"If some things need to be updated that do not undermine the advances that NAFTA has helped make", Smith said, that ultimately could be helpful.
In Davos, Switzerland, Foreign Affairs Minister Chrystia Freeland was able to discuss Canada's counter-proposals with U.S. Trade Representative Robert Lighthizer.
Many Canadian officials, however, are downbeat about the talks amid uncertainty over whether Washington really wants to negotiate.
"They say, 'It is my proposal or nothing, '" said one of the sources, who spoke to reporters on condition they not be named.
But it is the talks between chief negotiators that should provide a fairly clear idea whether indeed there will be room for real progress in Montreal, or whether discussions will bog down in the face of American demands for more concessions.
"He was engaged, he asked questions ..."
The source emphasized that it was too soon to assess what that means.
Trump wants to expand the list of parts whose origin is actually traced, something that would add a paperwork burden for automakers and potentially lead to certain parts, now deemed domestic because they aren't traced, being counted as foreign.
Flavio Volpe, the president of the Automotive Parts Manufacturers Association of Canada, said keeping the talks moving is imperative.
Two major US and Mexican labor federations said they have filed a complaint under the North American Free Trade Agreement against Mexican laws that allow companies to sign contracts with employer-friendly unions before they even open a plant in the country. "I happen to be of the opinion that if it doesn't work out, we'll terminate it".
"Canada is a hot spot economically right now, and I think it's positive", she told reporters in Montreal.
The Trudeau-Netanyahu chat comes weeks after the Canadian government chose to abstain from voting on a resolution condemning U.S. President Donald Trump's decision to recognize Jerusalem as the capital of Israel and to relocate the American embassy.
In 2016, Mexico and Canada were the largest and second-largest agricultural importing countries for the US, respectively.
"There is a set of what we call the unconventional USA proposals in areas like rules of origin, particularly for the vehicle sector, like the sunset clause proposal ... there is a greater distance between the parties", Freeland said.
The proposal from Canada is created to shift the conversation away from American demands for greater US and North American content for vehicles to qualify for duty-free movement across borders-a demand derided by the industry as destructive to North American competitiveness.
Canada responded by suggesting that content would be higher if the value of software and other high-tech materials made by the three nations were taken into account.
Higgins and many other lawmakers from onetime factory towns have long viewed the original NAFTA as a job-killer - as does President Trump. "So the uncertainty, while we're obviously going to be anxious, I think the Americans should not take USA for granted".
MONTREAL-A pair of Canadian proposals over the next few days will provide a litmus test on one of the biggest questions looming over this country's politics, economics, and global relations: Can a new NAFTA deal be achieved?