A Secret Plan For Free Trade And Sovereignty

MARY JANIGAN November 11 1985

A Secret Plan For Free Trade And Sovereignty

MARY JANIGAN November 11 1985

A Secret Plan For Free Trade And Sovereignty



As Ottawa prepares to enter historic free trade talks with Washington, it is drawing up a sweeping program to reassure Canadians that the nation's basic sover eignty is not under threat. To that end, according to secret documents obtained by Maclean's, the Conservative government is studying plans for a far-reaching public relations campaign. Not only that, it has examined proposals for making major expendi

tures on defence-related projects in sensitive areas such as the Arctic. One document circulated among cabinet members makes it clear that the reason for the government-wide initiative is a concern that Canadians will resist free trade because of a perception that it might imperil the nation’s independence. The document also says that cultural programs could be used as “trade-offs” in the negotiations if the government can convince citizens that the Canadian identity will flourish in

an economy strengthened by free trade.

The information is contained primarily in a 29-page memorandum, marked secret, which the external affairs department submitted at cabinet’s request. But the sensitive nature of the trade issue is also clear in a personal and confidential letter which Allan Gotlieb, Canada’s Washington ambassador, wrote to Regional Industrial Expansion Minister Sinclair Stevens, a copy of which was obtained by Maclean’s. Related information is contained in a letter from acting Communications Minister Benoît Bouchard to Stevens and a secret report to former communications minister Marcel Masse. Insiders say that the external affairs draft cabinet document set off a heated debate among ministers. It is now back in the department for refinement.

To combat concerns about excessive American influence in Canada, the cabinet has been discussing a publicity campaign that would involve all ministers, Prime Minister Brian Mulroney and even Gov. Gen. Jeanne Sauvé in a program of speeches and special eveiits. In addition, the cabinet also is considering up to $4 billion worth of defence-related spending over the next decade—including the possible purchase of four nuclear-powered submarines and a surveillance satellite to de-

fend the arctic frontier. Other policy proposals call for tighter Canadian control over coastal territory on the Atlantic and the Pacific coasts, increased official bilingualism and more emphasis on symbols of Canadian nationhood.

The policy memorandum, dated Oct. 10, 1985, was prepared by officials at External after consultations with other departments and agencies that would be involved in the campaign.

The paper, entitled Canadian Sovereignty, was circulated to the Mulroney cabinet last month (page 18). Maclean's has learned that the memo provoked protests from some ministers who do not want cultural issues to be discussed when CanadaU.S. talks on trade expansion get under way, probably early next year. The dissenting ministers —including Employment Minister Flora MacDonald, Transport Minister Don Mazankowski and Environment Minister Thomas McMillan—argued that talks on freer trade will ultimately benefit Canada only if cultural policies are excluded from the discussions.

But there is no indication that external affairs officials will compromise on their position that Canadian cultural policies must become part of the bargaining for widened Canadian-U.S. trade.

That debate could become particularly sensitive because one of the strongest defenders of cultural sovereignty—Masse—is no longer in the cabinet. Masse, who usually had Mulroney’s support, resigned in September because of an RCMP investigation of his election spending. Indeed, some of the other confidential government documents indicated that a dispute is under way within the government over the fate of the book publishing firm of Prentice-Hall Canada, whose U.S. parent was taken over last year by the U.S. conglomerate of Gulf + Western Industries.

In his letter dated Aug. 6, Gotlieb told Stevens that a powerful lobbyist for Gulf + Western had told him that the firm would conduct a “scorched earth” campaign against Ottawa if Masse’s book publishing policy, which could prevent Gulf -IWestern from taking over Prentice-Hall’s Canadian subsidiary, is not rescinded (page 70).

Last week the argument over cultural sovereignty continued among cabinet members and within external affairs. Whatever the outcome of that crucial dispute, the cabinet had already decided in September to make the sovereignty policy a top government priority for the next year. The reason, as outlined in the external affairs document: “To reassure Canadians that the government is actively

engaged in protecting Canadian sovereignty and promoting Canadian independence, and that co-operation with the United States and other countries will strengthen, not weaken, our national identity.”

The memorandum asserted that the sovereignty issue is, in large part, “a communications issue” and it recom-

mended a special effort to stress sovereignty as a “principal objective” of Canadian policy. As well, it urged the Prime Minister and cabinet members to routinely mention sovereignty in their speeches and to stress the sovereignty implications of existing Canadian policies.

The document also outlined an agenda of sovereignty-enhancing measures, including a plan to enlist the Governor General in the promotion of patriotism. It called for the creation of a new “sovereignty group” of government departments and agencies to develop programs to promote the policy.

The memorandum also placed heavy emphasis on measures to exert Canadian control over the Arctic, including a list of 21 defence and environmental options priced at $4 billion (page 20). That price tag included the estimated $450 million to construct a giant Polar 8 icebreaker that Ottawa announced two months ago after the voyage through Canadian arctic waters by the U.S. Coast Guard vessel Polar Sea provoked controversy and made the sovereignty issue a matter of current pointed public debate. And in repeated references the paper refers to the cabinet’s desire to ease any Canadian fears about sovereignty in order that trade talks with the United States can proceed smoothly.

Two months ago Mulroney formally informed Washington—and Canadians—that Ottawa wished to enter into negotiations with the United States to bring about a sweeping reduction in tariff and nontariff barriers between the two nations. And last week, after a meeting in Calgary with External Affairs Minister Joe Clark, U.S. Secretary of State George Shultz declared that his government would probably be ready to begin those talks early next year. “The window is wide open,” declared Shultz. Only eight days after z taking office in Septem£ ber, 1984, Mulroney sig-

0 nailed the start of a new 5 era in Canada-U.S. rela9 tions by visiting Presig dent Ronald Reagan in

1 Washington. The two ° men met again last

March in the so-called “Shamrock Summit” in Quebec City. As well, in a December speech to the Economic Club of New York, Mulroney proclaimed that “Canada is open for business again.” In the meantime, his government gradually dismantled the 1980 National Energy Program, which promoted Canadian ownership but was

widely blamed for causing a major slowdown in the industry.

When Mulroney made his September trade announcement, he added that “our unique cultural identity” would not be “at issue.” But he did not say that he would exclude from the bargaining the panoply of federal cultural policies which include laws to protect Canadian magazine publishers and television stations, as well as measures to promote increased Canadian ownership in book publishing. And the external affairs memorandum said that in order for trade negotiations with the United States to succeed, “we may need to make tradeoffs between different policy objectives.”

As areas in which trade-offs may be necessary, the document cites “issues of foreign investment,” including access to such market areas as publishing and pharmaceuticals—a reference to Ottawa’s 1969 law that allows Canadian drug companies to market inexpensive generic equivalents of brand-name drugs. The law has produced resentment in Washington by large U.S. drug companies which want better protection for their patents and higher royalty payments. The U.S. government has also protested Bill C-58, a law passed in 1976 which states that Canadian firms can only deduct the cost of advertising in publications that are 75-per-cent Canadianowned and contain 80 per cent Canadian content. The law prompted Time Inc. to close its Canadian edition and cleared the way for Maclean’s to become a weekly newsmagazine in 1978.

The publicity campaign is designed to ease fears about including those policies in the trade negotiations. The external affairs document proposed mea-

sures designed to demonstrate that “Canadians are a strong and confident people and can embark on new ventures without fear of losing their identity in the process. Trade liberalization with the United States can make the economy stronger, which will benefit cultural industries and support an independent, global foreign policy.”

The memo also said that some Canadians fear free trade will lead to the gradual disappearance of their distinctive cultural life. But it added that there is a contrasting conviction that “the need for restrictive measures is

not proven, and insistence on exemptions for cultural institutions could prejudice the successful conclusion of the Canada-U.S.A. trade negotiations on which the health of the economy as a whole—and hence of cultural industries—depends.” As well, it said, “a good deal could be accomplished through packaging existing policies to play up their sovereignty dimensions and through drawing attention to international events where Canada can be seen as an important and independent player.” Specifically, the docu-

ment said that Ottawa should use Vancouver’s Expo 86 international communications fair and a major Canadian cultural exhibition in the United States to demonstrate Canada’s international role.

At the same time, the memorandum argued that Ottawa should emphasize Canadian achievements in the arts, business, sports and science, and it urged the government to supply nationalist literature and other materials to schoolchildren. The document also called on Secretary of State Bouchard to seek “greater bilingualization of majority populations and national institutions and the integration of the multicultural community into Canadian society.” And it advised the Mulroney government to promote national symbols and national holidays—and to place a greater emphasis on the rights and duties of Canadian citizenship.

The paper added that Ottawa should take steps to promote the public stature of Sauvé to communicate “the distinctive character of Canada.” The document proposed that Sauvé deliver more speeches on national unity, make more trips to areas like the Arctic to assert Canadian sovereignty and be associated with sovereignty-protecting projects such as the Polar 8 icebreaker.

The paper noted that Canadian concerns over sovereignty fall into three main categories: territorial sovereignty; political and economic independence; and national unity and identity. On territorial sovereignty the document said that Ottawa should negotiate a “cooperative agreement” on the Arctic with the United States. In the area of national unity the paper pointed out that although Quebec separatism now appears to be “a muted force,” the issue requires constant attention. The memo added, “The Ottawa-Quebec-Paris triangle bears special watching for its potential to undermine the u competence of the federal z government.”

Whether or not the Mulroney government decides in the end to accept some, or all, of the proposals, the sovereignty campaign at least has been approved. What cabinet now has to decide is the extent of spending on the new priority—and the extent of the publicity effort. The cabinet document noted that because of spending restraint, a “premium” will be placed on projects that can be funded from existing budgets.

For both the government and Canadians generally, it may become a consuming campaign.

-MARY JANIGAN in Toronto