Market woes, unsafe toys to feature in NAFTA talks

Canadian Minister of International Trade David Emerson (C) along with Mexican Secretary of the Economy Eduardo Sojo Garza-Aldape (L) and United States Trade Representative Ambassador Susan C. Schwab take questions during the closing press conference of the NAFTA Free Trade Commission meeting in Vancouver, British Columbia, August 14, 2007.

OTTAWA (Reuters) - The leaders of the United States, Canada and Mexico will discuss topics as diverse as the current turmoil on financial markets and the safety of Chinese-made toys when they meet near Ottawa next week.

The credit crunch, which has depressed markets globally, has nosed its way on to the agenda of a regular summit of the partners in the North American Free Trade Agreement: U.S. President George W. Bush, Canadian Prime Minister Stephen Harper and Mexican President Felipe Calderon.

"I'm quite confident that they will be having a wide-ranging discussion on the economy," Harper spokeswoman Sandra Buckler said on Thursday when asked if they would discuss market disruptions.

The Aug 20-21 meeting in Montebello, Quebec, is formally to develop further the "Security and Prosperity Partnership" (SPP) of NAFTA countries -- which has become a red flag for activists on the left and the right who are convinced it means a European Union-style loss of sovereignty.

"The president is going to Canada to talk to our North American neighbors about making the continent safer and more prosperous," White House spokesman Gordon Johndroe said in Crawford, Texas, where Bush is on vacation.

"These are two of our largest trading partners. They are also our two largest sources of energy. And we share 7,000 miles of very dynamic borders with Canada and Mexico."

Much of the business of the SPP is technical, such as working on common labeling, but it has the potential to affect the playrooms and the factories of the continent.

Harper said this week, after mass recalls of Chinese toys and other products, said he would be raising the idea of continental standards.

"I can tell you that the government is concerned about this. We are examining this carefully," he told reporters. A Canadian official later said no agreement on this issue was likely to emerge from the Montebello meeting.

Bush and Harper were also expected to compare notes on the Arctic, particularly after Russia recently tried to stake a claim to potential energy riches there by planting a flag on the seabed under the North Pole.

"The symbolic staking of the flag at the North Pole was exactly that. The North Pole is in the high seas. Nobody has the right to claim ownership to the North Pole," said a Canadian official who did not want to be identified.

Located on the Quebec side of the Ottawa River, about a 90-minute drive from Ottawa, Montebello presents a logistical challenge for security personnel trying to prevent disruptions by protesters.

Thousands of demonstrators are expected to converge on the site, some charging that democracy is being subverted and that the ability to take national decisions on water, energy, the military and other issues will be impaired.

"There's no discussion of giving up anyone's sovereignty here," the U.S. ambassador to Canada, David Wilkins, told Reuters. "It's all about coming up with a North American strategy here to compete in a global economy...and to deal with emergencies on the border."

The organizers have set up two fields near the swanky Montebello hotel for protesters, complete with a video link into the summit site with the aim of meeting a court requirement that their protests be heard by the leaders.

"Under the law, they need to be seen and heard, and they will be," Buckler said.

(Additional reporting Tabassum Zakaria with Bush in Texas)