U.S. President Barack Obama's jobs plan has raised concerns in top trading partner Canada because of measures that would restrict foreign companies from participating in infrastructure projects.
Canadian Trade Minister Ed Fast said Wednesday he had instructed his officials to begin consultations with Washington under a 2010 bilateral agreement that exempts Canada from such restrictions.
"Our government will raise with the Obama administration and Congress concerns regarding measures that impede access for Canadian workers and businesses to the U.S. market, as we did for earlier U.S. stimulus programs," Fast said in a statement.
Obama has proposed a $447 billion package of tax cuts and spending measures to spur hiring and revive a stalled economy, but the plan will be difficult for the Republicans to support and parts of it may never materialize.
The so-called Buy American clause prohibits the use of foreign-made iron, steel and other manufactured goods in public works projects.
"In this fragile economic recovery, we know history has shown protectionist measures stall growth and kill jobs," Fast said.
Obama's 2009 stimulus bill caused diplomatic friction for the same reason, but the two countries eventually struck a deal to guarantee each other access to public works contracts at the state and provincial levels.
A spokeswoman for the U.S. Trade Representative's Office said Obama's jobs legislation did not ran afoul of Washington's international obligations.
"As with the (2009) American Recovery and Reinvestment Act, the American Jobs Act provides that it will be consistent with U.S. obligations under international agreements," USTR spokeswoman Nkenge Harmon said.
She added that the deal struck in 2010 gave Canada only "temporary access to certain programs" funded by the 2009 economic stimulus bill.
Jay Myers, head of the Canadian Manufacturers and Exporters group, said he was confident Ottawa's fight would be easier this time than in 2009.
Not only does the agreement allow disputes to be dealt with more rapidly, but the Republicans, who control the House of Representatives, are likely to block the Buy American provision because they believe it delays infrastructure projects and causes supply chains to freeze up unnecessarily.
Myers said the business opportunities were not as big as in the first stimulus package but that it was important to defend the principle of open access.
"It's more the precedent it sets than the impact, economically," he said.
Canada is the largest U.S. trading partner, with two-way trade worth about $1.4 billion a day. (Reporting by Louise Egan; Editing by Peter Galloway and Peter Cooney)
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