BUSINESS

Washington stages a blitz

MICHAEL POSNER October 4 1982
BUSINESS

Washington stages a blitz

MICHAEL POSNER October 4 1982

Washington stages a blitz

As a former junior football coach, Canadian Trade Minister Ed Lumley doubtless knows a blitz when he sees one. Just in case he had forgotten, Washington last week staged a pointed and effective reminder. While Lumley was warning a Georgetown University audience of the catastrophic results of an international trade war, the U.S. Congress and the Reagan administration were rudely squeezing Ottawa at half a dozen sensitive pressure points.

In fact, the U.S. manoeuvres—on trucking routes, uranium imports, the auto pact, postal rates and air fares— were hardly a declaration of all-out economic warfare. Still, as symptoms of the contagious protectionist fevers now running rampant through an electionyear Congress, they do suggest an ominous trend. To be sure, the Reagan administration has tried to leash the more extremist reflexes on Capitol Hill. Last week, for example, President Ronald Reagan temporarily waived a moratorium that would have denied Canadian trucking firms access to lucrative transboundary routes. Such a sanction would certainly have brought reprisals from Canada, thus risking a major trucking war.

The genesis of the conflict lies in a 1980 congressional act to deregulate the U.S. trucking industry, which made it easier for Canadian haulers to penetrate the vast U.S. market. There was no comparable deregulation in Canada, where provincial licensing boards remain as restrictive as ever—for truckers of both nations. The net effect was that American truckers were losing their share of the market south of the

border, with no chance to recoup in Canada. American truckers cried foul, and a sympathetic Congress responded.

The president’s waiver is essentially a tepid compromise. It gives special trade representative Bill Brock 60 days to negotiate a solution with Ottawa, during which time U.S. regulators can continue to issue licences. Carousing in Georgetown afterward, Lumley expressed deep disappointment and said he expected provincial retaliation.

But the trucking industry is not alone in feeling the chilly winds of protectionism. Canadian uranium producers, who provide the United States with most of its import needs, may soon face curbs and a temporary ban on imports. The current recession has sent the world price of uranium plunging, putting 20,000 Americans out of work. To keep U.S. mines operating,

Senator Pete Domenici (R-N.M.) proposed legislation that would have restricted imports to 20 per cent of the total market.

But that proposal proved too restrictive, even for a sympathetic Congress. The Reagan administration, with its strong free trade ethic, also lobbied heavily

against the legislation. Now, Congress is considering a new formula that would limit imports to 37.5 per cent. When that level is reached, a two-year

moratorium would take effect. Domenici’s spokesman, Jim Bradshaw, predicts that will happen within two years. The méasure is expected to reach the Senate floor this week.

In the House of Representatives another committee is debating legislation to curb auto imports. Although the bill is aimed principally at Japan, it would set domestic content levels for all imports. Failure to meet the content quotas would force foreign manufacturers to limit exports. Both Bill Brock and Commerce Secretary Malcolm Baldrige last week condemned the bill as a violation of the Canada-U.S. auto pact and warned that passage would invite Canadian retaliation. But the House trade subcommittee, confronting near-depression conditions in the auto industry, was not persuaded. Chances are, however, that the proposal will not reach the House floor before the current congressional session expires.

At the same time, Canada-U.S. talks on the pricing of cross-border airfares have broken down. This, too, is a conflict between Washington’s instinct for deregulation and free, competitive pricing and Ottawa’s need for what one Canadian diplomat calls “checks and balances.” Finally, the Reagan administration formally asked last week for a GATT meeting in Geneva to complain that Canadian postal rates discriminate against American magazine publishers. Ottawa’s defence is that the cheaper cost of mailing domestic periodicals is due to government subsidies.

Still, it is the protectionist urge in Congress that poses the greater threat to Canadian-U.S. relations. When times are tough, a little protectionism—or a demand for reciprocity—is a politician’s best offence. Under normal circumstances these initiatives would never get out of committee, let alone to the House or Senate floor. But Jeremy Kinsman, the Canadian Embassy’s political minister, notes that the lack of leadership in Congress has fragmented power and eroded discipline. Now, junior members of Congress can promote emergency domestic content bills into reams of favorable publicity, if not into law.

Congressional impatience also thrives on administration neglect. Most Canadian-U.S. issues are, in the grand scheme of things, picayune. Preoccupied with the Middle East, the Soviets and NATO, the White House seldom turns its attention to uranium imports or trucking licences. Says Kinsman: “It leaves us feeling very frustrated.” Until the U.S. economy si; revives, the feeling is not likely to ï fade. MICHAEL POSNER

in Washington.