Donald Trump: Mexico Can Pay for the Wall 'Indirectly Through NAFTA'

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Separately, a USA source close to the White House quoted Trump as saying "I want out" as the talks drag on with little sign of progress.

Officials are due to meet for a sixth and second-last round of scheduled negotiations on updating NAFTA in Montreal from January 23-28, but the talks are in trouble.

The Canadian dollar was little changed against its USA counterpart on Friday as the greenback broadly fell and the price of oil pared some recent gains, while investors awaited an interest rate decision from the Bank of Canada next week.

Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries.

U.S. Trade Representative Robert Lighthizer said the WTO filing was a "broad and ill-advised attack".

"They can pay for it indirectly through Nafta", Trump said in an interview with the Wall Street Journal on Thursday. "When people see that you are firm, you get respect".

"We've been talking with Canadian stakeholders, and we have some ideas we're looking forward to talking with our USA and Mexican counterparts about...."

Guide NAFTA Pullout 20180111
Donald Trump: Mexico Can Pay for the Wall 'Indirectly Through NAFTA'

Canadian officials who spoke on condition they not be identified declined to say whether the chances of Trump saying he will quit the pact are greater than 50 per cent. "When it comes to the more unconventional USA proposals, we have been doing some creative thinking, we've been talking with Canadian stakeholders and we have some new ideas that we look forward to talking with our USA and Mexican counterparts about in Montreal".

But while Champagne was talking tough, Freeland said she remains hopeful a new NAFTA deal beneficial to all three countries can be reached.

Freeland said Canada will enter the sixth round of NAFTA talks, to be held in Montreal Jan. 23 to 28, with a spirit of good will, and says it's "absolutely possible" to have a positive outcome.

"When it comes to the more unconventional USA proposals, we have been doing some creative thinking, we've been talking with Canadian stakeholders and we have some new ideas that we look forward to talking with our USA and Mexican counterparts about in Montreal".

"And we've always understood that this was a very complex negotiation".

Neither Freeland nor Finance Minister Bill Morneau would discuss what preparations the government is making for the potential end of NAFTA. Canada is hoping to win USA support for an idea that might achieve its key goal of ensuring American content in cars, while limiting disruptions to current supply chains.

In a letter previous year sent to the governors of NY and Wisconsin, the Canadian ambassador to Washington, David MacNaughton, cited data showing dairy trade between the countries benefits the U.S.by a five-to-one margin.

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