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U.S. wants end to Canada protection for dairy sector -source

ARLINGTON, Va, Oct 16 (Reuters) - U.S. negotiators at talks to update the North American Free Trade Agreement want Canada to dismantle its system of protections for the dairy and poultry sectors, a move Ottawa will reject, a source briefed on the matter said on Monday.

The proposal is the latest in a string of hard line demands from the U.S. side that are increasingly fueling doubts as to whether the Trump administration wants NAFTA to collapse.

U.S. producers have long complained about the Canada's so-called supply management system, which imposes high tariffs on imports and controls domestic production as a means of supporting prices in the dairy, poultry and egg sectors.

The source, who requested anonymity because of the sensitivity of the situation, said the United States wanted full access to Canadian markets within 10 years, effectively killing off supply management.

Canada had already made clear the idea was a non-starter, said the source.

Canada has a powerful dairy lobby and successive governments have for decades promised to keep the system of protections intact.

A spokesman for Foreign Minister Chrystia Freeland - who is in overall charge of Canada's NAFTA negotiating team - did not immediately respond to a request for comment. (Reporting by David Ljunggren; Editing by Leslie Adler)