Canadian PM open to compromise on disputed NAFTA sunset clause

By David Ljunggren

LA MALBAIE, Quebec (Reuters) - Canadian Prime Minister Justin Trudeau on Saturday rejected a U.S. demand for a sunset clause in NAFTA but said he was prepared to compromise on the issue, which is holding up talks to update the 1990s-era pact.

U.S. President Donald Trump - who regularly threatens to pull out of the North American Free Trade Agreement - insists that Canada and Mexico agree to a sunset clause that would allow a member nation to withdraw after five years.

Although Canada and Mexico say the idea is unworkable, Trump told reporters earlier on Saturday that the new deal would contain such a provision. Trudeau rejected the idea.

"There will not be a sunset clause ... we will not, cannot sign a trade deal that expires automatically every five years," he told a news conference at the end of a Group of Seven summit in Quebec.

"I think there are various discussions about alternatives that would not be that, and that would not be entirely destabilizing for a trade deal, and I think we are open to creativity," he said.

This, he suggested, could involve "a check in and a renewal." Officials say Canada and Mexico have proposed member nations gather every five years to review the treaty.

Talks to modernize NAFTA, which started last August, have effectively stalled as Canada and Mexico resist U.S. demands for major changes such as the sunset clause and boosting the North American content of autos made in the three nations.

Trudeau said he had told Trump that the talks had been made more complicated by a U.S. decision to impose tariffs on Canadian steel and aluminum, ostensibly for national security reasons. Canada has promised retaliatory measures on July 1.

"I highlighted directly to the president that Canadians did not take it lightly that the United States has moved forward with significant tariffs," said Trudeau.

"Canadians, we're polite, we're reasonable, but we will also not be pushed around."

(Reporting by David Ljunggren; editing by Grant McCool)