Canada's Trudeau, ministers to discuss Trump plans for Nafta

[CALGARY, Alberta] Canada's Prime Minister Justin Trudeau will begin a two-day retreat with his cabinet on Monday, focused mainly on the best approach to take with new US President Donald Trump, whose vow to renegotiate Nafta could damage Canada's economy.

Mr Trump said on Sunday he plans talks soon on the three-nation North American Free Trade Agreement, under which Canada and Mexico send the majority of their exports to the United States.

Canadian officials - trying to persuade the new administration that focusing on Canada makes no sense, given how closely the economies are linked - say the Trump team is most concerned about large US deficits with China and Mexico.

"They haven't said anything specific about any real problems that they have with us," said David MacNaughton, Canada's ambassador to Washington and a key player on the Nafta file.

The danger, he told reporters late on Sunday, is that Canada could suffer collateral damage from US measures designed to cut the trade deficit with Mexico.

The two-day meeting in Calgary, in western Canada, starts at 9am Mountain Time (1600 GMT) and is the first chance for cabinet to discuss US relations since Mr Trump was sworn in.

As part of the Canadian bid to reach out to Mr Trump's team, Stephen Schwarzman, chief executive officer of major investment firm Blackstone Group, has been invited to address the retreat on Monday. Mr Schwarzman chairs a panel of business leaders who give Mr Trump advice.

The challenge of dealing with Washington comes at a sensitive time for Mr Trudeau, who is facing separate probes into a luxury vacation he took with the Aga Khan as well as his centrist Liberal Party's fund raising activities.

He is also under fire from Kevin O'Leary, a brash television personality running for the leadership of the opposition right-leaning Conservative Party, who says Mr Trudeau is too weak to stand up to Mr Trump.

Mr O'Leary complains that Mr Trudeau, who came to power in late 2015 promising to run a few years of modest budget deficits on infrastructure projects, has ramped up spending so much that finance ministry officials predict there will be shortfalls for decades to come.

While polls currently show the Liberals well ahead of their rivals in the run-up to the 2019 election, pollster Nik Nanos of Nanos Research says Mr O'Leary could eat away at Liberal support by positioning himself as a fiscal hawk. "Canadians were okay with a modest deficit for a specific purpose but I think there's a difference between that and a perpetual deficit," said Mr Nanos.

REUTERS