign, in support of Detroit's auto industry, is seen in the back of an auto scrap yard in Detroit, Michigan May 18, 2009.Rebecca Cook</p>

WASHINGTON (Reuters) - "Buy American" provisions in the U.S. economic stimulus package will cost jobs in Canada and the United States, Canada's U.S. ambassador and a group of U.S. businesses told Congress on Tuesday.

The provisions have hurt jobs in the water and sewage sector on both sides of the border, said Guy Saint-Jacques, deputy head of mission at the Canadian Embassy, adding he did not have any estimates of job losses.

"It's important to stop the contagion of those Buy American provisions," Saint-Jacques told reporters.

The United States and Canada are each other's largest trade partners, with close to $600 billion bilateral trade in 2008.

Canada sends about 75 percent of its exports to the United States. Trade with Canada supports about 7 million U.S. jobs, Saint-Jacques said.

In February Congress passed the $787 billion stimulus package with a provision that public works projects should use iron, steel and other goods made in the United States, as long as that did not contravene commitments to trade agreements.

U.S. steel companies and smaller manufacturers lobbied for the measure, which was opposed by the U.S. Chamber of Commerce.

'SLIPPERY SLOPE'

Some U.S. state and municipal governments -- which are not parties to trade agreements -- have since excluded Canadian companies as suppliers to water treatment projects funded by stimulus money, Saint-Jacques said, noting it has hurt some U.S. companies that supply Canadian counterparts with raw materials.

Bills on water quality and school construction passed by the House of Representatives this year also included "Buy American" clauses. They have not been passed by the Senate.

A climate change bill before Congress offers financial aid to auto makers building electric cars, but only if they are developed and made in the United States.

The embassy and allies from more than 35 U.S. businesses blitzed about 75 members of Congress with facts about how many jobs in their states and congressional districts depend on trade with Canada, Saint-Jacques said.

"We want to tell them that we are on a slippery slope, that this could have unintended consequences because of the integrated nature of our economies," he said.

The embassy said the delegation included U.S. companies from the manufacturing, transportation, energy, finance and technology sectors.

Canada is also raising its concerns with the Obama administration's Office of Management and Budget and with the Environmental Protection Agency, Saint-Jacques said.

"We are looking at all aspects to see what kind of waivers or exemptions we could be getting to help Canadian companies to enjoy ... the traditional access they would have to U.S. markets," he said.

Canada's economic stimulus package did not include "Buy Canadian" provisions, Saint-Jacques said.

Canadian mayors have threatened to retaliate against the U.S. provision, but have given Canadian trade officials 120 days for more negotiations on the issue.

Reporting by Roberta Rampton; Editing by Xavier Briand

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