LONDON (Reuters) - Canada aims to hold joint talks with the United States and Mexico over their trade agreements, which U.S. President-elect Donald Trump has threatened to scrap, the Canadian finance minister said on Tuesday.
“We have an enormous stake in the success of our relationship with the U.S. and with Mexico: our supply chains are intertwined, we’ve developed a very successful economic unit over the course of the last twenty years,” Bill Morneau said at the London School of Economics.
“We will work with the U.S., and this would go with any U.S. administration, in order to show the benefit of that relationship,” he said. “We expect Mexico will be part of that discussion.”
Mexico, the United States and Canada trade under the North American Free Trade Agreement (NAFTA), formed in 1994. Trump has threatened to scrap or renegotiate NAFTA to get a “better deal” from Mexico and Canada.
Exports account for about a third of Canada’s GDP. Of these, about three-quarters go to the United States and many Canadian companies are dependent on American imports.
A study by Export Development Canada estimates exports to the United States could drop by as much as 5 percent if a 10 percent tariff were imposed.
“Working together is the right thing to do and we’ll get to a conclusion that is mutually advantageous,” Morneau said.
Mexican President Enrique Pena Nieto said on Tuesday his country would need to show “enormous pragmatism” in its dealings with Trump’s government to try and find common ground on trade and immigration.
On economic policy, Morneau said Western economies had been too focused on monetary policy to stimulate growth, but that had largely run out of steam.
Canada said this month it would set up an infrastructure bank with access to C$35 billion ($26 billion) to help fund major projects and the country is also seeking private investors.
“We brought in a point of view that using fiscal policy for long-term investments was the right way to go to enhance our growth,” Morneau said.
Trump plans a similar fiscal policy, with $1 trillion of infrastructure spending, relying on investment from the private sector.
Morneau also said Canada would press on with carbon pricing, a plan which is seen at risk from Trump’s resistance to measures to tackle climate change.
Last month Prime Minister Justin Trudeau said that carbon emissions would cost C$10 a tonne in 2018, rising by C$10 a year and reaching C$50 in 2022.
“Our focus right now is a pan-Canadian approach to carbon pricing ... I believe we will be able to make progress on that in the near term,” Morneau said.
Reporting by Helen Reid; Editing by Robin Pomeroy