Canada balks at Buy American provisions

September 14, 2011 - 6:12 PM

TORONTO (AP) — Canada plans to fight the Buy American provisions in the new U.S. jobs package proposed by President Barack Obama and is surprised and frustrated that the issue has come up again, Canada's trade minister said Wednesday.

Obama's proposed $447 billion package includes a requirement that all "iron, steel, and manufactured goods" used in public buildings or works be supplied by American firms. The bill would allocate more than $100 billion toward the renovation of schools, the construction of roads and bridges and improving transit.

Trade Minister Ed Fast said the provisions are not acceptable to Canada and said history shows protectionist measures stall growth and kill jobs.

"It is disappointing that it is coming from the Obama administration given the fact that we have been there before," Fast said in a telephone interview.

Canada ultimately won an exemption from the "Buy American" provisions that were included in 2009's $787 billion economic stimulus bill, which favored U.S.-made steel and other manufactured goods in government-funded building projects. The provision was a major irritant in trade relations between the United States and Canada, its largest trading partner.

The Canadian government offered U.S. companies expanded access to Canadian government procurement contracts in return for the waiver of the "Buy American" provisions. But the Canadian Manufacturers and Exporters group said Canadian companies lost out on billions of dollars in work on U.S. infrastructure projects before the waiver was granted. Suppliers of everything from steel and sewers to metals, pipe and construction materials were affected.

Fast said there is now a fast-track consultation process in place with the U.S. to deal with issues like this because of the 2010 agreement. Fast declined to say whether Canadian Prime Minister Stephen Harper would call Obama about it, but said Harper is very involved.

Canada sends more than 70 percent of its exports across its southern border.

Nkenge Harmon, a spokeswoman for the Office of the United States Trade Representative, said in an email that "The American Jobs Act is fully consistent with the United States' international obligations on government procurement."

Jayson Myers, head of the Canadian Manufacturers and Exporters group, said he is extremely disappointed and concerned that Buy American restrictions are reappearing, but pleased the Canadian government is responding quickly.

The new measures come at a time when Canada and the U.S. are close to signing an expanded arrangement to allow more secure flow of goods across the border along with stepped up security.

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AP Economics Writer Martin Crutsinger in Washington contributed to this report.