US businesses, Canada assail 'Buy American' rules

WASHINGTON, June 9 (Reuters) - "Buy American" provisions in the U.S. economic stimulus package will cost jobs in both Canada and the United States, Canada's U.S. ambassador and a group of U.S. businesses said on Tuesday.

A delegation of more than 35 U.S. businesses joined Canadian diplomats to meet about 75 members of the U.S. Congress on Tuesday to express concern over the language in the $787 billion U.S. economic recovery package signed by President Barack Obama in February.

"U.S. restrictions on Canadian exports kill American jobs for U.S. suppliers to Canadian companies, and retaliatory actions will close markets for Canadian and U.S. exporters around the world," Michael Wilson, Canada's ambassador to the United States, said in a news release issued by the Canadian Embassy in Washington.

Wilson did not provide a forecast of how many jobs could be lost.

The embassy said the delegation included U.S. companies from the manufacturing, transportation, energy, finance and technology sectors, but did not provide names of companies.

In February, Congress passed the stimulus package with a provision that public works projects such as infrastructure improvements should use iron, steel and other goods made in the United States, as long as that did not contravene commitments to trade agreements.

U.S. steel companies and many small- to medium-sized manufacturers lobbied hard for the "Buy American" provisions, which was opposed by large business groups like the U.S. Chamber of Commerce.

The United States and Canada are each other's largest trade partners, with close to $600 billion in total two-way trade of goods in 2008. Key areas of trade include oil and gas, agriculture, vehicles and machinery. Canada sends about 75 percent of all its exports to the United States.

But some U.S. state and municipal governments -- which are not parties to trade agreements -- have since excluded Canadian companies as suppliers to water and sewage treatment projects, Ottawa has complained.

Bills on water quality and school construction that have been passed by the U.S. House of Representatives this year also included "Buy American" provisions. Those bills have not been passed by the Senate.

A climate change bill currently before Congress offers financial aid to auto makers building electric cars, but only if they are developed and produced in the United States. [ID:nN05297454]

Canadian mayors threatened to retaliate against the provision, but have given Canadian trade officials 120 days for more negotiations on the issue. [ID:nN06310449]

Both countries have been hit hard by the economic downturn, Wilson said, noting that Canada is the largest export market for 35 of the 50 U.S. states.

Trade with Canada supports about 7 million U.S. jobs, Wilson said, and Canada buys more from the United States than Britain, Germany, Japan and China combined. (Reporting by Roberta Rampton; Editing by Will Dunham)