CANADA

SELLING A DEAL

OTTAWA CLAIMS VICTORY AFTER A CONTINENTAL TRADE COMPROMISE

JOHN DALY,GLEN ALLEN,LUKE FISHER August 23 1993
CANADA

SELLING A DEAL

OTTAWA CLAIMS VICTORY AFTER A CONTINENTAL TRADE COMPROMISE

JOHN DALY,GLEN ALLEN,LUKE FISHER August 23 1993

SELLING A DEAL

CANADA

OTTAWA CLAIMS VICTORY AFTER A CONTINENTAL TRADE COMPROMISE

Ever since he crooned When Irish Eyes Are Smiling on a stage with Ronald Reagan, one of the most frequent criticisms levelled against Brian Mulroney during almost nine years as prime minister was that he appeared too eager to do the bidding of American presidents. Indeed, prior to Mulroney’s announcement on Feb. 24 that he intended to leave politics, the suggestion that a federal Conservative leader would enter an election campaign this year cast as a strong defender of Canadian interests would have appeared farfetched at best. But last week, Mulroney’s successor attempted to don the nationalist mantle. Claiming that the negotiations on a North American Free Trade Agreement (NAFTA) among Canada, the United States and Mexico had reached an “impasse,” Prime Minister Kim Campbell declared that Canadian negotiators were resisting U.S. pressure for side deals on the environment and labor standards that President Bill Clinton had insisted were crucial to U.S. approval of the agreement. Only one day later, federal Trade Minister Thomas Hockin claimed victory, an assertion that critics disputed. Still, Hockin said that Ottawa had forced Washington to back down on its proposal that each country be allowed to impose trade sanctions as punishment for violations of its environmental and labor rules. Instead, Mexico and the United States would only be allowed to levy sanctions on each other. And although there were powerful doubts about the arrangement in the U.S. Congress, which must ratify the pact to bring it into force, the three nations announced that they had struck a trade deal after four months of negotiations. Enthused Hockin: “It’s a great day for Canada.”

For Campbell, the NAFTA strategy marked the latest step in her campaign to distinguish herself from the policies of her predecessor. That effort began at the Group of Seven Tokyo summit in June, when Campbell won a public apology from Clinton for failing to notify Ottawa before the June 26 U.S. bombing raid on Baghdad. Last month, Campbell’s government moved to help the Canadian magazine industry by trying to block socalled split-run editions of U.S. magazines— issues containing mostly reprints of articles from the foreign edition but containing Canadian advertising. Then, in a widely circulated interview with the Philadelphia Inquirer on July 25, Campbell complained that the United States dominates Canada culturally, just as many men, she said, dominate women. Added Campbell: “No other country would put up with it.”

Since she became Prime Minister in June, Campbell’s stock as measured in opinion surveys has risen sharply. In an Angus Reid poll published on Aug. 7, her approval rating climbed to almost 50 per cent—compared with the 14 per cent who approved of Mulroney at the time that he announced his resignation. Political analysts say that Campbell, like John A. Macdonald, Robert Borden and John

Diefenbaker before her, is tapping into a long-standing strain of anti-Americanism held by both the Conservative party and the electorate as a whole. Said Michael Behiels, a professor of history at the University of Ottawa: “It is an extremely powerful current throughout Canadian politics. Kim Campbell has been told this, and she can mouth the words.”

In the case of NAFTA, while both Campbell and Hockin claimed that they were refusing to cave in to Washington last week, they were hardly taking a huge political risk by balking at the U.S. sanctions proposals. In addition to playing to the nationalists, Campbell’s stance appealed to Canadian business leaders, the strongest supporters of Mulroney’s free trade initiatives. They had argued for months that the sanctions could be used by U.S. protectionists to block Canadian exports, undermining the improved access to U.S. markets promised under the 1989 Canada-U.S. Free Trade Agreement. Among the most worried were steel and pulpand-paper executives, whose companies have been the targets of repeated U.S. trade actions in recent years. Said Roger Phillips, president of Reginabased steelmaker IPSCO Inc.: “Agreements are not one-sided, but quite often the Americans think so.”

As well, the differences among the three parties were clearly far from irreconcilable. On the same day that Campbell told reporters in Ottawa that the talks had stalled, officials from the three countries were ironing out the final terms of the deal. They reached a settlement just hours later. Opposition critics charged that Campbell and Hockin had exaggerated the gap between the negotiators for political advantage. ‘This whole side-deal process at its conclusion is smoke and mirrors,” NDP trade critic Dave Barrett told Maclean’s. Liberal finance critic Herb Gray was equally unimpressed. “There is no proof that Kim Campbell stood up to anybody,” he said. But Hockin insisted that “until 11 p.m. that night, we were at an im-

passe that could have lasted for some time.”

The side deals themselves are considerably weaker than those first proposed by the Americans. They set up two trilateral commissions, one on labor and one on the environment, which have the power to recommend trade sanctions against Mexico and the United States—but now, not Canada—if they find that one of the countries has violated its own laws. Canada would only be subject to fines. The Clinton administration is committed to the side deals to neutralize fears that relatively lax Mexican environmental and labor legislation would draw industry across the Rio Grande from the United States.

Canada won another exemption as well: the side agreements will not apply to the provinces, which have jurisdiction over most environmental and labor questions, unless they ratify the deals. However, if the provinces refuse to sign on, they will be unable to lodge complaints with the commissions. Clearly, that creates a dilemma for NDP premiers and other traditional NAFTA opponents. “I would think that the environmentalists and the labor activists would want the provinces to sign on,” said Hockin. Predictably, Canadian business leaders hailed the new labor and environmental side deals. “They will not have a new weapon to beat us with,” said Tim Page, senior vice-president of the Canadian Chamber of Commerce.

Now, the fate of NAFTA rests in the U.S. Congress, where Clinton faces stiff opposition from leading Democrats. Last week, many of them said that they were still dissatisfied with the agreement—even with the new side deals. Declared Richard Gephardt, the influential Democratic majority leader in the House of Representatives: “Although progress has been achieved, the announced side agreements fall short in important respects and, taken alone, are not supportable.”

Whatever happens in Washington, Campbell can argue that her government has attempted to respond to the concerns of both business and free trade opponents. For opposition critics, however, Campbell’s interventions in the NAFTA talks are merely her latest attempt to distance herself from Mulroney—even while attempting to secure one of his least popular policy inidatives. With a federal election call expected within weeks, Canadian voters will ultimately decide whether Campbell has undergone a political conversion—or is just putting a brave new face on the same old policies.

JOHN DALY

GLEN ALLEN

LUKE FISHER