MONTREAL Honeywell International Inc's (HON.N) aerospace business, under review as part of a spinoff proposal, has performed well and benefited from heavy investment from the U.S. technology and manufacturing company, Executive Chairman David Cote said on Monday.

Honeywell said in May it would decide by this fall whether to separate the business, its biggest with $14.75 billion in 2016 sales, which makes auxiliary power units and engines for aircraft.

"The business has actually performed pretty well," said Cote in an interview on the sidelines of the International Economic Forum of the Americas in Montreal.

"And if you take a look at margin improvement and you take a look at the wins that we've had over a long period of time since 2013. We've invested very heavily in that business."

Hedge fund investor Third Point LLC has argued in favor of the spinoff, which it said could create more than $20 billion in shareholder value.

Cote said Honeywell Chief Executive Darius Adamczyk was reviewing the unit with the company's board and discussions would be held with investors at some point.

"I can promise you that whatever Darius does, it's going to be consistent with 'how do you keep growing that overall return for our shareholders,'" he said.

Cote, Honeywell's former CEO, also said that while he would have preferred that the United States not leave the 2015 global Paris agreement to fight climate change, he did not believe the move was "catastrophic."

While the decision would erode the ability of the United States to influence other countries, it will not stop America from achieving its own emissions reductions goals, in part because of the conversion from coal to natural gas use for power generation, he said.

Cote also said he believed it was worth modernizing and updating the North American Free Trade Agreement to include technological developments.

"Twenty years ago when they were negotiating NAFTA the whole idea of cyber was not all that big a deal," he said. "It's very different today."

(Reporting By Allison Lampert; Editing by Phil Berlowitz and Richard Chang)

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Honeywell aerospace unit under review for spinoff has fared well: chairman - Reuters