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Canada to Mexico on NAFTA: you might be on your own

CALGARY, Alberta (Reuters) - Canada will focus on preserving its U.S. trade ties during talks to renegotiate NAFTA and may not be able to help Mexico avoid being targeted by the Trump administration, Canadian government sources say.

Mexico's President Enrique Pena Nieto speaks with an assistant during the deliver of a message about foreign affairs at Los Pinos presidential residence in Mexico City, Mexico, January 23, 2017. REUTERS/Edgard Garrido

“We love our Mexican friends. But our national interests come first and the friendship comes second,” a source said on the sidelines of a cabinet retreat in Calgary, Alberta.

“The two are not mutually exclusive,” the source added.

The comments are some of the starkest yet by Canadian officials, who are increasingly convinced Mexico will suffer the most damage from changes to the North American Free Trade Agreement.

U.S. President Donald Trump on Sunday said he planned talks soon to begin renegotiating NAFTA, under which Canada and Mexico send most of their exports to the United States.

The Canadian sources stress Ottawa has not taken any final decision on how to approach the NAFTA talks, since Trump’s opening stance is largely unknown.

The government dismisses the idea that Canada will formally abandon Mexico. Foreign Minister Chrystia Freeland said on Tuesday that Canada supported NAFTA as a trilateral agreement and noted that Trudeau had talked to Mexican President Enrique Pena Nieto over the weekend.

That said, the government sources note Mexico and Canada would appear to have little in common. Trump is unhappy about the large U.S. deficit with Mexico and has promised to punish firms with manufacturing bases there.

“Our negotiating positions are totally different. Mexico is being hung out of an skyscraper window by its feet,” said a second government source.

“Mexico is in a terrible, terrible position. We are not,” said another Canadian person involved on the trade file.

Officials familiar with diplomatic contacts between Mexico and Canada say there has been no talk of creating a joint front against the United States over NAFTA on the grounds that such a move would raise tensions and be counterproductive.

Bilateral trade is critical for Canada, which sends 75 percent of its exports to the United States. Statistics Canada data for 2015 show two-way trade in goods with the United States totaled C$760 billion ($580 billion) compared to just C$26 billion with Mexico.

Canada has a “very special status” and is unlikely to be hit hard by changes to NAFTA, the head of a business advisory council to Trump said on Monday.

Derek Burney, a former Canadian ambassador to Washington, told CTV News on Monday that Canada should distance itself from Mexico on NAFTA.

“We have security agreements, both continental and multi-lateral -- Mexico does not. Mexico has a huge border problem with the United States in terms of immigration and drugs -- Canada does not,” he said.

Reporting by David Ljunggren; Editing by Alistair Bell