June 11, 2009 / 12:05 AM / in 8 years

U.S., Canada look to ease "Buy American" flap

WASHINGTON (Reuters) - The United States and Canada are open to discussing ways to head off a trade spat over “Buy American” restrictions in the U.S. economic stimulus package, officials in both countries said on Wednesday.

<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. REUTERS/Rebecca Cook</p>

Canadian suppliers now have few rights in U.S. state and local government procurement, but the U.S. trade representative is willing to discuss a reciprocal deal to meet U.S. requirements, USTR spokeswoman Debbie Mesloh said.

The United States requires “reciprocity” from countries seeking rights to U.S. procurement opportunities, according to Mesloh.

“USTR is always willing to sit down with our trading partners to discuss access to our procurement market when they are ready to enter agreements with specific commitments to provide reciprocal opportunities for U.S. goods, services, and suppliers,” Mesloh said in an e-mail response to questions.

A provision in the $787 billion U.S. stimulus package requires public works projects to use iron, steel and other goods made in the United States, as long as that does not contravene trade commitments.

The Canadian government and business groups on both sides of the border have complained some U.S. state and municipal governments have excluded Canadian companies as suppliers in water and sewage projects funded by U.S. stimulus money.

It has become a new sore spot between the two nations that shared close to $600 billion in bilateral trade last year, and are each other’s largest trading partners.

Canadian Trade Minister Stockwell Day said he had discussed the issue of procurement trade reciprocity with provincial leaders, and Canada was willing to look at it as a “lever” to “move past these protectionist measures.”

“Historically, the provinces have kept free-trade practice open, and we want to communicate that. They’re willing to look at that even in some kind of written agreement,” Day told reporters in Montreal.

The Buy American provision ensures that parties to the World Trade Organization government procurement agreement and other free-trade deals can bid on U.S. government contracts, Mesloh said.

“While the United States covers 40 states in various (trade) agreements, none of those commitments extend to Canada since it has never offered its provinces under the NAFTA or the WTO” government procurement agreement, Mesloh said.

“As a consequence, Canadian suppliers have few rights to sub-central procurement in the United States,” she said.

Canadian municipal leaders warned last week they might begin to retaliate for the “Buy American” restrictions by blocking U.S. firms from selling goods and services to local governments in Canada.

Additional reporting by Doug Palmer, Louise Egan and Allan Dowd; Editing by Peter Cooney

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