Canada PM says doesn't think Trump will pull U.S. out of NAFTA

OTTAWA (Reuters) - Canadian Prime Minister Justin Trudeau on Wednesday said he did not think U.S. President Donald Trump would pull out of NAFTA, despite slow progress at negotiations to update the $1.2 trillion trade pact.

Canada's Prime Minister Justin Trudeau attends the World Economic Forum (WEF) annual meeting in Davos, Switzerland January 25, 2018. REUTERS/Denis Balibouse

Trudeau’s comments were among the most positive made by any Canadian official since talks started last year to revamp the North American Free Trade Agreement, which Trump calls a disaster that killed off many U.S. manufacturing jobs.

Scrapping NAFTA would badly hurt U.S. workers and industries, Trudeau told Winnipeg radio station 680 CJOB.

“I’m confident that the president is going to see that and choose to not terminate because it’s not in his or Americans’ best interests to walk away from NAFTA,” he said.

Trump’s trade chief, speaking on Monday after the sixth of eight rounds of talks, rejected proposals for unblocking the negotiations but promised to seek quick breakthroughs.

Canadian Foreign Minister Chrystia Freeland, speaking to the Council on Foreign Relations think tank in New York, on Wednesday said significant gaps still remained between the United States on one hand and Canada and Mexico on the other.

Freeland will meet her U.S. and Mexican counterparts in Mexico City on Friday to discuss the talks and other issues.

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Canadian officials came out of the latest talks in a better frame of mind than at the start of the week-long round, said a person briefed on the negotiating team’s conclusions.

“They are a much more optimistic group than they were...imminent death is no longer the defining mood but at the same time it’s still going to be a very, very long haul,” said the person, who requested anonymity given the sensitivity of the situation.

Work on renegotiating the deal began soon after Trump took office a year ago. He said if it could not be overhauled to better favor U.S. interests and American workers, Washington would pull out.

The Trump administration is demanding big changes to the pact, and this has caused tensions with Canada and Mexico.

Trudeau told 680 CJOB that “there are multiple issues at which point” Canada would not accept a deal.

“We’ve pushed our American partners on this and they understand that right now,” he said.

In his State of the Union speech on Tuesday, Trump said “America has also finally turned the page on decades of unfair trade deals,” but did not mention NAFTA by name.

Trudeau told the Canadian Broadcasting Corp that Canada has multiple contingency plans in the event Washington does announce it plans to withdraw.

Government sources told Reuters on Jan 10 that Ottawa was increasingly convinced Washington would give notice of withdrawal. The news hit stock markets and the Canadian and Mexican currencies.

Asked about contingency plans, Trudeau told the CBC “not only do we have a Plan B, we have a Plan C and D and E and F”. He declined to give details.

Reporting by David Ljunggren; Editing by Andrew Hay and Alistair Bell