Canadian officials expect Trump will soon pull plug on NAFTA: report

Canada is increasingly convinced that U.S. President Donald Trump will soon announce that the United States intends to pull out of the North American Free Trade Agreement, two government sources said on Wednesday.

The sources said they expected Trump would make his move at about the same time that negotiators from the United States, Canada and Mexico meet in late January for the sixth and penultimate round of talks to modernize the treaty.

The Canadian and Mexican currencies both weakened against the U.S. dollar after the news.

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The Canadian dollar fell to its weakest level this year at C$1.2561 to the greenback, or 79.61 U.S. cents. The peso was trading down more than 0.6 pct at 1925 GMT, while the S&P/BM IPC stock index was down about 1.7 per cent.

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Trump has repeatedly threatened to walk away from NAFTA unless Canada and Mexico agree to major changes Washington says are needed to make the 1994 treaty more fair.

Canadian officials say if Trump does announce a U.S. withdrawal, it could be a negotiating tactic designed to win concessions. They also express doubt whether the U.S. Congress would approve such a move.

Foreign Affairs Minister Chrystia Freeland on Tuesday reinforced her commitment to seeing the trade negotiations through to a successful end.

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“Canada and the United States enjoy one of the closest relationships of any two countries in the world. We are friends, we are allies and we are partners. For 24 years NAFTA has created opportunities, jobs and a better life for our peoples,” Freeland said in a release.

“We are focused on achieving real progress, including in Montreal‎ later this month.”

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Canada and Mexico have rejected most of the U.S. proposals for NAFTA reforms, leaving officials with a big job if they are to bridge the large differences at the Jan. 23-28 talks in Montreal. Negotiations are due to wrap up at the end of March.

— Reporting by David Ljunggren; Editing by Susan Thomas