Canada and the provinces are offering U.S. firms guaranteed access to procurement contracts, as long as Canada gets a waiver of the "Buy American" provision of the U.S. government's economic stimulus package.

In a letter sent to U.S. Trade Representative Ronald Kirk and obtained by The Canadian Press, International Trade Minister Stockwell Day offered "time-limited guaranteed access to an ambitious package of sub-federal procurement."

In exchange, Canada would get a bye on the Buy American clauses in the U.S. government's stimulus plan — the U.S. Recovery Act — and any similar new laws.

The Buy American provision gives priority to U.S. iron, steel and other manufactured goods for use in public works and building projects funded with recovery money.

Day noted that only federal-level procurement contracts are covered under international trade deals such as North American Free Trade Agreement.

Under NAFTA and WTO rules, agencies below national governments are not subject to the same procurement restrictions.

Earlier this week, Ontario Premier Dalton McGuinty called on Ontario municipal governments to fight U.S. protectionism alongside the federal government, noting that Buy American clauses could hurt the province when it is struggling with a weak economy.

Last week, Prime Minister Stephen Harper said the federal government is confident that an agreement on the Buy American issue can be reached, but he cautioned that won't simply be a case of getting a pledge from Obama on the issue.

With files from The Canadian Press