News Archive


Airbus to take majority stake in Bombardier CSeries jet program

MONTREAL/PARIS (Reuters) – Airbus SE (AIR.PA) agreed on Monday to buy a majority stake in Bombardier Inc’s (BBDb.TO) CSeries jetliner program, grabbing control of a struggling competitor at the second attempt and giving the Canadian plane-and-train-maker an unexpected boost in its costly trade dispute with Boeing Co (BA.N).

The deal, which would come at no cost for Airbus, would give the European planemaker a 50.01 percent interest in CSeries Aircraft Limited Partnership (CSALP), which manufactures and sells the jets, the companies said.

Airbus Chief Executive Tom Enders said the company has offered to assemble some of the narrowbody jets at its U.S. plant in Alabama for orders by American carriers.

The U.S. assembly line would mean the 110-to-130-seat jets would not be subject to possible U.S. anti-subsidy and anti-dumping duties of 300 percent, Bombardier Chief Executive Alain Bellemare said on a media conference call.

“This is a strategic decision. We’re doing this deal here not because of this Boeing petition. We are doing this deal because it is the right strategic move for Bombardier. And it makes good strategic sense for Airbus,” Bellemare said.

A Boeing spokesman immediately dismissed the agreement as a “questionable deal between two state-subsidized competitors” to try to skirt a recent U.S. trade finding against the CSeries.

  • Airbus, Bombardier see boost in CSeries sales under deal
  • Boeing calls CSeries deal a bid to escape U.S. import fees

The Boeing-Bombardier dispute has snowballed into a bigger multilateral trade dispute, with British Prime Minister Theresa May wading into the debate and asking U.S. President Donald Trump to intervene in order save British jobs.

Bombardier is the largest manufacturing employer in Northern Ireland, which is the poorest of the United Kingdom’s four nations and remains mired in political sensitivities after emerging from decades of armed sectarian conflict.

BOOST FOR BELFAST

On Monday, the leader of the Northern Irish party propping up Britain’s minority government said Airbus’s deal with Bombardier was “incredibly significant news” for Belfast.

Talks for the deal between Airbus and Bombardier first started in August. Enders said the deal was different from an earlier round of talks in 2015, when he abruptly ordered an end to negotiations. He said the CSeries’ performance had now been certified and entered service and was performing well.

“It’s an entirely different situation,” he said.

Delta Air Lines Inc (DAL.N) said after the announcement of the deal that it looked forward to introducing the CSeries jet into its fleet.

Under the deal, Bombardier will own about 31 percent, while Investissement Québec, the investment arm of the province of Quebec, will hold 19 percent once the deal closes.

Quebec’s largest pension fund, which holds a 30 percent stake in Bombardier’s rail division, said the decision ”strengthens the company, improves its prospects for growth, and makes the company more robust over the long term.”

The Quebec government, through its financing arm, took a 49 percent stake in the CSeries program in 2015 for $1 billion. Quebec’s share, most recently worth 38 percent, slipped to 19 percent following the deal with Airbus.

The deal also provides Airbus warrants exercisable to acquire up to 100 million Class B Shares of Bombardier.

Airbus will provide procurement, sales and marketing, and customer support expertise to CSALP, the companies said.

There will be no cash contribution by any of the partners, nor will CSALP assume any financial debt, they said.

Bombardier expects a $400 million loss in commercial aircraft this year, but has set a breakeven target for 2020.

Additional reporting by Ankur Banerjee in Bengaluru and Alana Wise in Atlanta; Writing by Denny Thomas; Editing by Sriraj Kalluvila and Mary Milliken

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Kobe Steel faked quality data for more than 10 years: source

TOKYO (Reuters) – Kobe Steel Ltd (5406.T) falsified data on product quality and specifications longer than the 10 years that the company had previously stated, a source with knowledge of the matter said.

Japan’s No.3 steelmaker is still trying to nail down the extent of the tampering, the source told Reuters, requesting anonymity because he was not authorized to speak to the media.

The cheating went on for decades with the knowledge of plant and quality control managers, the Nikkei reported earlier, without identifying the source of the information.

The revelations have sent shockwaves through supply chains around the world and hammered Kobe shares, which fell to near five-year lows on Monday on worries about the financial and legal fallout of the cheating scandal.

Last week investors knocked about $1.8 billion off the value of the company as successive revelations deepened the crisis.

The shares were trading nearly 6 percent higher on Tuesday.

Kobe Steel Chief Executive Hiroya Kawasaki on Friday said about 500 companies had received its falsely certified products, more than double its earlier count.

No safety problems have surfaced as the Japanese steelmaker attempts to confirm the extent of the data tampering, but companies from operators of Japan’s famous bullet trains to the world’s biggest aircraft maker, Boeing Co, (BA.N), have become ensnared in the scandal.

Reporting by Yoshiyasu Shida, Writing by Aaron Sheldrick; Editing by Himani Sarkar

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Oil prices firm as Iraq tensions escalate, shares extend rally

TOKYO (Reuters) – Oil prices held firm on Tuesday after Iraqi forces seized the oil-rich city of Kirkuk from largely autonomous Kurdish fighters while Asian shares look set to extend their bull run on optimism about upcoming earnings.

Short-term U.S. bond yields and interest rates jumped after a report U.S. President Donald Trump favoured Stanford economist John Taylor to head the Federal Reserve.

Japan’s Nikkei .N225 gained 0.6 percent, extending its 10-day winning streak until Monday while MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.04 percent having gained 10 of the past 12 sessions.

Oil prices held near their highest levels in more than two weeks after Iraqi government forces captured the major Kurdish-held oil city of Kirkuk in a response to a Kurdish independence referendum, raising worries about oil supply.

As Iraqi forces advanced, Kurdish operators briefly shut some 350,000 barrels per day of oil output at two large Kirkuk fields, citing security concerns, oil ministry sources on both sides said.

Although production resumed shortly thereafter, concerns about supply disruptions and further escalations in the confrontation between Baghdad and the Kurds kept investors on edge.

U.S. crude CLc1 traded at $51.85 a barrel, little changed on the day, after having hit a high of $52.37 on Monday. Brent crude LCOc1 fetched $57.85 per barrel, having risen to as high as $58.47 on Monday.

U.S. short-term interest rates and bond yields jumped on Monday after Trump met Stanford University economist John Taylor to discuss the job of Federal Reserve Chair as Trump seeks candidates to succeed current Janet Yellen next year.

Taylor is known as a proponent of a rule-based monetary policy and according to his formula, known as Taylor rule, the Fed funds rate needs to be much higher than the current target of 1.0 – 1.25 percent.

The policy-sensitive two-year yield jumped to as high as 1.546 percent US2YT=RR, its highest since 2008, while Fed funds rates futures contract for settlement in late 2018 to early 2019 posted one of their biggest fall so far this year.

Trump has met other candidates, including former Fed Governor Kevin Warsh, current Governor Jerome Powell and he will see Yellen on Thursday, leaving markets on tenterhook.

“At the moment, there’s no consensus at all in the market and there is little point betting on who will be picked as it would be a complete gamble. But once the decision will be made, there will be a clearer market direction,” said Tomoaki Shishido, fixed income analyst at Nomura Securities.

“And when the uncertainty is cleared, bond yields are likely to rise given the strength of the economy now,” he added.

Major currencies are also largely on hold.

The euro EUR= traded at $1.1792, little changed from the previous day.

The dollar bounced back to 112.16 yen JPY=, from Monday’s low of 111.65, which was its lowest since Sept 26.

Elsewhere, copper CMCU3 soared to $7,134.5 a tonne, hitting a three-year high, having jumped 3.7 percent on Monday, its biggest gain in about 10 months.

Editing by Sam Holmes

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Netflix adds more subscribers than expected, shares hit record

(Reuters) – Netflix Inc added more subscribers than expected around the world in the third quarter and projected growth in line with Wall Street forecasts, saying it had a head start on rivals as internet television explodes globally.

Shares of the world’s leading online video streaming service touched a record high on Monday and rose a further 1.2 percent after hours to $205.07. They are up about 64 percent this year.

For the third quarter, Netflix added 5.3 million subscribers in all its markets, compared with Wall Street’s target of 4.5 million, according to FactSet. Netflix forecast 6.3 million additions for the current quarter, just above analysts’ average estimate of 6.25 million, which would bring its global customer base to nearly 115.6 million.

The company known for original TV shows such as “House of Cards” is spending heavily to produce and acquire content as it races to dominate streaming television in international markets, which now account for the majority of its subscriber growth.

In its quarterly letter to shareholders, Netflix said it would boost its content budget to between $7 billion and $8 billion in 2018.

“As we move into 2018, we aim to achieve steady improvement in international profitability and a growing operating margin as our success in many large markets helps fund investments throughout Asia and the rest of the world,” the letter said.

Investors have been bullish on Netflix’s ability to keep signing up customers around the world despite new rivals. Netflix recently traded at 101 times expected earnings for the next 12 months, versus Amazon.com Inc at 144 times earnings and Time Warner Inc at 16 times earnings, according to Thomson Reuters data.

The company faces increasing competition from streaming services such as Amazon.com’s Prime Video, plus moves by traditional media companies. Walt Disney Co decided to yank its first-run movies from Netflix in the United States starting in 2019, and to launch its own online offering.

Netflix, in its investor letter, said Disney’s decision underlined the need to keep building its slate of exclusive original content. “We have a good head start but our job is to improve Netflix as rapidly as possible,” the company said.

But Hastings said on a webcast it was “extremely unlikely” that Netflix would bid on The Weinstein Company if the opportunity arose. The film production company is in talks to sell the bulk of its assets to Colony Capital following the firing of co-founder Harvey Weinstein.

Netflix distributes some Weinstein Company movies and TV shows on its streaming service but the business is not material, Netflix Chief Creative Officer Ted Sarandos said on the webcast.

Netflix’s 5.3 million additional subscribers in the third quarter included 4.45 million in international markets and 850,000 in the United States. Wall Street had expected 4.5 million overall, with 3.69 million overseas and 810,000 in the United States, according to FactSet.

Revenue rose about 30 percent to $2.99 billion in the third quarter.

Net income rose to $130 million, or 29 cents per share, in the latest quarter from $52 million, or 12 cents per share, a year earlier.

Reporting by Aishwarya Venugopal in Bengaluru; Editing by Bill Rigby and Richard Chang

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Procter & Gamble says Peltz loses board seat bid by around 6 million votes

(Reuters) – Procter Gamble Co (PG.N) said on Monday that activist hedge fund manager Nelson Peltz had lost his bid to win a seat on the consumer goods company’s board by 6.15 million votes, according to its preliminary tally.

Peltz, whose Trian Fund Management LP owns a $3.5 billion stake in PG, has sought a board seat in one of the biggest and most expensive proxy contests ever.

PG chief executive David Taylor said last week that Peltz had lost the fight, but Peltz said the vote was too close to call and was not conceding.

He had contested the existing seat of Ernesto Zedillo, the former president of Mexico.

Peltz received 973.0 million votes, compared to Zedillo’s 979.2 million votes, PG said in a filing. (bit.ly/2yt33t6)

The results were preliminary estimates and subject to change based on certification by an independent firm, the maker of Pampers diapers and Gillette razors said.

It is expected to take the independent firm weeks to deliver a final tally. The counting process is made difficult in this case because PG has a large number of individual investors and many of them voted their own shares instead of having brokerages who hold the shares do the voting.

Peltz could not immediately be reached for comment on Monday.

Reporting by Laharee Chatterjee, Editing by Rosalba O’Brien

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Striking Canadian autoworkers ratify GM deal

MONTREAL (Reuters) – Striking Canadian workers on Monday voted nearly 86 percent in favor of a new four-year agreement with General Motors Co (GM.N) in a deal that would make it more costly for the U.S. automaker to shut the Ontario plant.

The U.S. auto maker and the union, Unifor, had reached a tentative deal on Friday for about 2,500 workers at the CAMI plant in Ingersoll, after a near month-long strike.

The workers walked off the job on Sept. 18 after GM rejected a union call to designate the factory as the lead production site for its popular Chevrolet Equinox sport utility vehicle model in North America.

The strike followed union demands for guarantees to prevent GM from shifting Canadian production of the strong-selling Equinox toward two factories in Mexico at a time when the auto maker has been scaling back manufacturing in Canada.

The deal would create a C$300 million ($239.5 million) fund for workers in the event GM ever decides to close CAMI, and employees would have to be offered early retirement incentives in the case of layoffs, plant chair Mike Van Boekel told Reuters in a telephone interview.

“If they want to lay anybody off, it will be expensive,” Van Boekel said.

The benefits will bring the CAMI plant in line with other unionized automaking facilities in Canada, an industry source said.

About 400 workers were laid off at the plant this year after an older Equinox model was phased out and GM moved production of a similar SUV model, the Terrain, to Mexico.

In a statement, GM called Monday’s vote “welcome” news for the company.

Production was to resume late Monday night at CAMI following Canada’s first GM assembly strike since 1996.

CAMI is not GM’s biggest plant outside of the United States, but the Equinox SUV is a popular model in one of the fastest- growing segments of the North American market.

GM warned the union last week that it would start winding down production at the plant and ramp up output in Mexico unless workers called off their strike. The union had blamed the North American Free Trade Agreement, which is now being renegotiated, and Mexico’s cheaper labor costs for the job losses..

Between 2004 and 2017, GM’s vehicle-making footprint in Canada has shrunk by 61 percent, with the automaker producing about 407,000 units this year, according to data from AutoForecast Solutions LLC.

GM is expected to build 321,000 autos in Canada in 2018, with most of those being the Chevrolet Equinox, said AutoForecast’s Sam Fiorani.

Apart from the fund, workers will get a C$6,000 signing bonus, immediate 2 percent raises and regular $2,000 bonuses at Christmas, Van Boekel said.

($1 = 1.2524 Canadian dollars)

Reporting by Allison Lampert; Editing by Leslie Adler and Dan Grebler

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Colony Capital injects cash, in talks to buy Weinstein Co

NEW YORK (Reuters) – The Weinstein Company has entered talks to sell the bulk of its assets to private equity firm Colony Capital, the companies said on Monday, as the film production company looks for stability after firing co-founder Harvey Weinstein.

Co-Chairman Bob Weinstein, Harvey’s brother and fellow co-founder, on Friday had denied the firm was seeking to sell or shut down following Harvey Weinstein’s dismissal after a number of women went public to accuse him of sexually harassing or assaulting them over the past three decades.

Colony Capital, which has about $20 billion in assets under management, will provide an immediate capital infusion into The Weinstein Co and is in talks to buy all or a significant portion of its assets, the companies said in a statement.

The Weinstein Co confirmed its board is to meet on Tuesday. No further details of the meeting were available. The board has shrunk to only three people following the resignation and departure of five others in the wake of the accusations against Weinstein, trade publication Deadline reported over the weekend.

Weinstein has denied having non-consensual sex with anyone.

One of Hollywood’s most influential forces since launching in October 2005, The Weinstein Co produces and distributes films, including such hits as “The King’s Speech,” “Silver Linings Playbook” and others. Its TWC Television arm produces the long-running reality series “Project Runway.” It does not operate a film studio, and as such has few physical assets.

If the deal goes through, it will be familiar territory for Thomas Barrack, the founder and executive chairman of Colony Capital and a friend of Donald Trump who chaired the U.S. president’s inaugural committee.

Colony Capital and the Qatar Investment Authority, the sovereign wealth fund of Qatar, in 2010 bought the Miramax studio, the original studio founded by the Weinstein brothers, in 1979. The two brothers sold Miramax to Walt Disney Co (DIS.N) in 1993. Last year, Colony and Qatar Investment sold Miramax to Qatar-based BeIN Media Group.

Like Miramax, the value of The Weinstein Co likely lies in its library of movie hits, which are in demand by traditional TV networks and online streaming services.

The Weinstein Co handed control of hundreds of films to Goldman Sachs Group Inc (GS.N) and insurance company Assured Guaranty Ltd (AGO.N) when it overhauled its balance sheet to avoid bankruptcy in 2010, while retaining ownership of 150 films, Reuters reported at the time.

Goldman Sachs later offloaded its control of the library to AMC Networks (AMCX.O), which still owns a stake in the library, a source familiar with the matter told Reuters on Monday.

Colony Capital and The Weinstein Co made no mention in their statement on Monday of a possible deal value.

According to a source familiar with the talks, there are a couple of deal structures under consideration. One would involve Colony’s outright acquisition of all of The Weinstein Co or its major assets, including what it sees as the more attractive TV operations, with an escrow account being negotiated to cover legal liabilities.

Another option is for The Weinstein Co to file for bankruptcy with Colony as a “stalking horse” bidder to buy it or its major assets. That would shield Colony from having to assume The Weinstein Co’s legal liabilities.

MEGA-PRODUCER SHUNNED BY PEERS

There is also the question of what The Weinstein Co is without Harvey Weinstein, the elder of the two brothers and the aggressive dealmaker and wrangler of Hollywood talent, money and egos – and the one credited with conceiving the strategy that scored dozens of Oscar awards for the company’s films.

Last year, Harvey Weinstein told The Hollywood Reporter that the privately held company was worth $700 million to $800 million, including the film library, and that it had no debt.

There are no public filings on which to assess the likely value of the company or its debt load. Opus Bank (OPB.O) was one of several banks that funded a $400 million credit facility to Weinstein Co in August 2016, but it is unclear if the company tapped the facility.

The cash infusion comes after more of the Weinstein Co’s partners have cut ties in recent days. Goldman Sachs said on Friday it was exploring options for its stake in the company, which is worth less than $1 million.

Hachette Book Group, the U.S. publishing house of French group Lagardere (LAGA.PA), terminated the Weinstein Books imprint on Thursday.

Colony’s cash infusion will “stabilize the company’s current operations, as well as provide comfort to our critical distribution, production and talent partners around the world,” the companies said in the statement.

The Academy of Motion Picture Arts and Sciences expelled Weinstein on Saturday, a sharp smack for a Hollywood mogul so closely associated with Oscar gold. The Weinsteins together have received 341 Oscar nominations and won 81 Academy Awards for their films.

On Monday, the Producers Guild of America said it had begun the process of terminating Weinstein’s membership after a unanimous vote by its board of directors and officers. Weinstein will be given until Nov. 6 to respond to the decision.

Colony Capital is the private equity arm of Colony NorthStar Inc (CLNS.N), a real estate investment trust that has holdings in healthcare, industrial and hospitality sectors. Colony NorthStar shares closed up 0.2 percent on Monday.

Reporting by Greg Roumeliotos and Jessica DiNapoli in New York; Additional reporting by Jessica Toonkel and Anna Driver in New York, Aparajita Saxena in Bengaluru and Piya Sinha-Roy in Los Angeles; Writing by Bill Rigby and Mary Milliken; Editing by Leslie Adler

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Major Sears investor Berkowitz departs board; stock plunges

(Reuters) – Sears Holdings Corp (SHLD.O) on Monday said that Bruce Berkowitz, head of the company’s second-biggest investor, resigned from the board of directors less than two years after he sought a seat to help turn the struggling department store chain around, sending Sears stock down as much as 15 percent.

The decision by Berkowitz, the head of investor fund Fairholme Capital Management, was not the result of a disagreement over operations, policy or practices, Sears said in a statement.

A fund managed by Fairholme Capital Management disposed of 3.14 million Sears shares on Oct. 12, according to a regulatory filing. As part of a previously approved plan of liquidation, the fund distributed the stock to the fund’s investors, including 727,816 shares of Sears stock to Berkowitz.

The fund in liquidation, which a person familiar with Fairholme identified as Fairholme Partnership LP, also distributed warrants to buy Sears stock.

Like many U.S. retailers, Sears has been losing customers to online competition such as Amazon.com Inc (AMZN.O) and to discounters such as Wal-Mart Stores Inc (WMT.N).

Hoffman Estates, Illinois-based Sears has been closing scores of its weaker Kmart and namesake department stores, striking brand licensing deals and promoting its shopper loyalty program in efforts to turn itself around.

Sears named Berkowitz to its board in February 2016, expanding the number of directors to 10, after Berkowitz said he wanted an active role in returning Sears to profitability. He also said he wanted greater disclosure of assets and strategy.

“Mr. Berkowitz believes that he has achieved that objective, and was pleased to have the opportunity to provide input during the formulation of the company’s strategic restructuring program,” Fairholme said in a statement.

Fairholme said the firm remains a significant investor in Sears. As of June 30, Fairholme owned 26.9 percent of Sears stock, according to Thomson Reuters data, and only company Chairman Eddie Lampert himself holds a bigger stake.

Sears said Lampert appreciated Berkowitz’s board tenure. “Mr. Lampert and Mr. Berkowitz have a long-standing partnership and continue to have great respect for each other,” said spokesman Howard Riefs of Sears.

Sears announced last February a plan to cut costs by $1 billion and reduce debt and pension obligations. Its stock more than doubled in the months following the turnaround plan, and in May Sears reported its first quarterly profit in two years.

The gains in the share price, however, have eroded since summer. On Monday afternoon Sears shares were down about 10.7 percent at $6.04 on Nasdaq, as the stock posted it biggest one-day drop in more than three years, according to Thomson Reuters data. Earlier on Monday, the shares were just 25 cents above the record low price set in February.

On an analyst call in June, Berkowitz said Sears was worth $90 per share based on its real estate and brands, but operating losses were undermining that value.

He said on the call he continued to invest in Sears because the stock was falling faster than the net value of Sears’ assets. Fairholme had invested 9.7 percent of its net assets in Sears, according to a May 31 securities filing.

Reporting by Tom Hals in Wilmington, Delaware; Editing by Leslie Adler and Lisa Shumaker

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Tough U.S. NAFTA demands send ball back into lobbyists’ court

ARLINGTON, Va. (Reuters) – Lobbying efforts on the North American Free Trade Agreement faced a major test this week after the Trump administration ignored advice from U.S. business groups and pitched proposals to radically reshape NAFTA, leaving its future in doubt.

The U.S. demands to force renegotiation of NAFTA every five years and reserve the lion’s share of automotive manufacturing for the United States have cast a pall over a fourth round of talks due to end Tuesday in suburban Washington.

Though they were widely expected, the aggressive U.S. proposals were met with dismay by many officials from Mexico, Canada and U.S. industry, who have formed a loose alliance in opposing major changes to NAFTA.

By Monday, Mexico’s peso MXN=D2 hit a near five-month low with fears growing about the future of the deal underpinning $1.2 trillion in annual trade between the three countries. Mexico sends nearly 80 percent of its exports to the United States.

U.S. opposition to NAFTA’s dispute resolution mechanisms, plans to restrict outside access to government contracts and attacks on Canadian dairy and softwood lumber producers have further stoked the grim mood among trade officials.

Bosco de la Vega, head of Mexico’s National Agricultural Council, the country’s main farming lobby, said coming weeks would show whether Mexico and Canada’s allies in Congress and the U.S. private sector could push back against the proposals.

“We’re going to see what the people here are made of,” he told Reuters on the sidelines of the talks. “What I can guarantee you is that Mexico won’t agree to a bad deal.”

Officials from the two biggest U.S. export markets have spent the months since Trump’s November election victory working on U.S. bosses and political leaders to defend NAFTA, a 23-year-old accord that the president has repeatedly called a “disaster,” which he blames for the loss of U.S. manufacturing jobs.

The U.S. Chamber of Commerce has rejected what it calls the “poison pill” plans and has been backed by other major industry groups.

But whether lobbies that Trump has sought to characterize as part of the “Washington swamp” can encourage a change of heart is far from certain, especially with the president openly feuding with a number of senior Republicans in Congress.

Trump has attacked NAFTA throughout the talks and participants are doubtful how much influence Canadian Foreign Minister Chrystia Freeland and Mexico’s economy minister, Ildefonso Guajardo, will have on U.S. Trade Representative Robert Lighthizer when the three meet for talks on Tuesday.

Arguing that the deal has boosted Mexican manufacturing at the expense of the United States, Trump points to a goods trade deficit with its southern neighbor of $64 billion last year.

To that end, his administration is seeking to raise the amount of NAFTA content in autos to 85 percent from 62.5 percent and secure 50 percent of the total for the United States.

U.S. negotiators at the talks opened up another front by proposing that Canada dismantle its system of protections for the dairy and poultry sectors, a move that Ottawa will reject, a source briefed on the matter said on Monday.

LOUDER NAFTA SALES PITCH

Defenders of NAFTA say the cross-border integration has made the region more competitive with the rest of the world and prevented job losses to rival economies in Asia and Europe.

Ann Wilson, senior vice president of government affairs for the Motor and Equipment Manufacturers Association, which represents U.S. auto parts makers, said the group was speaking to “as many levels of policymakers as possible.”

“We are hopeful that by providing data and analysis … that we can find a landing zone that will allow our members to continue to thrive,” said Wilson. “But the proposal that I understand is on the table right now will not do that.”

Moises Kalach, head of the international negotiating arm of Mexico’s CCE business lobby, was confident the divisive measures did not have the support of Congress or key U.S. employers.

“The American private sector completely supports us, they’re very aligned, working with Congress, working with the governors and the Senate, and they are meeting with a lot of resonance,” Kalach said. “There’s a lot of fighting still to do.”

Jerry Dias, head of Canada’s biggest private-sector union, Unifor, said the United States could not expect to extract concessions from the other two nations at minimal cost.

“Ultimately, Trump is going to get a major pushback because Canada is the number one trading partner for 30 U.S. states,” he said. “He agricultural sector of the United States will go absolutely crazy. The dairy sector will go absolutely crazy.”

But many are not convinced it will be enough.

“I don’t think Lighthizer will do much beyond listening and nodding. I can’t see a situation where (he) is ready to start negotiating,” said a Canadian source familiar with the talks, noting that Trump remained the biggest unknown. “We’ve heard time and time again that Lighthizer only has an audience of one.”

Additional reporting by David Ljunggren and Ginger Gibson; Editing by Susan Thomas and Leslie Adler

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