OTTAWA  -- Canada is threatening legal action to force United States Steel Corp. X-N to resume production at two Ontario mills it acquired in its takeover of Stelco Inc., becoming the latest Group of Seven government to put economic reality ahead of summit rhetoric extolling free trade and investment.

Pittsburgh-based U.S. Steel, which recorded its first loss in five years in the first quarter, is laying off more than 9,000 workers at six facilities in North America, citing the recession and the collapse of automobile production. The former Stelco plants in Hamilton and Port Dover, acquired in 2007, were swept up...

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