OTTAWA (Reuters) - Canada and the United States must make progress in dealing with the "buy American" component of the $787 billion U.S. economic stimulus package, because letting it stand would send the message that protectionism is acceptable, Prime Minister Stephen Harper said on Thursday.
Harper, pressured by Canadian companies that say the measure is unfair and shuts them out of lucrative U.S. markets, raised the matter with U.S. President Barack Obama at a meeting in Mexico this week.
Obama was less exercised about the matter and said the policy had not endangered the huge overall Canada-U.S. trade relationship.
"It's very important that Canada and the United States ... at a time when we're trying to fight protectionism globally, I think it essential that we move forward on this and send a positive message to the world," Harper told a televised news conference in Kitchener, Ontario.
"Because we are seeing the expansion of these domestic preferences around the world ... these things, if they multiply around the world, could become extremely problematic in terms of recovery," he said.
Harper repeated that he was sure Canada would emerge from the recession in a strong position.
"Unlike many countries in the world at a time of global recession, we have tax rates that are falling. We will come out of this recession with a very low debt-to-GDP ratio, which will allow our taxes to stay low when others will be pushing theirs up," he said.
Reporting by David Ljunggren; editing by Peter Galloway