Canada's Freeland won't hold NAFTA talks, says more work needed

By David Ljunggren

SASKATOON, Saskatchewan (Reuters) - Canadian Foreign Minister Chrystia Freeland on Wednesday said officials needed to do more work before she could hold fresh talks with the United States on renewing NAFTA as time runs out to reach a deal.

A well-placed source had earlier told Reuters that Freeland planned to return to Washington for more talks on Thursday with U.S. Trade Representative Robert Lighthizer, adding that plenty of work remained.

But Freeland, who briefed Prime Minister Justin Trudeau about the negotiations twice in a matter of hours on Wednesday, said she had agreed during a phone conversation with Lighthizer that she would stay in Canada.

"We decided that in order to have another productive conversation, it would be best to give our officials some time to hold technical discussions," she told reporters late in the day, but gave no details.

U.S. President Donald Trump has already struck a deal with Mexico, the third member of the North American Free Trade Agreement, and is threatening to exclude Canada unless Ottawa agrees to concessions.

Canada and the United States are still arguing over cultural protections, an American demand for more access to the Canadian dairy market and a dispute resolution mechanism that Canada wants to keep and Washington insists be scrapped.

Asked whether the talks had hit a stalemate, Freeland replied: "Absolutely not".

Canada's chief NAFTA negotiator, as well as the country's ambassador to the United States, will fly back to Washington on Wednesday night for more talks, she said.

Trudeau, speaking to legislators of his ruling Liberal Party at a meeting in the western city of Saskatoon, reiterated that he would rather have no NAFTA than sign a bad agreement.

Freeland, pressed as to how much time was left, said her focus was on getting a good deal for Canada.

Canadian officials say they have some doubt as to whether Trump has the legal power to unilaterally tear up the 1994 pact, which he says is biased against the United States and needs to be reformed.

NAFTA underpins $1.2 trillion in trade. Uncertainty over the pact's future has hit Canadian and Mexican markets as well as the two countries' currencies.

The well-placed source had earlier reiterated Canada's position that it would take as long as needed.

"I expect we'll probably have several more sessions. This won't get resolved in an afternoon," said the source, who declined to be identified given the sensitivity of the situation.

Earlier on Wednesday, Mexican Economy Minister Ildefonso Guajardo said while he expected the U.S-Canada talks to yield an agreement, Mexico must be ready to pursue a bilateral trade deal with the Washington if need be.

Guajardo told reporters that Mexico still wants Canada to join the agreement to make it trilateral, saying that would be a "great asset."

He also said that Kenneth Smith, Mexico's chief NAFTA negotiator, went to Washington on Wednesday to continue working on the wording of the new bilateral accord that Trump announced.

(Reporting by David Ljunggren; Additional reporting by Adriana Barrera in Mexico City; Editing by Leslie Adler and Christopher Cushing)