September 27, 2018 / 1:45 PM / 3 months ago

Canada sticks to plan to stay at NAFTA talks despite Trump attack

OTTAWA (Reuters) - Canada on Thursday shrugged off U.S. President Donald Trump’s criticism that talks to modernize NAFTA were moving too slowly and made clear it had to keep negotiating as long as there was a chance of success.

Canadian Prime Minister, Justin Trudeau, speaks during a news conference at U.N. headquarters during the General Assembly of the United Nations in Manhattan, New York, U.S., September 26, 2018. REUTERS/Amr Alfiky

The prospects for a quick deal to update the North American Free Trade Agreement appeared to dim on Wednesday after Trump blasted Canada’s stance and threatened to impose tariffs on cars imported from Canada.

“The Americans are finding that the negotiations are tough because Canadians are tough negotiators, as we should be,” Trudeau told reporters on the way into a regular weekly cabinet meeting in Ottawa.

“But a good, fair deal is still very possible. We won’t sign a bad deal for Canadians,” he added, saying his office had not requested a private meeting with Trump. He declined to answer when asked whether Trump had lied.

The United States has imposed a Sept. 30 deadline for Canada to agree to the text of a new NAFTA. The 1994 deal underpins $1.2 trillion in annual trade between Canada, Mexico and the United States.

Canada, which sends 75 percent of its goods exports to the United States, is vulnerable. The Canadian dollar weakened to its lowest in more than two weeks against the U.S. greenback early on Thursday.

But insiders - who requested anonymity given the sensitivity of the situation - say there is no alternative for Canada but to keep trying to settle the differences between the two nations and ignore mounting pressure from the U.S. administration.

“Plan A, B, C and D is NAFTA. If the government listened to everything the Trump team said about the negotiations we’d never get anything done,” said one source with direct knowledge of Ottawa’s stance.

Separately, a well-placed Canadian source said there were no immediate plans for any more talks with the United States.

Washington has already wrapped up a deal with Mexico, the third NAFTA member, and is due to publish the text on Friday.

Although U.S. lawmakers said they expected that text to completely exclude Canada, U.S. Trade Representative Robert Lighthizer has made clear Ottawa could sign on later.

Canadian officials say there is no rush to get an agreement since any move to recast NAFTA as a bilateral deal would have to be approved by the U.S. Congress. Some U.S. legislators - echoing comments by business leaders - say the agreement must stay a three-nation affair.

Rep Brian Higgins, a Democrat whose district borders Canada in upstate New York, attended a briefing by Lighthizer and afterwards attacked the plan to proceed with Mexico.

“(Lighthizer) indicated there was no deal with Canada, but the hope is that Canada will come in later on, which I think is totally unacceptable. This is an abject failure,” Higgins said.

U.S. lawmakers at the Lighthizer meeting cited him as saying the earliest they would be able to consider a deal with Mexico, even a bilateral agreement, would probably be next February or March.

One Canadian government source said there was a significant chance that Congress would balk at any move to turn NAFTA into a bilateral pact.

Yet people close to Trudeau acknowledge that it is quite possible Trump might slap tariffs on Canadian autos, which would have major consequences.

Andrew Scheer, leader of Canada’s official opposition Conservatives, on Thursday cited the risk of auto tariffs and told legislators that “Canadians are rightly becoming more and more nervous” about the way the talks were going.

Trudeau responded by saying, “the Conservatives want to sign any old deal quickly at any cost.” Polls suggest Trudeau would easily retain power in a federal election set for October 2019.

A recent Reuters/Ipsos/UVA Center for Politics poll showed a majority of voters in the industrial states of Michigan, Ohio, Pennsylvania and Wisconsin opposed tariffs on Canada. Half the voters in Indiana also rejected the idea.

The survey suggested politicians in America’s Rust Belt would likely struggle to capitalize on Trump’s trade war in November congressional elections.

Additional reporting by David Lawder and Megan Davies in New York; Editing by Chizu Nomiyama, Paul Simao and Nick Zieminski

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