The "Buy American" provision in the American Recovery and Reinvestment Act is continuing to make waves both at home and abroad.

In Canada, where the issue is a major bone of contention, the government could mount a full-scale attack on the provision by trying to renegotiate the North American Free Trade Agreement (Nafta) to cover government procurement.

Such action would be a turnabout from Obama's presidential campaign, when he seemingly backed a renegotiation of Nafta to obtain tougher labor and environmental side agreements with both Canada and Mexico, although the administration has now backpedaled from that stance.

A spokesman for Canadian Prime Minister Stephen Harper confirmed at the weekend that Canada is interested in ending the so-called national preference practices in both the United States and Canada.

The Canadian Manufacturers and Exporters Association estimated that as many as 250 Canadian companies have lost out on contracts because of "Buy American" rules. "What we are seeing so far may just be the tip of the iceberg," according to Jayson Myers, president of CMEA.

The U.S. provision has triggered a backlash in Canada, where over the weekend leaders of Canadian municipalities, meeting at Whistler, British Columbia, voted...