The Free Trade Debate Continues
It's hard to know what are the real issues, pro and con, in the arguments about free(r) trade between Canada and the United States.
On the one side are those who warn that more integration of the Canadian and American economies will jeopardize Canadian sovereignty as well as Canadian jobs. On the other side are those who argue that free trade with the U.S. is needed to invigorate the Canadian economy and so create more jobs. Who is right? It may be helpful to quote from both sides of this debate, and I'll begin with those who oppose free trade.
In a recent speech Mel Hurtig, a vociferous advocate of Canadian nationalism, warned that the Americans intend to use free trade as a means to fulfil their old dream of "manifest destiny," in which the U.S. would control all of North America. Mr. Hurtig stated, "Clearly they have the idea in Washington that Canada should be part of the U.S....The year 1986 is the most important year in modern Canadian history. The very future of Canada as a sovereign and independent country is at stake" (Globe and Mail, February 11, 1986).
According to Mr. Hurtig, Canadians have built a different society than the Americans, one which is "more compassionate, sensible, peaceful and sane." He is convinced that free trade with the U.S. would destroy those qualities.
In "An Open Letter to the Prime Minister" (Toronto Star, January 23, 1986) two other long-time advocates of Canadian nationalism, Walter Gordon and Abraham Rotstein, warned the prime minister that free trade will have a devastating impact on jobs and on Canada's national integrity. They wrote:
The present free trade initiative, we feel, is a symptom of this country's weakness and vacillation in the realm of domestic economic policies to strengthen our own future. We are inclined to hand over the responsibility we have for industrial development to others—to the anonymous currents and unpredictable forces of a bilateral trade agreement where we are by far the weaker partner.
Canada has every reason to protect and to improve its trade channels with the United States as it has done under the GATT agreement signed in 1979 and as it can continue to do in a new round of GATT negotiations. But closer trade links should not come at the price of abrogating our own control of our economic future. Herein lies the great danger of a free trade agreement.
Dennis McDermott, president of the Canadian Labour Congress, called on Canada's labour unions to launch an all-out fight against a free trade arrangement with the United States. He warned that the federal government's trade initiative with the U.S. "is not only an attack on trade unions, it's an attack on Canada as a country and on everything we hold dear" (Globe and Mail, November 15, 1985).
On the other hand, there are those who believe that a free trade agreement with the Americans would be in Canada's best interests, although they concede that certain difficult hurdles would have to be overcome.
One convinced advocate of free trade with the U.S. is Professor John Crispo of the University of Toronto. Crispo responds to the accusation by many anti-free trade people that Canada's medicare and other social security programs would be seen by the U.S. as (non-tariff) trade barriers and therefore be put into jeopardy. Crispo believes that this argument is a red herring intended to scare the Canadian public. He points out that the American economy also has its share of industrial and social subsidies, particularly in its huge military industry. Such subsidies would also be subject to negotiations and trade-offs. In a Toronto Star article (March 10, 1986) Crispo gave this advice:
Without free trade and the scale and volume it will provide Canada's producers, there is a grave danger that this country's productivity and therefore standard of living will stagnate or, worse still, go down. As the U.S. standard of living continues to rise, this means that the disparity between our two countries' standards of living will widen.
If this happens, it is my judgment that the point will arrive when the hard-done-by West or hard-pressed EastÃ¢â‚¬â€which both have long favored free tradeÃ¢â‚¬â€will become so disillusioned with central Canada's selfish and short-sighted domination of their destiny that they will seriously consider leaving this country and joining the U.S. lock, stock and barrel. It Is In this ironical sense that the narrow-minded parochial activities of Canada's pseudo-nationalists could actually prove the undoing [of] this country.
At the centre of the free trade debate is Simon Reisman, a veteran of many delicate trade negotiations, including the Canada-U.S. Auto Pact. Recently appointed by Prime Minister Mulroney as the chief negotiator in the current free trade discussions, Weisman has openly expressed his stand. Following are some excerpts from an interview with Mr. Weisman which was printed in Canadian Business of March 1986.
Q. But with Ontario Premier David Peterson talking about the loss of 280,000 Jobs in Ontario alone....
A. Peterson released a paper that was misleading and you can quote me. It wasn't a study at all. The Ontario Ministry of Industry, Trade and Technology has classified the province's manufacturers according to how vulnerable they are to US competition. So they sinply took all the Jobs In industries, which their computers say are vulnerable, then added up the number of employees In those firms and said they're going to lose that number of Jobs. Now that's pure Junk, because it assumes there'll be no positive adjustment—nobody will respond, nobody will learn how to do It, nobody will take advantage of new market opportunities. The second thing it seems to assume is that we're going to take whatever protection is afforded Industry today and throw it out overnight. Well, nobody In his wildest dreams believes that that's how you conduct yourself.
You negotiate and, in respect to vulnerable sectors, you will look for a transitional period with transitional aid and one with programs that will get Canadian firms into a better position to compete and put Canadian workers in a better position to supply labor.
Q. Suppose it becomes clear to you that the Americans aren't going to give us the assurances and adjustment periods we need to make free trade work. What then?
A. If I don't feel that we've got a workable agreement that will provide Canada with major benefits, benefits that more than offset any of the risks, I won't hesitate for a moment to advise the government that we cannot find a basis for agreement. I can say that unequivocally and without hesitation. I never go into a negotiation believing that I must have an agreement. If you go in believing you must have an agreement, you'll never get a good one. I will not hesitate to walk away from a deal that isn't clearly of benefit to Canada, and to all regions of Canada.
Q. You must have thought the probabilities of getting a good agreement were fairly high or you wouldn't have taken the Job.
A. I wouldn't say that. I think this is going to be a pretty tough one. It's going to be tough to persuade the Canadian people, and it's going to be tough to negotiate at the bargaining table. The Americans have a large [trade] deficit and they're on a protectionist kick. As the weaker of the two countries, we're going to need a lot of understanding from the Americans. We're going to need transitional periods and transitional arrangements. The Americans don't need these things nearly as much as we do. They already have their big markets. With a few exceptions, we don't.
Free trade with the U.S. is not the solution to all of Canada's woes, nor is it a certain road to cultural and economic suicide. The warnings of the thoughtful critics (e.g. Gordon and Rotstein) should not be ignored. We must be careful not to trade everything away. But it is hard to take seriously the dire predictions made by anti-American and pro-socialist ideologues, e.g., certain spokesmen of the Canadian Labour Congress and the Canadian Centre for Policy Alternatives. The free trade advocates, especially when they stress the need for Canadian business to be dynamic and imaginative, have the more persuasive case. At least, negotiations in good faith should be undertaken. Whether such discussions can be successfully concluded remains to be seen.