Canada increasingly convinced Trump will pull out of NAFTA

P.E.I. MP Lawrence Mac Aulay was introduced as the first Canadian agriculture minister to speak at American Farm Bureau Federation convention

Mexico's auto sector has benefited from NAFTA as major manufacturers, such as General Motors Co (GM.N), Ford Motor Co (F.N), Fiat Chrysler Automobiles (FCHA.MI) and Volkswagen AG (VOWG_p.DE), have made the country a top export hub, attracted by cheap labor and free trade pacts with more than 40 nations.

"A Canadian government official pushed back against a Reuters report, calling it "inaccurate" that the Government of Canada is "convinced" the U.S will soon pull out of NAFTA". The three countries have agreed to host joint negotiations through March.

If Trump did issue a withdrawal notice, it would open a six-month window before the USA would actually leave the deal.

Trump fell short Monday on making any firm promises that a NAFTA update could be done, although he told farmers he wanted a better deal for them during remarks to the American Farm Bureau Federation convention in Nashville, Tenn.

"Progress on NAFTA was made during previous rounds and the December intersessional and we expect more progress to be made in January", the official said.

However, vehicle sales in Mexico contracted 4.6 percent in 2017 from a year earlier and fell 17.6 percent in December, as stubbornly high inflation squeezed domestic consumption.

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"We have always said that this is a possibility", a Mexican government source with knowledge of the talks told Reuters, referring to the prospect of a USA withdrawal.

The Canadian sources said that if Trump did announce the United States was pulling out, Canada would stay at the table, since the talks would continue at a lower level.

Mexico's Economy Ministry declined to comment on the report, a ministry spokesman said.

Canadian officials say they expect contentious issues as part of any trade negotiation but are ready to work with the US and Mexico toward an updated NAFTA.

The news broke as the cabinet of Prime Minister Justin Trudeau began gathering in the southwestern Ontario town of London ahead of a scheduled two-day meeting where NAFTA is one of the items on the agenda.

Canadian Foreign Affairs Minister Chrystia Freeland was in Washington to meet with senior U.S. lawmakers and Secretary of Commerce Wilbur Ross on Tuesday.

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