Canada preparing for possibility Trump will pull out of NAFTA

President Trump & Zippy Duvall
    American Farm Bureau Federation

President Trump & Zippy Duvall American Farm Bureau Federation

The North American Free Trade Agreement (NAFTA) is a trade agreement between the countries in North America: the US, Canada and Mexico.

Prime Minister Justin Trudeau speaks during a town hall in Halifax on Monday, January 16, 2017.

"The Canadian government is aware of the possibility that President Trump may announce the United States's withdrawal from NAFTA", a senior government official told AFP on condition of anonymity.

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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 23-28 January talks in Montreal.

Mexico's peso reversed slight gains against the dollar after the report, and was trading down more than 0.6 pct at 1925 GMT, while the S&P/BM IPC stock index was down about 1.7 percent.

But there's more to a NAFTA withdrawal than a Presidential declaration.

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Canadian officials say if President Trump does announce a U.S. withdrawal, it could be a negotiating tactic created to win concessions.

USDA Secretary Sonny Perdue says he doesn't believe President Trump will walk away from NAFTA, but notes that just in case the agency is making "contingency plans" if the trade agreement is scrapped.

For one thing, Congress would have to approve such a move - and that's unlikely.

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But at the same time, Canada and Mexico have rejected most of the USA proposals for NAFTA reforms, Reuters said. A sixth round of negotiations will begin this month in Montreal.

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