CANADA

New threats to free trade

MARC CLARK November 17 1986
CANADA

New threats to free trade

MARC CLARK November 17 1986

New threats to free trade

The product lacks glamor, but it is worth more than $1 billion a year to Canadian farmers. While most grain corn—as opposed to the sweet corn consumed around dining-room tables—ends up in the stomachs of farm livestock, its derivatives find their way into everything from whiskey to paint. Now, the versatile crop has found its way into the complex muddle of Canada-U.S. trade disputes. Last week the department of revenue slapped a $1.45-a-bushel duty on grain corn imported from the United States. Declared Terry Daynard, general manager of the 27,000-member Ontario Corn Producers Association (OCPA): “The duty will effectively price American corn right out of the market.” But embattled advocates of free trade did not share Daynard’s optimism. For them, the duty was an ominous reminder of how long the road will be to reaching a workable trade agreement between Canada and the United States.

Indeed, the corn duty was only one of several discouraging developments last week for free traders.

In Washington, International Trade Minister Pat Carney and a delegation of four provincial trade and forestry ministers restated Canada’s determination to fight a 15-per-cent U.S. duty imposed on Canadian exports of softwood lumber.

But even as Carney spoke,

U.S. Ambassador Thomas Niles said that it was “unrealistic” of the Canadian government to expect that free trade talks with Washington would lead to an abolition of retaliatory trade barriers being erected from time to time. And in the Commons, Carney’s cabinet colleagues did not deny charges by New Democratic Party Leader Ed Broadbent that they were prepared to bargain away key provisions of the Auto Pact, a cornerstone of the Canadian auto industry—and of the Central Canadian economy.

For Carney, Niles’s comments were cause for serious concern. The minis-

ter has made it clear that Canada’s primary goal in the current trade talks is to shield Canadian exporters from protectionist measures. Canadian exporters contend that U.S. businesses use trade barriers simply to hurt their competitors. But Niles said that eliminating the potential for new trade obstacles was “imprac-

tical, at least in the near term.”

A day later, Broadbent released a memo that raised questions about the government’s repeated claims that the Auto Pact would not be part of free trade negotiations. The document, which Broadbent said was prepared by a government official last month for External Affairs Minister Joe Clark, said that trade negotiators had already begun to discuss revision of some elements of the pact. Finance Minister Michael Wilson did not deny the charge, saying only that Ottawa “recognizes fully the imI portance of the auto ” industry.”

But Ottawa’s tough action on corn imports clearly provided welcome relief for growers. Since last Christmas, when President Ronald Reagan signed a controversial farm

bill providing strong financial support for U.S. farmers, fears have grown

among Canadian farmers about the rising tide of subsidized American farm products. Last year the United States exported 612,000 tons of subsidized corn to Canada. As a result, the OCPA decided to launch a formal complaint in Ottawa against the U.S. subsidies. Submitting five volumes of documents to the revenue department, the association cited 75 loan, grant and price-support programs available to American farmers. The new $1.45 duty—which will increase the price of

imported corn by about 75 per cent—is intended to offset those subsidies.

The Canadian Import Tribunal will determine by March whether imports of U.S. corn have indeed hurt Canadian farmers. If it concludes that they have not, the duty will be dropped and money that was collected from importers will be refunded. As well, the revenue department has until February to determine a final value for the duty. Washington has made it clear that it will fight the duty both before the tribunal and in further Revenue hearings. Within hours of last week’s announcement, U.S. Agriculture Secretary Richard Lyng described it as “completely unwarranted.” And in an obvious reference to the trade talks, Lyng said that it was “inconsistent with recent efforts by both the United States and Canada to bring about freer and fairer trade.” Clearly, both sides will now have to make a concentrated effort to prevent such trade skirmishes from derailing the historic talks altogether.

— MARC CLARK in Ottawa