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UPDATE 1-Canada plans trade talks with U.S., Mexico -finance minister

Published 2016-11-15, 01:46 p/m
© Reuters.  UPDATE 1-Canada plans trade talks with U.S., Mexico -finance minister

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LONDON, Nov 15 (Reuters) - Canada aims to hold bilateral and trilateral talks with the United States and Mexico over their trade agreements, which U.S. President-elect Donald Trump has threatened to scrap, the Canadian finance minister said on Tuesday.

"We have an enormous stake in the success of our relationship with the U.S. and with Mexico: our supply chains are intertwined, we've developed a very successful economic unit over the course of the last twenty years," Bill Morneau said at the London School of Economics.

"We will work with the U.S., and this would go with any administration," he said. "We expect Mexico will be part of that discussion."

Mexico, the United States and Canada trade under the North American Free Trade Agreement (NAFTA), formed in 1994.

Trump has threatened to scrap or renegotiate NAFTA to get a "better deal" from Mexico and Canada.

Exports account for about a third of Canada's GDP. Of these, about three-quarters go to the United States and many Canadian companies are dependent on American imports.

A study by Export Development Canada estimates exports to the United States could drop by as much as 5 percent if a 10 percent tariff were imposed.

"Working together is the right thing to do and we'll get to a conclusion that is mutually advantageous," Morneau said.

On economic policy, Morneau said Western economies had been too focused on monetary policy to stimulate growth, but that had largely run out of steam.

Canada said this month it would set up an infrastructure bank with access to C$35 billion ($26 billion) to help fund major projects and the country is also seeking private investors.

"We brought in a point of view that using fiscal policy for long-term investments was the right way to go to enhance our growth," Morneau said.

Trump plans a similar fiscal policy, with $1 trillion of infrastructure spending, relying on investment from the private sector.

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