Deal Reached Between Canada, U.S. On Buy American: Sources

There’s been a breakthrough in talks between Canada and the U.S. on the protectionist Buy American provisions, sources said Thursday.

Details of an impending deal, including whether Canada has been granted an exemption to the provisions, weren’t immediately available. While the sources said specifics were expected to emerge later Thursday, officials in the U.S. Trade Representative’s office and in Ottawa denied there would be any further information about the details of a deal.

Word of the breakthrough came just hours before U.S. Commerce Secretary Gary Locke prepared to explain how the White House planned to double exports in the next five years.

Canada-U.S. trade experts have questioned how it’s possible for Americans to drastically increase exports to global markets while shutting countries out of the U.S. with Buy American and other protectionist trade provisions.

But President Barack Obama made the five-year pledge in his recent state of the union address. His National Export Initiative is targeting three areas: expanding trade advocacy, improving access to credit especially for small and medium-sized businesses and strictly enforcing international trade laws.

“The United States is committed to a rules-based trading system where the American people – and the Congress – can feel confident that when we sign an agreement that gives foreign countries the privilege of free and fair access to our domestic market, we are treated the same,” Locke said in remarks prepared for delivery later Thursday.

Buy American has been a major trade irritant between the United States and Canada for almost a year, since Congress inserted the provisions in the American Recovery and Reinvestment Act. That legislation was aimed at pulling the U.S. out of a devastating recession.

Ottawa has complained that Canadian exporters are being excluded from bidding on projects under the US $787-billion stimulus package because of Buy American, which prevents foreign-made components from being used on infrastructure projects.

Since last fall, Canada has been seeking an exemption from the provisions, arguing that American and Canadian supply chains are so intricately linked that the measures are hurting businesses on both sides of the border.

The U.S. Chamber of Commerce and several blue-chip American corporations have also long railed against Buy American.

Canadian municipalities had threatened “Buy Canadian” retaliation against the U.S., but put that course of action on hold as the talks dragged on.

It was unclear whether any impending Buy American deal would also apply to future U.S. laws. There are Buy American provisions in a mammoth jobs bill that’s currently winding its way through Congress, and similar measures are expected to pop up in other pieces of legislation in the weeks and months ahead.

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