A canceled Alaska ferry dock project in the Canadian port of Prince Rupert has been a focus of a high-level dispute over U.S.-Canada trade policy, but Alaska officials say Canada's stance on the project will mostly hurt Canadian workers.

A federal law called the Buy America Act requires that steel for projects funded by the Federal Highway Administration must be made in the United States. It's rare for such a project to be outside the United States, but the Alaska Marine Highway System was able to get the administration to pay for 91 percent of the Prince Rupert dock.

That terminal just south of Alaska is seen as a big convenience for Alaska travelers and shippers, and is popular with the visitor industry there as well.

But the dispute over who will make the steel for the dock's pilings and walkways has overshadowed the fact that Canada will still get much of the benefit of the project, said Capt. John Falvey, general manager of the Alaska Marine Highway System.

"This would have been Canadian labor building the dock," Falvey said. Canadian contractors would have likely won the bids.

The Vancouver Sun newspaper, no fan of American protectionist laws it called "offensive," urged officials of both countries to not let the dispute get out of hand.

"It is one thing to affect a high dudgeon over an affront to one's dignity and another thing entirely to be so consumed with the need for redress that one is prepared to cut off one's nose to spite one's face," the paper said.

The construction of the estimated $11 million to $20 million dock has been awkward for Gov. Bill Walker.

At a news conference last week, Walker said, "I'm all about local hire, and buy local." That might seem to be a contradiction with Buy America, but he said that was a good idea as well. "I think the Buy America provision is there for a reason," he said.

But Canadian officials, both at the federal and provincial level, saw the prospect of American steel being required on Canadian soil as an affront to their sovereignty. They threatened to invoke their Foreign Extraterritorial Measures Act, stopping Canadian companies from complying with Buy America.

During weeks of negotiations, during which Walker declined to request a Buy America waiver from the U.S. government, the Canadian FEMA was invoked.

"What they basically did was put the word out that any Canadian bidders would face big fines, and potentially other sanctions," Falvey said. Last week, Alaska withdrew the invitation to bid for the dock.

The dispute is reminiscent of a dispute over fish harvest between U.S. and Canadian fishermen in 1997 that saw Canadian fishing boats blockade the Alaska state ferry Malaspina in Prince Rupert for two days.

The escalation of the fish dispute to include ferries strained relations between the neighbors for years, and local officials have worked hard since then to rebuild relations.

Walker said he's still confident that some sort of agreement can be reached to end the dispute.

"I'm sure we'll come to some sort of understanding so the project can move forward," he said.

Falvey said the old wooden dock needs replacement, but can continue being used for now.

The dock was close to being condemned several years ago and had to undergo emergency repairs so it could be safely used, he said. At that time Alaska ferries were able to use a neighboring BC Ferries dock.

"That's not available to us anymore, that's a new dock and our ships don't fit there," Falvey said.

The dock was once was owned by the City of Prince Rupert, but Alaska has purchased a 50-year lease on it and "in essence" owns it, Falvey said.