A United States flag blows in the wind while transport trucks line up across the Ambassador Bridge between Windsor, Ont., and Detroit. (Jason Kryk/Canadian Press)

Canadian companies will be exempt from a protectionist "Buy American" clause in the U.S. government's $787-billion US economic stimulus package, the federal government announced Friday.

The deal involves 37 U.S. states that adhere to the World Trade Organization's government procurement agreement, effectively ending a dispute that has raged since Congress passed the protectionist measures in 2009.

"Our government had serious concerns about the 'Buy American' provisions contained in the American Recovery and Reinvestment Act," International Trade Minister Peter Van Loan told reporters in Ottawa.

"We believe that a co-ordinated approach to job creation and economic recovery was essential for both countries," said Van Loan.

Speaking shortly after details of the deal were announced, Liberal trade critic Scott Brison slammed it as "too little, too late" as much of the stimulus funds made available by the Obama administration have already been spent.

The U.S. stimulus money is allocated for roads, public housing and other infrastructure projects, the drawback being that most of the funding has already been spent. The program's deadline for handing out funding is Feb. 17.

"This deal is a pathetic attempt to try to create some level of symbolic victory when, in fact, a real deal was required to defend Canadian interests," Brison told reporters in Ottawa. "There is absolutely no reason the government couldn't have concluded this deal last March."

Access to sub-federal projects

The deal provides companies in both countries with permanent market access to projects at the sub-federal level, meaning they can bid and work on public works projects at the provincial, state or municipal level. Foreign Affairs Minister Lawrence Cannon (left) gestures as International Trade Minister Peter Van Loan looks on during an update on Canadian-American trade relations in Ottawa on Friday. (Pawel Dwulit/Canadian Press)

The agreement applies only to U.S. funding delivered under the current stimulus program, not future legislation that might include similar "Buy American" provisions.

International Trade Minister Peter Van Loan did not say how much the deal would be worth to Canadian companies, calling any estimate "highly speculative."

"We could only guess at how much value Canadians would have gotten out of [the stimulus] contracts," said Van Loan. In the future, the deal will bring "significant opportunities" for Canadians, he said.

'It sure is a sweet victory.'—Victor Fedeli, mayor of North Bay, Ont.

The "Buy American" provision gives priority to U.S. iron, steel and other manufactured goods for use in state-level and municipal public works and building projects funded with stimulus tax revenue.

In October, reports of progress between the U.S and Canada over the controversial provision prompted the Federation of Canadian Municipalities to withdraw a resolution to block U.S. companies from bidding on city contracts in this country.

'It's going to be good': mayor

The deal was made with the support of the provinces, territories and industrial associations, said Van Loan.

But it also has the support of some municipal leaders.

"It sure is a sweet victory," said Victor Fedeli, the mayor of North Bay, Ont.

"We have companies that make everything from sandbags and tarps to municipal engineering to huge bridges that you find all over the United States," said Fedeli. "And these companies now have their door open again."

Asked whether he worried the deal could also mean large American companies winning contracts in North Bay that might otherwise have gone to his own constituents, Fedeli said the city was "already a community with open doors."

"We bought two fire trucks in South Dakota for $850,000," he said. "They had to compete against the Canadian firms, and while we certainly want to buy Canadian, that is not the best value for taxpayers.

"The Canadian companies needed to sharpen their pencil, and if a company can make a water reservoir in Illinois and ship it to North Bay and install it for $1 million, I would hope someone in Ontario would have a sharper pencil," he said.

"I think it's going to be good."

With files from The Canadian Press