Canada talks tough with free trade talks looming

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Mexico, Canada and the United States have been renegotiating NAFTA since August, at the request of U.S. President Donald Trump, who has alleged that the 23-year-old agreement has harmed his country and has threatened to withdraw from it.

"I think the American colleagues understand when you stand strong in sending a message that said, 'We will stand up for the forestry industry, we will stand up for aerospace industry, we'll stand up for Canadian workers, '" Champagne said.

Canadian foreign minister Chrystia Freeland said on Thursday the US threat to quit NAFTA has to be taken seriously.

In her comments to reporters, Ms. Freeland said the Americans have always made it clear that one option would be for the U.S.to invoke Article 2205 of NAFTA, which allows any of the three member countries to provide a six-month notice of withdrawal from the deal.

Mexico has threatened to withdraw from the negotiations if the USA invokes the provision.

"I'm leaving it a little bit flexible because they have an election coming up", he said, though he also repeated his threat to walk away from the agreement.

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Freeland said the WTO filing is about the "unfair and unjustified" tariffs imposed, and is "on a quite separate track from the NAFTA negotiations". "You get respect when people see you are firm".

The talks start on January 23, just weeks after Canada launched a wide-ranging complaint against the United States at the World Trade Organization, potentially complicating NAFTA negotiations.

Canada and Mexico are unhappy about USA demands to establish rules of origin for NAFTA goods that would set minimum levels of US content for autos, a sunset clause that would terminate the deal if it is not renegotiated every five years and ending the so-called Chapter 19 dispute mechanism.

Neither Freeland nor Finance Minister Bill Morneau would discuss what preparations the government is making for the potential end of NAFTA.

"I know what we are trying to achieve is improvement in NAFTA".

Given the volatility of the trade talks, some wondered about Canada filing the WTO complaint that was sure to anger Americans - and it did. But she said it could backfire if it was the wrong move. "But if it's not a tool that's going to work, and it's going to blow up in their face, then of course we're going to have concerns about the tactics they used".

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