The sweep of free trade

PAUL GESSELL March 16 1987

The sweep of free trade

PAUL GESSELL March 16 1987

The sweep of free trade

As they prepared for a critical meeting with Prime Minister Brian Mulroney this week on free trade, some of Canada’s 10 provincial premiers expressed a sense of apprehension. For several weeks, a series of high-level disclosures from Ottawa has punctured the veneer of secrecy that has covered trade negotiations with the United States. The information raised concerns among some premiers that Ottawa may be seeking a much more comprehensive trade agreement than they anticipated. Then, last week Senator Lowell Murray, Ottawa’s minister of state for federal-provincial relations, sparked further worries when he questioned whether it was really necessary to have the provinces ratify a free trade accord. As a result, NDP trade critic Steven Langdon predicted “a massive acceleration of the free trade fight” between Ottawa and the provinces. Said Langdon: “We are coming to a crunch on the federal-provincial authority issue.”

At the centre of the conflict is a draft trade agreement currently being mapped out by Canadian free trade negotiator Simon Reisman and his Amer-

ican counterpart, Peter Murphy. Maclean's sources, who declined to be identified, have confirmed earlier reports that Reisman and Murphy are aiming for an accord that would gradually eliminate all tariffs by the year 2000. In addition, the agreement would prevent the creation of any new trade barriers in the future and prohibit both

Sources confirm that Reisman and Murphy are seeking a deal that would eliminate all tariffs by the year 2000

countries from giving special treatment to domestic companies. Briefings given by Reisman to provincial officials have also left some of them concerned that current restrictions on American ownership of Canadian companies will be eliminated and that protection against American competition will be diluted for Canadian television stations and some magazines.

One senior Canadian official close to

the talks said that Canada is prepared to grant Washington complete access to all service industries, including banking, and greater access to natural resources, including water. But other officials on both sides of the border maintained last week that those issues have not yet been resolved.

Trade officials in Washington, Ottawa and provincial capitals said that Reisman and Murphy intend to produce what they called a “bracketed draft agreement” in June. The draft would spell out the broad principles— but not the details—of a free trade pact. The document would also define areas of dispute, with the positions of each side in parentheses. Then, according to an American official, the negotiators will spend the summer “removing the brackets, doing the wheeling and dealing.” By October an outline of a proposed agreement would be submitted to the Congress.

Reisman’s office last week refused comment on those details, although other trade officials have identified him as the “senior Canadian official” who gave similar information to The Canadian Press two weeks ago. Some provincial officials maintained that Reisman had revealed to them many of the same details carried by CP. His strategy in disclosing the information, they claimed, was to force the federal

government to state publicly its basic position on several key trade issues, including protection for agricultural products. Ottawa’s hedging has been “driving Reisman crazy,” said a confidant of the negotiator.

Because of the potential impact on agricultural products, the proposed elimination of all tariffs has become one of the most contentious issues facing the talks. Domestic producers could be hurt unless some other mechanism, such as import quotas, were found to protect them from cheaper American produce. Canadian farmers have become especially concerned about U.S. imports since the passage of the 1985 U.S. Farm Bill, which allots billions of dollars for export subsidies. Last week Canadian farmers won a major victory in their struggle against U.S. imports when the Canadian Import Tribunal upheld a countervailing duty against subsidized U.S. corn. American producers immediately condemned the decision.

Ontario has also expressed concern that the elimination of tariffs could jeopardize the 22-year-old Canada-U.S. Auto Pact, which requires U.S. automakers to produce some of their vehicles and parts in Canada in return for duty-free access to the Canadian market.

A sounding of several provincial gov-

ernments last week indicated that Manitoba Premier Howard Pawley and Ontario’s David Peterson would likely be the leading opponents of tariff removal during discussions at this week’s meeting. And with Quebec Premier Robert Bourassa, Pawley planned to press for a mechanism that would allow the provinces to ratify or reject details of any proposed free trade agreement.

Bourassa wants a veto for the provinces, at least in areas affecting provincial jurisdiction. But Murray last week called the veto idea a “nonstarter,” voicing doubts about the need for provincial ratification. Said Murray: “It’s the government of Canada that approves international treaties.”

The signs that Ottawa may soon produce a draft agreement have alarmed some opponents of the trade initiative. Liberal trade critic Lloyd Axworthy, for one, said that he is concerned that the government may rush into a deal too quickly. The resulting agreement, he said, could be “a Trojan horse” filled with dangers that would hurt Canada for years to come. But the Mulroney government has long considered an accord to be a key goal. The recent flurry of activity indicates that it is determined to meet it.

PAUL GESSELL with HILARY MACKENZIE in Ottawa and IAN AUSTEN in Washington