As Prime Minister Brian Mulroney meets President Ronald Reagan in Washington this week, diplomats and economists on both sides of the border are cautiously predicting a warming of bilateral trade relations to match the obvious personal chemistry between the two conservative leaders. The positive climate for the encounter was set last week when Reagan removed one potentially explosive issue from the agenda: he ruled against imposing severe quotas on steel imports to the United States, which threatened to curtail the $1 billion in steel products Canada exports annually to the United States and imperil an estimated 2,000 jobs in Canadian steel mills.
The decision followed Reagan’s Sept.
6 rejection of domestic industry demands for quotas on copper imports —Canada supplies $200 million worth of copper each year to the United States. Together, the decisions seemed to bode well for new harmony in a relationship that suffered because of mutual dislike between Reagan and former Canadian prime minister Pierre Trudeau. Said Charles Doran, director of Canadian studies at the Johns Hopkins School of Advanced International Studies in Washington: “The personal chemistry between Reagan and Mulroney is very good. Their political styles are similar. This Washington meeting couldn’t come at a better time.”
Still, many experts cautioned last week that however well Reagan and Mulroney get along personally, there is a host of major irritants that remain. The U.S. administration is now anxious to see if Mulroney will fulfil election
campaign promises to -
transform the Foreign Reagan: good Investment Review Agency into a body that is perceived to encourage investment rather than discourage it and whether he will eliminate aspects of the National Energy Program that anger U.S. oil multinationals.
For Canada the dispute over acid rain remains as intractable as ever. More worrisome, however, is that there is a rising protectionist sentiment throughout U.S. industry and in Congress that may
threaten other Canadian exports in the future. Said a senior Canadian external affairs official: “Talks and platitudes are not going to alleviate the pressures for protectionist measures.”
A sworn free trader, Reagan rejected the recommendations of the U.S. International Trade Commission to impose a combination of tariffs and quotas over a five-year period. He ruled against official quotas in favor of consulations with
_ major steel-exporting
chemistry countries—such as Japan and Brazil—aimed at exacting voluntary restraint. But domestic political considerations —not the relationship with Canada—motivated Reagan. Explained U.S. trade representative William Brock: “The president has to look at the total needs of the country, the needs of the consumer and the needs of the fabricating industries.” Severe import quotas, added Brock, S would have jeopardized
two jobs for every one saved.
Canada, however, will not be asked to voluntarily cut back on steel exports. William Merkin, a Canadian trade specialist in Brock’s office, told Maclean's, “I think it’s safe to assume there will be minimal impact on U.S.-Canadian trade.” The United States, he said, wants to ensure that Canada does not exploit the situation by increasing its steel exports.
In the wake of last week’s decision, U.S. administration officials predicted that a bill in Congress which would cut steel imports by 15 per cent would die. But other threats to Canadian exporters remain—including calls from U.S. industries to restrict imports of cheap Newfoundland codfish and B.C. lumber. Said David Leyton-Brown, professor of political science at York University in Toronto: “There is a complex agenda between the two countries. We saw a couple of years ago how easily it can lead to strain. The key is how well these inevitable conflicts are managed and kept under control.”
With William Lowther in Washington and Hilary Mackenzie in Ottawa.
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