Canada decried on Saturday a rising tide of protectionism in the United States, but Secretary of State Hillary Clinton said the Buy American provisions in an economic stimulus package will not interfere with U.S. trade obligations.

Clinton, during a brief visit to Canada, said she and Canadian Minister of Foreign Affairs Lawrence Cannon discussed the issue during a meeting. The United States and Canada are each other's largest trade partners, with close to $600 billion in total two-way trade of goods in 2008.

Canadians are worried by a rising tide of protectionism in the United States, in various circles, and our government is very concerned in particular about the negative impact of the 'Buy American' legislation being felt on Canadian businesses, Cannon said during a joint news conference with his U.S. counterpart.

Canada sends about 75 percent of its exports to the United States and could be harmed by U.S. protectionism. Key areas of trade include oil and gas, agriculture, vehicles and machinery.

We also have been very focused on ensuring that nothing interferes with the trade between our countries, Clinton said.

I deeply respect the minister's comments and his concerns, but, as President (Barack) Obama has said, nothing in our legislation will interfere with our international trade obligations, including with Canada, Clinton added.

In February, Congress passed the $787 billion stimulus package with a provision that public works projects such as infrastructure improvements should use iron, steel and other goods made in the United States, as long as that did not contravene commitments to trade agreements.

The Canadian government previously had expressed concerns about the Buy American language.

Ottawa says Canadian companies are being discriminated against by U.S. state and municipal governments on some water and sewage treatment projects funded by the bill.

Canadian Prime Minister Stephen Harper on Wednesday said Canada would continue to protest the Buy American policy, saying that we will continue to make the case against creeping protectionism, both at home and abroad.

U.S. steel companies and many small- to medium-sized manufacturers lobbied hard for the Buy American provisions, which was opposed by large U.S. business groups.

(Editing by Will Dunham)

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