Canada, U.S. say procurement spat not solved yet

U.S. President Barack Obama (R) and Canada's Prime Minister Stephen Harper meet in the Oval Office of the White House in Washington September 16, 2009.

OTTAWA (Reuters) - The Canadian and U.S. governments said on Wednesday they have not yet reached a deal to exempt Canadian companies from the "Buy American" provision that blocks them from bidding on some U.S. stimulus projects.

Canada has pitched a two-pronged solution to protect its businesses from the provision, which has become a sore spot between the world's two largest trading partners, and which could hurt exporters just as they are starting to recover from the global economic crisis.

Ottawa has asked the White House to immediately exempt Canada from the "Buy American" rule, politically popular in Washington because it gives priority to U.S.-made products such as steel used in public works projects under the stimulus package.

In return, Canadian provinces and municipalities would open up their procurement markets to U.S. companies.

In the longer term, Canada proposes bilateral negotiations to permanently open up these markets, which are not covered under international trade agreements.

"We don't have an announcement right now, but everybody's working hard," Canadian Trade Minister Stockwell Day said.

CBC television reported late Tuesday that a deal was imminent. When asked if there would be an announcement in Canada's favor on Wednesday, Day said: "I can't say 'today'."

U.S. Trade Representative Ron Kirk said the same to reporters in Washington: "We don't have it nailed down yet."

"We're working very collaboratively on that," he said.

Day and Kirk are set to meet to discuss another issue later on Wednesday.

The Canadian Manufacturers and Exporters industry group says there are 250 companies that have procurement contracts in the United States and stand to lose out.

The value of lost business is impossible to gage because many of the stimulus contracts have not yet been tendered.

"Many Canadian companies won't realize they're affected until they're told they can't bid on a U.S. government procurement projects," said CME president Jay Myers.

"There is some urgency on this," he said.

(Reporting by Louise Egan in Ottawa, Frank McGurty in Toronto and Doug Palmer in Washington; editing by Rob Wilson)