Photo: Office of Prime Minister Harper

Obama and Canada's Harper say issue is minor in overall bilateral trade picture.

Obama did say the two sides are trying to find ways to ease the problem but he and Harper portrayed the issue as minor compared with what Obama termed the "robust" overall U.S.-Canadian trade picture.

Canada has said that its manufacturers are being harmed by ARRA's restrictions on use of non-U.S-made steel and manufactured products in projects that receive ARRA funding. In particular, the Canadians have cited projects that are administered by states and localities, in sectors such as water and wastewater facilities.

Obama said that one possible solution is that may lie in Canadian provincial governments' not being signatories to World Trade Organization agreements.

Under ARRA, Buy American restrictions could be waived if they are found to violate WTO pacts.

The President also said, "But in addition, we're pursuing, on a bilateral track, efforts to make sure that these sources of tension diminish."

Canadian International Trade Minister Stockwell Day has written a letter to U.S. Trade Representative Ron Kirk, outlining a proposed solution. It reportedly would seek an waiver of the ARRA Buy American provision for Canada, in exchange for U.S. access to purchases made by Canadian provinces, territories and major cities, for a period of time. A spokeswoman for the USTR's office said, "We are currently studying Canada's proposal." But she declined to provide more details.

The US and Canadian leaders' comments on trade were generally positive.

Obama said that "I do want to keep things in perspective. U.S.-Canadian trade continues to be robust. Canada continues to be a huge trading partner to the United States. Businesses in the United States and Canada both benefit from that trade, as do consumers."

He added, "There is no prospect of any budding trade wars between our two countries." he said that Buy American matters "are legitimate issues that ...have to be raised, but I think it's important to understand that on the scale of our overall trading relationship...these shouldn't be considered the dominant element of our economic relationship."

Harper basically seconded Obama's position, saying that the Buy American problems "are important irritants" and "are having some real impacts." But he added that "they are relatively small compared to the overall scale of Canadian-American trade."

Harper also said that he and Obama will be "giving more detailed direction"to their respective Buy American negotiators, concerning options they should consider.