CANADA

Celebrations for the ‘win-win’ deal

MADELAINE DROHAN December 21 1987
CANADA

Celebrations for the ‘win-win’ deal

MADELAINE DROHAN December 21 1987

Celebrations for the ‘win-win’ deal

CANADA

It was an emotional moment. After 19 months of stop-and-go bargaining with the Americans, Canada’s chief trade negotiator, Simon Reisman, last week handed Prime Minister Brian Mulroney three looseleaf binders containing the final text of a free trade agreement with the United States. Reisman has a legendary temper that often flared during the trade negotiations. But it was not in evidence at the brief ceremony on Dec. 10 in the Prime Minister’s Office in Parliament’s Centre Block. Instead, Reisman spoke movingly about the “great honor” of working with Mulroney and International Trade Minister Pat Carney.

And he noted solemnly that negotiating the pact —2,400 pages weighing about 10 lb.— had been the “highest point” of his 29-year career in Ottawa. Then Reisman extended his hands to Mulroney and Carney, and for an instant at least, the three of them—often at odds in the the past over the deal—were united. For Reisman, the ceremony marked the culmination of his work on the agreement. As he left the Centre Block he said, “It’s been a tough couple of years.”

Now that the draft agreement reached on Oct. 4 has been translated into legal language, Reisman’s work is largely complete. But important political battles remain to be fought. And until the necessary legislation is passed by Congress and by both the Commons and the Senate, the pact is not yet law. At home, Mulroney faces determined opposition from the federal Liberals and New Democrats, as well as at least three premiers. And in the United States, key congressional leaders last week threatened a delay in dealing with the pact that could result in its being scuttled completely. But for Mulroney, whose position was bolstered last week by an increase in his party’s popularity in the polls, the release of the final text was a moment to be savored.

Tabling the document in the House of Commons, a smiling Mulroney rose at week’s end to acknowledge a standing ovation from Tory MPs. The Prime Minister gave a thumbs-up signal to his chief of staff, Derek Burney, Reisman and other top officials in the Commons visitors’ gallery and later called the deal “a

major step forward for Canada.” The national debate over free trade reached new intensity in early October when a 35-page draft outline of the accord was released. The pact would eliminate all tariffs between the two countries over 10 years, establish a continental energy market and create

new binational panels to resolve trade disputes. Even before all the details were known, industry groups on both sides of the border began to lobby for changes. And in more than one instance, they were successful. As one trade consultant close to the talks said, “Both sides asked for changes that would make it easier to sell.”

While the final legal text does not differ substantially from the earlier outline, there were some changes. The most important among them:

• Termination: The final text says that either side can cancel the agreement on six months’ notice. That is the time generally required to terminate such arrangements under American trade law, but Canada had sought a provision requiring longer notice.

• Transport: All references to transportation

industries, including shipping and trucking, were removed in response to fierce pressure from the American maritime industry. The industry had feared that the wording in the draft agreement would open the door to increased Canadian competition.

• Disputes: Membership on the bina-

tional dispute-settlement panels was restricted to those “trained in the law,” following the Americans’ insistence that only lawyers be appointed. And a new, three-member panel will be created to deal with conflicts of interest or fraud involving members of the binational panels.

• Fish: Following a ruling last month by a panel set up under the Geneva, Switzerland-based General Agreement on Tariffs and Trade (GATT), Canada gave up its insistence that fish caught by Canadians off the Pacific coast be processed in Canada before export. But it retained that right for the Atlantic fishery.

• Periodicals: A measure that would have forced Canada to drop postal subsidies to Canadian

ö magazines and newspa9 pers was dropped from 5 the final text. As a re-

Mulroney receiving text from Reisman; Burney (below): ‘tough couple of years’

suit, Ottawa may continue to offer the subsidies.

• Agriculture: Canada’s right to retain marketing boards in agriculture was made more explicit to calm the fears of Canadian farm groups.

Liberal Leader John Turner sharply criticized the text. He challenged Mulroney to call an immediate general election on the issue. Said Turner: “This document represents nothing less than the title deed to this country, a deed that will now be held by the government of the United States.”

NDP Leader Ed Broadbent also called for an election.

Reisman strongly defended the accord.

He claimed that Canada had bested the Americans in the second round of the negotiations. “The trade covered by the items we eventually agreed to are close to three-toone in favor of Canada,” he said. “Our people were way ahead of them in terms of the analysis, the investigation, the facts, the methods, the procedures, the whole business. You would think that the United States was an underdeveloped country alongside us in terms of the way this negotiation went.”

Meanwhile, proponents of free trade drew support from an unexpected source last week: the Liberal government of Ontario Premier David Peterson. A study, commissioned by Peterson’s government and released by Ontario Treasurer Robert Nixon, indicated that the elimination of tariffs between the United States and Canada would have a “very small but marginally positive effect” on the Ontario economy. Maclean’s has learned that Ontario officials considered keeping the study private, but in the end Nixon decided to release it.

Some of the Prime Minister’s aides said privately that Mulroney has given up hope of changing the minds of Peterson, Howard Pawley of Manitoba and Joseph Ghiz of Prince Edward Island-all of whom have spoken out strongly against the deal. But at a luncheon he will host for the premiers this week in Ottawa, Mulroney intended to ask the two undeclared premiers—Frank McKenna of New Brunswick and John Buchanan of Nova Scotia—for their views. Regardless of their answers, the Prime Minister has

made it clear that he is prepared to proceed with the accord.

His position was strengthened last week when two new opinion polls showed that his Conservative party has improved its position with voters, at least partly because of public support for the trade pact. A Gallup poll conducted from Dec. 2 to Dec. 5 said that the Tories had climbed four percentage points, to 29 per cent, since the organization’s previous survey a month earlier. Gallup reported that the Liberals had dropped five points (to 35 per cent), while the NDP was at 34 per cent (an increase of one point). A survey by Angus Reid Associates Inc. yielded a similar result: it put the Tories at 30 per cent, the NDP at 32 and the Liberals at 37 per cent.

Still, congressional leaders said last week that Congress will not be able to write enabling legislation for the free trade deal until June 1 —six months later than Canada had hoped. The original plan had called for a ô j oint signing by 5 Mulroney and Presi5 dent Ronald Reagan I on Jan. 2, with legislation introduced in Congress shortly afterward. But Congress will have 90 working days in which to approve or reject the deal. And because of other pressing legislative business and because 1988 is an American presidential election year, it is uncertain whether the bill will be debated before June 1 or whether there will be time for a vote before Jan. 1, 1989, the day the agreement is to take effect. “We hope that the senators will take it up sooner,” said one official in the Prime Minister’s Office. “But we can’t force them.”

As well, the government is unable to force the Canadian Senate to pass any legislation necessary to enact the accord. And some Tories say they are concerned that the Liberal-dominated upper house could use its power to delay the Tory initiative. But last week those obstacles seemed far from Mulroney’s thoughts as he described the deal as “a win-win arrangement for Canada and the United States.”

HILARY MACKENZIE

SHERRI AIKENHEAD

MICHAEL ROSE

—MADELAINE DROHAN with HILARY MACKENZIE and MICHAEL ROSE in Ottawa and SHERRI AIKENHEAD in Toronto