Business

HANDS ACROSS THE WATER: CANADA COURTS THE EEC

MATTHEW HAGAN February 23 1976
Business

HANDS ACROSS THE WATER: CANADA COURTS THE EEC

MATTHEW HAGAN February 23 1976

HANDS ACROSS THE WATER: CANADA COURTS THE EEC

Business

MATTHEW HAGAN

For years the diplomats and trade officials have jetted between the chill of Ottawa and the charm of Brussels, maintaining the long-running flirtation between Canada and the nine-member European Economic Community. Now it appears that

Canada will announce a formal engagement but stop just short of a legal marriage with the EEC. Negotiations are due to start in March on a simple accord cadre or framework agreement setting out the principles of trade between the two economic units. But there will be a lot of commuting left for the negotiators and for Ivan Head, the prime ministerial assistant who unofficially spearheaded the Canadian team, starting with an Ottawa visit by EEC commission president François-Xavier Ortoli this month, and followed by at least a year of talks before the accord can reach final draft stage. For Canadians the agreement will mean a restatement of bonds with northern Europe and continuing markets for its exports. For the EEC, Canada will provide both an assured source of raw materials for manufacturing and a diplomatic statement that the United States is not the only worthwhile trading partner in this hemisphere.

Government officials are at pains to explain the agreement does not mean that Canada will eventually join the EEC; nor will it snub its major trading partner, the United States. “It’s the Prime Minister’s idea of establishing counterweights in in-

ternational trade,” says one official participating in the talks. “We have always had traditional relationships such as this one but, you know, you have to work at them.” In this case, “working at them” will mean a three-point accord which will reiterate the most favored nation principle, provide statements of intent by the signatories and set up mechanisms to facilitate continuing consultation.

Negotiators are quick to point out that the framework agreement is a spare, ambiguously worded diplomatic nicety, merely establishing certain ground rules for future agreements. But even that simple document has had a difficult conception. For a time it appeared as though Denmark might pose a serious threat to successful accord because ofthat country’s philosophical objections to Canada’s twoprice policy for oil exports. While Denmark never raised the question directly at informal Canada-EEC talks, it did air its grievances at the International Energy Agency meetings in Brussels last year. Denmark is not worried about Canadian oil exports per se; most of Canada’s foreign shipments are taken up by the United States. Its major concern was that other European nations might adopt the same policy of selling oil for export at prices greater than domestic market levels; there was also the suggestion that this policy might spread to other resources. Canada asked to be allowed to continue double pricing for oil and resources on the grounds that such commodities were often under provincial control. The Danish-im-

posed stumbling block was finally removed after enormous pressure was exerted on Denmark by her EEC partners and Ottawa gave unspecified, long-term undertakings to the community.

While the Europeans are basically interested in Canada’s inviting wealth of resources, the Canadian officials are hoping to use the framework agreement as a wedge to slip more finished products into European countries. The imbalance between finished and primary goods shipped to Europe each year is enormous. Out of Canada’s estimated four billion dollars in exports to the EEC in 1975, less than 10% was in finished products, compared with 36% of U.S.-bound exports. The long-term effects on a country already struggling with a serious trade imbalance are obvious. To take the selling process one step further, Ottawa has dispatched Trade Minister Donald Jamieson to various European countries peddling high-technology Canadian products, including electronics, telecommunications equipment, transportation systems and shipbuilding. “While it may seem we are offering the Europeans only unrestricted access to our resources, we have also made them quite aware that finished products must be dealt with next,” says a member of the negotiating team. Helping along with that message are frequent visits to the EEC’s new mission in Ottawa and more informal visits by Ivan Head to EEC leaders. “Because of his track record, they know that when he drops in we’re serious,” explains a senior Ottawa Official. MATTHEW HAGAN