Too early to say if Canada plan resolves spat: USTR

Thu Oct 1, 2009 7:26pm EDT
 
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WASHINGTON (Reuters) - It is too soon to say whether a Canadian plan to end a spat over the "Buy American" provisions of U.S. stimulus projects will lead to a deal, a spokeswoman for the U.S. Trade Representative said on Thursday.

"The United States is working through its assessment of the Canadian proposal, and it is premature to speculate if there is a basis for an agreement," Deborah Mesloh said on Thursday after trade officials met to discuss Ottawa's bid to exempt Canadian companies from the provisions.

Canada has pitched a two-pronged solution to protect its businesses from the provision, which has become a sore point between the world's two largest trading partners, and which could hurt Canadian exporters just as they are starting to recover from the global economic crisis.

Ottawa has asked the White House to immediately exempt Canada from the "Buy American" rule, popular in Washington because it gives priority to U.S.-made products such as steel used in public works projects under the $787 billion stimulus package.

In return, Canadian provinces and municipalities would open up their procurement markets to U.S. companies.

In the longer term, Canada proposes bilateral negotiations to permanently open up these markets, which are not covered under international trade agreements.

U.S. trade officials stressed President Barack Obama's recommendation to Canadian Prime Minister Stephen Harper last month "that one way to address Canada's concerns is for it to cover its provinces and territories under the WTO Government Procurement Agreement," Mesloh said.

The Canadian Manufacturers and Exporters industry group says 250 companies have procurement contracts in the United States and stand to lose out.

The value of lost business is impossible to gauge because many stimulus contracts have not yet been tendered.

A spokeswoman for Canadian Trade Minister Stockwell Day declined comment on USTR's remarks.

(Reporting by Roberta Rampton and Doug Palmer in Washington and by David Ljunggren and Louise Egan in Ottawa; Editing by Xavier Briand)