Canada convinced Trump will soon pull plug on NAFTA

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Holly Spangler

Mexican auto production and exports hit a record high in 2017, far outpacing growth in 2016, despite fears that shipments could be hurt by a renegotiation of the North American Free Trade Agreement (NAFTA) with top trading partners the United States and Canada. This was followed by Mexico and Canada, with a value of $6.6 and $4.9 billion, respectively. The rate on Canada's two-year government bonds declined 8 basis points to 1.71 percent.

Among the most divisive are plans to establish rules of origin for NAFTA goods that would set minimum levels of US content for autos, a sunset clause that would terminate the trade deal if it is not renegotiated every five years, and ending the so-called Chapter 19 dispute mechanism.

Canadian officials, speaking to CBC News, said they are prepared for anything but have no reason to believe Trump will announce his intention to withdraw this month.

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

The confusion over Canadian expectations come ahead of the next round of negotiations, scheduled to be held in Montreal Jan. 23-28.

A White House official later said there was no change to Trump's position on NAFTA.

Canada is still optimistic there could still be some sort of positive resolution to these fractious trade talks, the sources said, and will continue to pursue its aggressive outreach plans in the USA, which include meetings with US state governors and lawmakers in Washington. "Outside of the Bank of Canada meeting next week, there should be upward pressure on USD/CAD as that premium increases into the next round of negotiations in Montreal beginning January 23".

A withdrawal notice doesn't mean Nafta would be killed - a country can give notice and then not actually leave.

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