Canadian companies will be exempt from a protectionist "Buy American" clause in the U.S. government's $787-billion US economic stimulus package, the federal government announced Friday.

The deal involves 37 U.S. states that adhere to the World Trade Organization's government procurement agreement, effectively ending a dispute that has raged since Congress passed the protectionist measures in 2009.

"Our government had serious concerns about the 'Buy American' provisions contained in the American Recovery and Reinvestment Act," International Trade Minister Peter Van Loan told reporters in Ottawa.

"We believe that a co-ordinated approach to job creation and economic recovery was essential for both countries," said Van Loan.

Access to sub-federal projects

The deal provides companies in both countries with permanent market access to projects at the sub-federal level, meaning they can bid and work on public works projects at the provincial, state or municipal level.

The agreement applies only to U.S. funding delivered under the current stimulus program, not future legislation that might include similar "Buy American" provisions.

The U.S. stimulus money is allocated for roads, public housing and other infrastructure projects, the drawback being that most of the funding has already been spent. The program's deadline for doling out cash is Feb. 17.

International Trade Minister Peter Van Loan did not say how much the deal would be worth to Canadian companies, calling any estimate "highly speculative."

"We could only guess at how much value Canadians would have gotten out of [the stimulus] contracts," said Van Loan. In the future, the deal will bring "significant opportunities" for Canadians, he said.

The "Buy American" provision gives priority to U.S. iron, steel and other manufactured goods for use in state-level and municipal public works and building projects funded with stimulus tax revenue.

In October, reports of progress between the U.S and Canada over the controversial provision prompted the Federation of Canadian Municipalities to withdraw a resolution to block U.S. companies from bidding on city contracts in this country.

The deal was made with the support of the provinces, territories and industrial associations, said Van Loan.

With files from The Canadian Press

February 5th, 2010

SOURCE: CBC