US says investment curbs by Canada could backfire

Canadian officials have been warned "in a friendly wa" that the United States may take retaliatory trade steps against its neighbor if Canada curtails US investments there.

The US countermeasures, in the "extreme case," could include abandoning the US-Canada auto pact and emergency powers for a president to alter any trade agreement between the two countries, a Department of Commerce spokesman said.

The US message was sparked by Canadian moves to restrict investments in Canada such as a proposal to reduce foreign ownership of the oil and gas industry and tightening of controls on non-energy subsidiares of foreign companies operating there.