Canadians Bitterly Split Over Benefit of New U.S. Free Trade Agreement

TORONTO —  To some Canadians, a free trade agreement with the United States is an eviction notice. “It will mean the Americanization of Canada,” Barbara Sanger said, “crime in the streets, violence, unemployment, homeless people.”

But to Larry Zolf, free trade will bring openness, prosperity and a more dynamic life. “Whenever I hear the silly fears about free trade, I want to run out and hug an American,” he said.

The views expressed by Sanger, an Edmonton secretary, and Zolf, a Toronto political journalist, are extreme but not unusual as Canadians search for the meaning of the arrangement signed Jan. 2 and expected to become law in both countries early next year. It is a debate that each side agrees will determine both the economic and cultural future of the nation.

The debate also dredges up issues that have bedeviled Canada virtually throughout its history--currents of anti-Americanism and troubling self-doubts about Canadian viability as a nation and society.

And, according to Mitchell Sharp, a former minister of external affairs and an expert on international trade, “The debate is splitting the country in a very dangerous way. It is a fundamental and pervasive division.”

From the language of the two sides, it seems so.

“There will be no Canada within a generation if the (agreement) is allowed to proceed,” said Mel Hurtig, an Edmonton publisher and one of the most fervent opponents of free trade with the United States. “The result will be, at best, a colony or trust territory.”

Margaret Atwood, a Canadian novelist whose works are best sellers in the United States, said the agreement threatens “to fragment and destroy the country.”

John Turner, the leader of the opposition Liberal Party, asserted that the agreement is “a monumental disaster” and that he “will tear up” the pact if he heads the next federal government.

Not all of the ranting comes from critics of the agreement. Prime Minister Brian Mulroney, the architect of the deal, has characterized Hurtig, Atwood and their allies as “intellectual terrorists.”

And University of Toronto political economist John Crispo charged the opponents with being “anti-American, left-wing and narrow-minded nationalists” who engage in “fear-mongering tactics.”

Former Nova Scotia Premier Gerald Regan takes a milder tone in criticizing the doom-sayers but was still sarcastic when he asked, “Does someone suggest that we would no longer have Highlands dancing in Cape Breton? Will our fiddling championships be taken away? Will the Americans kidnap (Cape Breton singer) Rita MacNeil?”

Two Years to Complete

On the face of it, the document that has sparked this bitter and sometimes irrational argument is a mundane if long and complicated commercial arrangement, full of arcane economic language about tariffs, dispute resolution mechanisms and market access.

In brief, the agreement, which took two years to complete, calls for phasing out over 10 years all tariffs on goods and most services crossing the border. That will be a relatively easy task since the United States already allows in more than 90% of all Canadian imports duty free while Canada imposes taxes on only 15% of its American imports.

Among the agreement’s more controversial aspects are those that allow the United States greater investment opportunities and access to Canadian energy resources, including provisions that require Canada to sell gas and oil to Americans at the same price that prevails within Canada. Furthermore, the agreement stipulates that in the event of another oil shortage, Canada may not cut supplies to American customers at any greater rate than to domestic customers.

For the Canadians, the agreement’s major gains are relatively secure access to the American market, which is more than 10 times larger than their own, and a quasi-judicial system that will resolve disputes over such trade issues as selling at less than production costs or unfair government subsidies. Trade disputes between the two countries are currently adjudicated by U.S. agencies such as the Commerce Department. Canadians complain that they are no more than supplicants in the process and that most of the rulings go against them.

While the sums involved are great--more than $120 billion a year in two-way trade--the treaty would not seem to be the stuff of drama or national soul-searching; but in Canada it is and always has been.

This is not the first free trade agreement between the two countries. A treaty was signed in 1856 but it lasted only 11 years before the Americans canceled the deal under pressures from U.S. grain farmers.

According to Abraham Rotstein, an economics professor at the University of Toronto, the abrogation of the agreement was one of the major factors in the founding of Canada in its modern form in 1867.

“We founded Canada on the rebound,” he said, explaining that when Canada, which was a collection of semi-independent British colonies, realized that it could not depend on a secure and cheap market to the south for prosperity, its leaders decided to centralize the government and create a highly protected national economy.

Half a century later, Prime Minister Wilfred Laurier and President William Howard Taft agreed on a new free trade arrangement, called a reciprocity treaty. However, Laurier’s opponents, charging that reciprocity meant annexation by the Americans and campaigning on a slogan of “no trade nor truck with the Yankees,” won a national election in 1911 and killed the deal.

1984 a Key Year

Shortly after World War II, a secret agreement between the two countries to open up trade also died when the Canadian government of Prime Minister William Lyon Mackenzie King decided that the public would not accept a closer relationship with the Americans.

The idea of free trade remained essentially dormant until 1984, when a stunning political switch in policy occurred. Newly elected Prime Minister Brian Mulroney, who had campaigned for the leadership of his Progressive-Conservative Party the year before as an anti-free trader, announced that free trade with the United States would be the keystone of his government’s economic and political agenda.

Under the Canadian parliamentary tradition of the opposition party opposing for opposings’ sake, the Liberal Party of Laurier and King dropped its longstanding policy favoring free trade and set out to defeat Mulroney’s effort.

So far, the Liberals are behind and, given Mulroney’s huge majority in Parliament, the deal should be ratified unless the government loses its will or the opposition can force and win an election on the issue as happened in 1911.

That is the strategy of the Liberals and the third Canadian national party, the socialist New Democrats.

Increasingly, that is becoming Mulroney’s strategy as well: The prime minister, who is trailing both Liberal Party leader John Turner and the New Democratic leader Ed Broadbent in the personal popularity polls, does not have to call an election until the fall of 1989. But he is betting on renewed public support for free trade and is considering a national vote as early as next September.

“We’re going to run on it,” he said of the free-trade issue not long ago, “and we’re going to ask the Canadian people to endorse what we believe will be a new era of prosperity and fairness and equality of opportunity for our regions.”

As things stand, neither side can be confident of popular support. Polls show a slight majority of the public favoring the agreement, with 51% for it, 42% opposed and the remaining 7% uncertain. But recent poll results have been seesawing wildly: Nearly 70% of those polled backed the concept of free trade when negotiations started.

“We can still win,” opponent Hurtig said.

The critics have largely settled on two arguments, that Canada has given up too much for too little--in other words, that the agreement is simply a bad commercial deal--and that, in any event, no financial gain is worth the sacrifice of sovereignty and national identity required by any free trade pact with the United States.

Hurtig, who has created a lucrative publishing business by promoting Canadian nationalism, sums up the no-deal sentiment by arguing that Canada’s “more compassionate social net” will be sacrificed because Canadian companies will not be able to pay the necessary costs and still stay competitive with American firms.

Hurtig points out that nearly all films shown in Canada are American productions, that more than 53% of industry profits, excluding those of the financial industry, go to foreign-controlled companies, and that in the industrialized world only Belgium’s economy is more dominated by outsiders. Under the agreement, he claims, “we will no longer have the ability to take independent actions, the very definition of sovereignty.”

Although Canada’s so-called cultural industries--book publishing, recording companies and magazines and newspapers--were excluded from the agreement and so would remain legally protected, critics say it may be too late to save Canadian cultural identity.

“You should be able to turn on TV and know what country you’re in,” economist Rotstein said. In Canada, that is difficult, since three of every four television programs originate in the United States and even the government-owned and -financed Canadian Broadcasting Corp. carries American shows in prime time.

That is all nonsense, respond the supporters.

“Canada was, is and always will be its own place,” political economist Crispo said. “Canadians have different values, different institutions and a different way of looking at things. It is a country of capitalism with a conscience.”

Canada, he continued, “is a better society, but the cost of being a better society, particularly as the population ages, is staggering, and the only way we can continue to pay is through the free trade agreement.”

Kenneth Freed, the Times bureau chief in Toronto, wrote this story before going to Israel, where he is now on temporary assignment.