WASHINGTON - Canada and the United States will announce Friday that the year-long dispute over protectionist Buy American provisions has finally been resolved, The Canadian Press has learned.
A source familiar with the negotiations suggested that Canada would be granted a Buy American exemption involving any contracts funded from what remains of the US$787-billion economic stimulus package passed by Congress last year.
The White House will make it clear to states and municipalities that Buy American requirements don't need to apply to Canadian companies, the source said. That would leave states and municipalities free to exempt Canadian manufacturers if they want to.
In return, Canadian provinces and municipalities will give the green light to American firms bidding on projects north of the border.
"The big question now is how quickly it will lock in for uncommitted U.S. stimulus money," one source said.
But others pointed out that even though the deal comes just two weeks before the deadline for spending the stimulus money, it's a significant development in contemporary Canada-U.S. relations. It means the U.S. is now recognizing that the two countries' economies are intricately linked.
Buy American has been a major trade irritant between the United States and Canada since Congress inserted the provisions in the American Recovery and Reinvestment Act a year ago. 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 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 intertwined that the measures are hurting businesses on both sides of the border. Prime Minister Stephen Harper and Gary Doer, Canada's ambassador to the U.S., even took their complaints directly to President Barack Obama.
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 that course of action was put on hold as the talks dragged on.
It was unclear Thursday what the impending Buy American deal would mean to future U.S. laws, although there's hope it will serve as a precedent. 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.
Word of the breakthrough came just hours before U.S. Commerce Secretary Gary Locke explained how the White House planned to double exports in the next five years.
Canada-U.S. trade experts had 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 told a news conference on Thursday.