Canada, U.S. talking about carmaker aid: Flaherty

By Jeffrey Jones

WINNIPEG, Manitoba (Reuters) - Canada has held informal talks with the United States that may lead to a coordinated aid package for the sputtering auto industry as a worsening economy saps car sales, Canada's finance minister said on Thursday.

Canada and especially the major manufacturing province of Ontario face prospects of mass job losses as Detroit's Big Three automakers, General Motors GM.N, Chrysler and Ford Motor Co (F.N: Quote), suffer with skidding sales and the global credit squeeze.

Finance Minister Jim Flaherty said he and Industry Minister Tony Clement had discussions with U.S. officials about automobile industry aid last weekend.

"We need to talk to each other. Of course we do, because this is an integrated production system. It has been since the Auto Pact back in the 1960s," Flaherty told reporters at a Conservative Party policy convention in Winnipeg, Manitoba.

The United States is considering a bailout package for its automakers, hard hit by sliding sales and the impacts of a global credit squeeze. The carmakers are seeking $25 billion in urgent assistance.

Their vehicles are assembled on both sides of the Canada-U.S. border.

"It necessitates, if one's going to be intelligent in terms of assistance to the industry, that there be discussion," Flaherty said.

Ottawa is also being briefed by executives with the Canadian subsidiaries of the major automakers about the situation in the United States and what they want from Washington, Flaherty said.