BUSINESS/ECONOMY

Tension in talking

D’ARCY JENISH June 29 1987
BUSINESS/ECONOMY

Tension in talking

D’ARCY JENISH June 29 1987

Tension in talking

BUSINESS/ECONOMY

With less than 3⅛ months left before Canadian and American negotiators must present a free-trade agreement to the U.S. Congress, there are still "big rocks to move" and "bullets to bite," according to Canada’s chief negotiator. Simon Reisman will not reveal the precise nature of the problems plaguing the talks, but some participants contend that under-staffed, overworked U.S. negotiators have not had time to respond to Canadian proposals. And other observers argue that personality conflicts are causing trouble. Reisman and his immediate superior, International Trade Minister Pat Carney, are widely reported to loathe each other while, other informed sources say, Reisman and his U.S. counterpart, Peter Murphy, are barely on civil terms. Then last week, amid a Reisman-Murphy bargaining session in Washington, it became apparent that the talks have hit some serious obstacles.

Prime Minister Brian Mulroney postponed a June 22 meeting to discuss free trade with the premiers because the United States had not responded to several key Canadian demands, and there was no draft agreement to show the provincial leaders.

After 13 months of negotiating, major differences still separate the two countries on most of the principal issues. As a result, the negotiators are facing increasingly intense pressure to produce an initial agreement by early October in order to meet congressional deadlines. At the same time, the Manitoba and Ontario governments are voicing their concerns about the outcome of the talks. Manitoba provincial trade representative Robert Adams says that the federal government has not answered fundamental questions about how an agreement will be implemented if it touches on areas of provincial jurisdiction. And Ontario Pre-

mier David Peterson frequently complains that Ottawa is withholding critical information from the provinces. “The big question is what would you give up,” Peterson told Maclean's. “Those are the decisions. If they have been made, we don’t know about it.” According to two provincial trade

representatives, the talks are becoming bogged down not only because of the complexity of the issues on the table but also because the U.S. negotiators do not have the same resources as their Canadian counterparts. They say that Reisman has not had responses to proposals or counterproposals on such major issues as U.S. trade law, industrial subsidies, regional development subsidies, trade in services and nontariff barriers on agricultural products. Said one Canadian representative: “A whole bunch of issues have got to a certain stage, but we can’t get any further until the Americans come back with an equivalent response.”

The U.S. team is both smaller and far more decentralized than Canada’s

massive trade negotiation office under Reisman. American negotiator Murphy has a group of about five people directly under him at the Office of the Trade Representative. Beyond that, he has access to a network of about 40 officials in other departments who are working full time on the trade talks.

Another 60 officials, scattered throughout the civil service, devote some of their time to the negotiations. By comparison, Reisman has assembled at least 100 bureaucrats from various federal departments to work full time under him. He has access to the Prime Minister, meets regularly with the cabinet and briefs a committee of deputy ministers.

Some insiders downplay the role of personalities in the negotiations. One provincial trade representative wellacquainted with both Reisman and Murphy said that the Canadian is aggressive, bombastic and pushy while the American is quiet and low-key. “If they stood on opposite sides of the table and yelled at each other, we would

probably have a problem,” he said. “But I don’t see that happening.” And a senior official in Reisman’s office said that the negotiators have developed a healthy mutual respect. “Nobody gets mad at anyone,” he said. “But there are some very forceful confrontations on some issues.”

The same official also argued that each formal bargaining session is a complicated ritual for Reisman and Murphy. “In a very real sense, each chief negotiator has two negotiations going on at once,” he said. “One is with the other guy. The other is with his principals.” Following the daylong formal sessions, Reisman and Murphy usually have a heads-of-delegations meeting over dinner, accompanied by

one senior official each. Those informal talks sometimes last after midnight. “That’s where a lot of the serious work is done in a very interesting way,” said one recent participant. “It’s this business of trying to understand what the other guy’s bottom line is, and give him a sense of where yours is.”

But other observers speculate that a prickly personal relationship between the two top negotiators is hindering the talks. “The relationship between Reisman and Murphy is very bad,” said a longtime confidant of the Prime Minister. “One of them [Murphy, who is 39] thinks the other guy is a pompous old bag, and the other [Reisman, 68] thinks the other guy is a young

whippersnapper who has no influence in his home town.” The same adviser contends that Reisman’s relations with Carney are almost nonexistent. If it were a marriage, the two would be in the middle of very bitter divorce proceedings, the adviser said, adding, “Cabinet briefings tend to be not the most crisp and organized events, in no small part because of the two of them.”

For some provincial trade officials, the informal discussions between heads of delegations are a major source of anxiety. Those who will discuss the negotiations say that Reisman keeps them well-informed about what happens at the formal meetings. Following each session with Murphy, he

briefs provincial officials through a conference call or at a meeting of the continuing committee on trade negotiations. They go over the agenda of the meeting and what each side proposed.

But Ontario’s Peterson, for one, said that neither Reisman nor his political superiors are telling the provinces what trade-offs they are prepared to make in the negotiations or what fall-back positions they have adopted. “They are fiddling around with the details,” said Peterson. “We don’t know because they don’t know what’s going to happen on the big issues.” Peterson expressed his concerns in a May 25 letter to Mulroney, which was reported last week in The Toronto Star. He said that he is par-

ticularly worried that Ottawa might bargain away the Canada-U.S. Auto Pact without fully consulting Ontario. But one Ontario trade official conceded that the federal government could not negotiate effectively if it revealed how much ground it is prepared to yield to the United States.

If the two sides reach an agreement, the approval process is clearly defined in the United States. The Reagan administration is negotiating under a so-called fast-track authority from Congress, which expires on Jan. 3. An agreement must be presented to Congress in early October, 90 days before the deadline, to allow for public hearings. After that, the House of Representatives and the Senate must approve or reject the package in its entirety within 60 days.

For its part, the Mulroney government has no agreement with the premiers on approval of any free-trade deal that touches on both federal and provincial jurisdiction. Said Bruce Phillips, the Prime Minister’s communications director: “The Canadian government has the untrammeled constitutional power to make international agreements that bind the country.” Still, a free-trade pact would likely be submitted to a joint Senate-Commons committee for review or it would be the subject of a parliamentary debate, he said. But Phillips added that the opposition of a single premier likely would not prevent the federal government from signing an agreement.

On the other hand, Peterson has insisted all along that the provinces have a veto. And Manitoba representative Adams said that his government is becoming increasingly alarmed about the role of the provinces in approving and implementing an agreement. With many major issues still unresolved, a deal can only be reached after furious last-minute bargaining and compromises, he said.

As a result, the negotiators may not have much time to consult with the provinces. Adams said that the Manitoba government has raised those concerns on several occasions but has received only vague assurances from Ottawa. And even if the federal government can impose a trade agreement unilaterally, it is clearly in its interests to overcome as much of the provinces’ opposition as it can. But the provinces are still waiting to hear how much time will be allowed for public review and assessment of any agreement—or, indeed, whether any amendments at all will be possible.

— D’ARCY JENISH with IAN AUSTEN in Washington, MADELAINE DROHAN and HILARY MACKENZIE in Ottawa and ANN WALMSLEY in Toronto

IAN AUSTEN

MADELAINE DROHAN

HILARY MACKENZIE

ANN WALMSLEY