Obama, Harper seek to ease U.S.-Canada trade tension

Wed Sep 16, 2009 5:15pm EDT
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By Randall Palmer and Matt Spetalnick

WASHINGTON (Reuters) - U.S. President Barack Obama assured Canadian Prime Minister Stephen Harper on Wednesday he wanted to resolve a dispute over "Buy American" provisions that has dogged ties between the world's top trading partners.

Obama sought to strike a positive note on free trade before next week's Group of 20 summit in Pittsburgh, which has been clouded by protectionist concerns after his administration last Friday imposed higher duties on Chinese tire imports.

"There is no prospect of any budding trade wars between our two countries," Obama said about U.S.-Canada relations after holding White House talks with Harper.

The Canadian leader said he and Obama had instructed negotiators to look at a range of options to bridge differences over "Buy American" provisions in a U.S. stimulus package, the centerpiece of Obama's economic recovery effort.

Canadian companies have complained the provisions are protectionist and shut them out from large U.S. contracts. Canada is proposing a reciprocal deal that would allow companies from both countries to bid for contracts at the state and provincial level.

"These are important irritants," Harper said.

While both leaders sought to play down the trade spat within the overall context of U.S.-Canada ties, Harper's message to the Obama administration was that failure to resolve the trade matter would send the wrong signal to the world.

"It is critical at a time where we are trying to see a recovery in the global economy, where forces of protectionism are a very significant threat, that we continue to demonstrate to the world that Canada and the United States can manage their trade relations in a way that's extremely positive and a model for other countries," Harper said.   Continued...

<p>President Obama and Canadian Prime Minister Stephen Harper meet in the Oval Office, September 16, 2009. REUTERS/Larry Downing</p>