Canada says U.S. "Buy American" deal closer

VANCOUVER, British Columbia (Reuters) - Canada and United States continue to work to end a spat over the "Buy American" restrictions in U.S. economic stimulus spending, but remain short of a deal, Canada's top trade official said on Friday.

"We're closer than we were, but no announcement yet," Trade Minister Stockwell Day told reporters in Vancouver following a speech to municipal leaders on Canada's own infrastructure spending programs.

Day did not comment directly on a U.S. statement on Thursday that said it was too soon to say whether a Canadian plan to resolve the dispute would lead to a deal.

The negotiators are hard at work and we hope to make progress, Day said when asked about the comments.

Canada is pushing a two-pronged solution to protect its businesses from the Buy American provision in the $787 billion stimulus package, which gives priority to U.S.-made products such as steel used in public works projects.

On one front, Ottawa has asked the White House to immediately exempt Canada from the Buy American rule. In return, Canadian provinces and municipalities would open up their procurement markets to U.S. companies.

On a second, and longer-term front, Canada proposes bilateral negotiations to permanently open up these markets, which are not covered under international trade agreements.

Day did not say if the United States was asking for anything significantly more than what Canadian provincial and municipal officials have offered as part of Canada's proposal.

Day made no direct reference to the "Buy American" issue in his talk to the Union of British Columbia Municipalities, but said Canada believes all trade restrictions will hurt efforts to recover from the global recession.

(Reporting by Allan Dowd, Editing by Peter Galloway)