Obama to reassure Canada on free trade pact

[February 18, 2009]  WASHINGTON (AP) -- President Barack Obama is seeking to assure Canada, the largest U.S. trading partner, that he has no interest in disturbing the two countries' economic relationship.

That message, for now, trumps any push by the U.S. to renegotiate a North American trade pact, as Obama has suggested.

In his first foreign trip as president, Obama will meet Thursday with Canadian Prime Minister Stephen Harper in Ottawa, the Canadian capital. The ties between their countries are vital: No country takes part in as much daily trade with the U.S. or exports as much oil to the U.S. as Canada does.

Obama plans to underscore that the U.S. is not pulling back from trade even as it enforces new "Buy American" language and reconsiders the 1994 North American Free Trade Agreement. The new American president has stirred up some nervousness north of the border by pledging to renegotiate NAFTA, which links the U.S., Canada and Mexico, to get better labor and environmental standards.

When he was scrapping for the Democratic presidential nomination a year ago, Obama raised the notion of withdrawing from NAFTA. "We should use the hammer of a potential opt-out as leverage to ensure that we actually get labor and environmental standards that are enforced," he said.

Now, though, Obama is choosing softer language.

"I think there are a lot of sensitivities right now because of the huge decline in world trade," Obama said Tuesday when asked whether now was the time to renegotiate NAFTA. He maintained that labor and environmental standards, currently part of side deals, could be better enforced if woven into the main agreement.

"But what I've also said is that Canada is one of our most important trading partners," Obama said in an interview with the Canadian Broadcasting Corp. "We rely on them heavily. There's $1.5 billion worth of trade going back and forth every day between the two countries. ... It is not in anybody's interest to see that trade diminish."

Reopening NAFTA to deal with standards could spiral into a broader debate about the agreement itself, a potential mess for the White House as protectionist tendencies run high in weak economic times. Free-trade opponents say expanded international trade threatens U.S. jobs and keeps wages from growing.

Denis McDonough, Obama's senior foreign policy adviser, said Tuesday that the president will use the visit with Harper to underscore his views on labor and environmental standards, and that he will do the same in conversations with Mexican President Felipe Calderon.

Meanwhile, Canadian worries have subsided somewhat over the "Buy American" clause wrapped into the giant economic stimulus bill Obama signed Tuesday.

It requires that U.S. iron, steel and other manufactured goods be used for public buildings and other public projects paid for under the bill. But the final language makes clear that the policy must not violate U.S. obligations under existing international trade agreements, including NAFTA.

[Associated Press; By BEN FELLER]

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