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WASHINGTON (Reuters) - Canada needs to reach a deal with the United States this month to exempt its companies from a "Buy American" measure or the agreement could become effectively worthless, a Canadian industry official warned on Thursday.
"From the Canadian point of view, we have to see a successful conclusion of these negotiations soon. I would say by the end of this month," Jayson Myers, president of Canadian Manufacturers and Exporters, said during a panel discussion on a provision of last year's U.S. economic stimulus package that has strained trade ties with Canada.
Myers said he believed the two sides would reach a deal.
But the longer the negotiations take, the "less and less valuable" an agreement is for Canada because the bulk of public works contracts under the $787 billion American Recovery and Reinvestment Act already will have been locked up, he said.
The Buy American provision requires projects funded by that act to use only U.S.-made products such as steel. The measure was touted as a way to ensure funds spent under the mammoth package would create jobs in the United States.
Critics say it threatens jobs at U.S. companies that rely on global supply chains to manufacture goods, boosts stimulus costs and creates project delays.
In response to international outcry about the measure, Congress exempted countries including Canada that have opened their government procurement markets to the United States.
But that does not spare Canadian provinces and cities, which are not party to any government procurement pact with the United States, even though the country's federal government is.
After Canadian companies were shut out of initial stimulus contracts, Canadian cities threatened in June to retaliate by banning U.S. companies from their public works projects.
Myers said he expected many cities to follow through on that threat unless there is an agreement soon.
Any agreement must exempt Canada from future Buy American provisions as well as the current one, Myers said.
That is a concern for Canada because the House of Representatives included a Buy American provision in a $155 billion jobs bill passed in December.
The Senate is expected to take up the bill when it returns from its break later this month.
A coalition of about 30 U.S. business groups who say the Buy American provision is counterproductive are lobbying to have the measure removed, but face an uphill battle.
Reporting by Doug Palmer; Editing by Xavier Briand