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Saskatchewan Premier Brad Wall arrives for a meeting of premiers and aboriginal leaders in Charlottetown on Wednesday, August 27, 2014.Andrew Vaughan/The Canadian Press

Ontario is prepared to negotiate over its protectionist policies to avoid a trade war with Saskatchewan, the minister in charge of the file signalled Wednesday.

Economic Development and Infrastructure Minister Brad Duguid extended an olive branch to the Prairie province, which is threatening to impose retaliatory trade barriers on Ontario if it doesn't scrap rules that give local companies a head start when bidding on infrastructure projects.

"Those discussions have to take place among the premiers and among the provinces and Ontario is very much in favour of constructive discussions," Mr. Duguid told The Globe and Mail. "We haven't ruled anything out, we haven't ruled anything in."

Saskatchewan Premier Brad Wall has said he will raise the issue at the Council of the Federation meeting with his fellow premiers in Charlottetown this week. Ministers are scheduled for further discussions on the matter in the fall.

Mr. Wall is pushing for the tearing down of trade barriers between provinces, and argues that Ontario's infrastructure rules are unfair. Under current regulations, companies bidding on government infrastructure projects in Ontario are evaluated on a scale of 100 points. Ten of those points are allocated for "local knowledge" – a practice that favours Ontario companies over out-of-province competitors.

If Ontario doesn't do away with this requirement, Mr. Wall has warned, he will consider favouring Saskatchewan companies over Ontario ones when they bid for government contracts in his province.

Mr. Duguid has defended Ontario's "local knowledge" rule, but hinted he might be willing to make concessions.

"Our intention will be to continue to be constructive as we work towards freer trade across the country," Mr. Duguid said on the lawn of the Ontario legislature, shortly after his son doused him with a bucket of ice water to raise money for ALS research.

While it seems unlikely the government would scrap the local knowledge requirement entirely – Ontario, for instance, went to so far as to get an exemption in Canada's free trade pact with the European Union in order to keep the rule – it could offer Mr. Wall concessions on other trade barriers in exchange for him not throwing up new barriers in retaliation.

Ontario is seen as one of the country's most protectionist provinces, in large part because of a liquor monopoly that makes it difficult for businesses to bring in wine and beer from other provinces.

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