Obama will see benefits of NAFTA: Canada

By David Ljunggren

OTTAWA (Reuters) - Canada believes the new U.S. administration will appreciate the "very positive" benefits of the North American Free Trade Agreement and will want it to continue despite President-elect Barack Obama's concerns about the pact, Trade Minister Stockwell Day said on Wednesday.

During the election campaign, Obama said he wanted to work with Canada and Mexico to strengthen NAFTA's labor and environmental protections.

His comments prompted fears that he might be seeking major changes to an agreement that has benefited Canada, which sends 75 percent of its exports to the United States and is the largest U.S. supplier of energy.

"I believe the incoming administration will have an appreciation for the very positive effects of NAFTA on both countries. Millions of Americans' jobs depend on the trade that they have with us," Day told Reuters in an interview.

"In a time of economic uncertainty globally, I believe the new administration will be sensitive to the fact that they don't want to hurt their own people, (that) they'll want this relationship to continue."

Speaking in April, Canadian Prime Minister Stephen Harper said that if NAFTA were to be renegotiated, Canada's role as a major supplier of oil and natural gas would put it in a strong position.

"The prime minister was stating the obvious," said Day, adding that Obama's desire to cut U.S. dependence on foreign oil "automatically puts things back into a North American context". He referred to Canada's tar sands, which represent the largest oil reserves outside the Middle East.

Day said Obama's concerns about labor seemed to be focused mainly on Mexico and said he believed Canada's Conservative government and the Obama team were heading in the same direction on the environment.

Canada's Conservative government, which followed the lead of U.S. President George W. Bush by walking away from the Kyoto Protocol on climate change, now says it wants to regulate industry to curb emissions of greenhouse gases.

"We can have differences on the speed or the percentage, but the fact is it appears that this is the direction where President-elect Obama wants to go," Day said.

Green groups say Ottawa's climate change plan is grossly inadequate.

Day also said he would watch for problems along the two nations' long shared border. In the wake of the September 11 suicide attacks, the United States clamped down on security, triggering long and costly delays at some border crossing points.

"We have to always be alert to impediments to prosperity and we'll be quick to identify those," Day said.

(Reporting by David Ljunggren; Editing by Peter Galloway)