NIAGARA FALLS (Canada) - US Secretary of State Hillary Clinton on Saturday tried to reassure America's trading partners that a 'Buy American' provision of the US stimulus plan is not protectionist.

'Let me just reiterate that the provision is not being enforced in any way that is inconsistent with our international trade obligations,' Mrs Clinton told reporters.

What the exemption is about UNDER the terms of the proposed plan, Canadian provinces and municipalities would be exempt from the 'Buy American' provision. Federal procurement in both countries is already liberalized under the North American Free Trade Agreement. The 1994 trade pact created the largest trading bloc in the world by eliminating import tariffs on goods circulating among partners Canada, the United States and Mexico. -- AFP

On her first visit to Canada as America's top diplomat, Mrs Clinton met with Canadian Foreign Affairs Minister Lawrence Cannon to renew a century-old water treaty and to discuss global hotspots.

But Canadian concerns over a 'Buy American' provision in recent US legislation - echoed in Asia and Europe - overshadowed much of their discussions.

The provision requires US states and municipalities to use only iron, steel and goods manufactured in the United States for federally-funded infrastructure projects.

Mrs Clinton said Washington does not want to hinder trade, and agreed to 'take a hard look ... (at) what more we could do to ensure that the free flow of trade continues.'

'Canada is our number one trading partner, it is a mutually beneficial relationship that we intend to not only nurture but see grow,' she added.

On Tuesday, Canadian provincial premiers said they were 'deeply concerned' over the 'Buy American' provision in recent US legislation, and threatened retaliation if it was not nixed or amended to exempt Canada.

The provision is 'hurting both American and Canadian companies,' and is hindering efforts to stimulate the largely interdependent economies of the world's largest trading partners, the regional leaders said.

In Washington, meanwhile, Canadian envoys met with members of Congress to say the restrictions in the massive 787-billion-dollar US economic stimulus are costing jobs on both sides of the border.

Mrs Clinton said she would 'take a very close look' at a Canadian proposal for a Canada-US procurement pact that would encompass all levels of government spending in both nations. Mr Cannon, meanwhile, opined that Ottawa and Washington would reach a negotiated solution. -- AFP