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Canada Objects To ‘Buy American’ Bill

America's top trading partner is voicing strong objections to the U.S. economic stimulus bill that calls on major public works projects to favor U.S. iron and steel over imports.

TORONTO (AP) -- Canada, America's top trading partner, is voicing strong objections to wording in the U.S. economic stimulus bill that calls on major public works projects to favor U.S. iron, steel and manufactured goods over imports.

Prime Minister Stephen Harper told Parliament on Thursday the provision in the bill goes against the North American Free Trade Agreement -- which links the U.S., Canada and Mexico -- and other international pacts aimed at liberalizing world trade.

"This is obviously a serious matter, a serious concern to us. I spoke to our ambassador about it," Harper said.

The House of Representatives passed the $819 billion stimulus bill on Wednesday that included a provision that would call on major public works projects to favor U.S. steel and iron.

Canada's trade minister noted the Senate is considering expanding the measure to include manufactured goods, a far more far-reaching provision. The proposed Senate provision states that none of the funds may be used for a project "unless all of the iron, steel and manufactured goods used in the projects are produced in the United States."

Vice President Joe Biden, however, downplayed the interpretations of the bill as leading to a wave of protectionist measures.

"I don't view that as some of the pure free traders view it, as a harbinger of protectionism," Biden said in an interview with CNBC. "I don't buy that at all. So I think it's legitimate to have some portions of buy American in it."

Stockwell Day, Canada's International Trade Minister, said the U.S. has very clear legal obligations under both NATA and the World Trade Organization, and Canada expects the U.S. to live up to them.

Day said the U.S. is hearing complaints from Canada, Australia and the European Union. The EU warned Thursday it would protest the provisions.

On Thursday, EU spokesman Peter Power said the EU would not "stand idly by and ignore" a bill that "prohibits the sale or purchase of European goods on American territory."

Day said he will present his concerns to U.S. trade representatives at the World Economic Forum in Davos, Switzerland this weekend.

U.S. trade with Canada totaled about $560 billion in the first 11 months of last year, well ahead of trade with second-place China, which was about $379 billion in the January-November period.

Day said the provisions in the stimulus bill are similar to the U.S. Smoot-Hawley Act of 1930, a tariff law which he said had led to the Great Depression.

"This type of legislation is dangerous. They just have to look at history. In 1930 the U.S. in a time of recession brought in very strong protectionist legislation that resulted in retaliatory legislation around the world and it deepened the recession into a depression," Day said in a telephone interview with The Associated Press.

"This is the message we're trying to remind them of," he said.

Canada and the EU are waiting to see if the measure is included in the final economic-recovery package that is expected to emerge from the Senate next week. Democratic leaders have pledged to deliver it to the White House for President Barack Obama's signature by mid-February.

Obama is scheduled to make his first foreign trip as president to Canada on Feb. 19.

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