Canada braces for possible USA exit from NAFTA trade pact

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Canada is increasingly convinced Trump will announce that the USA intends to pull out of the North American Free Trade Agreement, two government sources told Reuters on Wednesday.

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

Despite those preparations for a possible pullout, Canada will stay at the negotiation table even if Trump makes that call, those sources said, speaking on the condition of anonymity.

- $47 billion in agriculture trade between the USA and Canada in 2017.

A White House spokesman said "there has been no change in the president's position on NAFTA".

Odds Bank of Canada Governor Stephen Poloz will raise interest rates at the meeting next week also declined to 82 percent on the news, from 87 percent Tuesday.

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

- A tripling of trade between Canada, the USA and Mexico since 1994.

Kansas City Southern fell as much as 4.6% after the report, its biggest loss in more than eight months.

The sixth round of negotiations is set to take place from 23-28 January 2018, in Montreal, Canada.

The Canadian and Mexican currencies both weakened against the US dollar after the news, Reuters said. The peso fell 0.8 percent to 19.3963 per dollar.

Earlier in the session, the 10-year yield had touched its highest since September 2014 at 2.231 percent.

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.

But at the same time, Canada and Mexico have rejected most of the US proposals for NAFTA reforms, Reuters said.