CANADA

Free trade: what |
are the alternatives?

By ALAN TATE
and KERRY McCUAIG

Last week Tory minister for International
Trade James Kelleher presented his govern-
ment’s proposals on trade. Although it con-
tained four ‘options’, the paper clearly favors a
general free trade agreement with the U.S.

While most sections of capital in Canada have
rallied to the free trade option, the Mulroney
forces have moved cautiously. Their ‘‘con-
sultative approach”’ is essentially a process of
testing the waters.

A free trade agreement with the U.S. would
undermine Canada’s already weak manu-
facturing sector, resulting in a massive increase
in unemployment; it would further tie Canada to
Washington, and eventually lead to the virtual
absorption of Canada into the U.S.

The Tories recognize such a policy will bring
an outcry from large segments of the Canadian
population. Opposition to U.S. domination of
Canada has many proponents in the country,
from. the Communist Party to bourgeois
nationalists. But this opposition is not un-
animous in its intent.

Previous Liberal government policy — wa-
tered down Canadianization while attempting to
negotiate sectoral free trade agreements —
essentially died with the Liberals’ defeat on
Sept. 4.

Under Trudeau, an attempt was made to les-
sen Canadian dependence on the U.S. market.
The Liberals were unable to advance very far
with this approach, however, due to inter-
ference from. U.S. transnationals.

The Foreign Investment Review Agency and
the National Energy Program were also part of
Liberal efforts to curtail U.S. encroachment,
but these too were resisted. Washington took
Canada to the World Court over FIRA, accus-
ing it of violating GATT agreements. The NEP
was met by a vicious campaign emanating from
Washington, with the help of the Alberta
government and the oil interests.

To underline its displeasure with Canadian-
ization, the Reagan administration became in-
transigent in other areas of bilateral friction,
including revisions to the Auto Pact, acid rain
control, off-shore boundaries and _ fishing
treaties.

Faced with U.S. blackmail, in most cases Ot-
tawa capitulated. In particular, it aligned itself
more closely with U.S. foreign policy, and
agreed to allow U.S. weapons testing in Canada.

Sovereignty Not Strengthened

There was popular support for the Liberals’
Canadianization efforts, however in the absence
of government willingness to follow through on
its intentions, Canadian sovereignty was not
strengthened. Rather these policies required the
good will of the U.S. as a precondition for their
realization.

In vying for the ground left vacant by the
Liberals in the last election, the New Demo-
cratic Party backed away from its proposals to

counter U.S. domination. Party policy, as ar- -

ticulated in convention, calls for limited mea-
sures of nationalization and economic and poli-
tical independence. However, during the cam-
paign, NDP leader Broadbent indicated there
would be a review of the party’s economic and
foreign policy, which could bring a renunciation
of nationalization and its longstanding position
of taking Canada out of NATO.

Official policy aside, recent speeches by NDP
leaders have advocated an economic gameplan
suspiciously like the Tories’, albeit wrapped in
rhetoric of an “industrial strategy’’. Essentially,
they advocate the state being used to direct
investment into those sectors of the economy
likely to be “‘winners’’ in the international com-
petitiveness game. This would be done through
a combination of tax incentives to targetted in-

dustries and the creation of a ‘“‘national invest-
ment fund’’.

The NDP does see the need to strengthen the
manufacturing sector and reduce Canada’s re-
liance on resource exports, but in leaving the
economy in the hands of private capital it is only
a formula to strengthen Canadian monopoly. In
effect it is a call for strengthened Canadian im-
perialism.

The labor movement and the left have gener-
ally supported a more radical restructuring of
the economy to promote Canadian in-
dependence. The Canadian Labor Congress has
in recent conventions called for a compre-
hensive economic alternative, including
nationalization of the banks, key resource sec-
tors and the building of secondary manu-
facturing.

A strong manufacturing sector, including cru-
cial industries such as machinery, is essential if
Canada is to tackle its unemployment problem.
This would also help solve problems of regional
disparity by providing an alternative for those
parts of the country which are almost com-
pletely dependent on resource extraction. ~

Unfortunately, labor’s leadership has not
campaigned around this strategy. Instead, it has
leaned toward a tripartite deal with government
and business. It has only been the strong opposi-
tion of the membership in convention that has
prevented the. leadership from embarking on
this course. The task remains to force the
leadership to mobilize around its economic
alternative and its immediate program for jobs.

In its submission to the MacDonald Com-
mission, the Communist Party outlined its alter-
native. It includes. four essential points:
nationalization under democratic control of re-
sources and the creation and expansion of
state-owned secondary industries; national-
ization of the transnationals, the banks and
other financial institutions; stopping the export
of capital and foreign exchange controls, and
other measures to counter foreign, especially
U.S. retaliation.

Public Ownership Essential

Public ownership under democratic control is
essential to any restructuring of the economy
because of the enormous power of the trans-
nationals. The Liberal example is an indication
of the fierce resistance which will meet an
economic strategy geared towards Canadian in-
dependence — not only from U.S. business, but
from those sectors of Canadian monopoly
which are inextricably linked to U.S.
imperialism. :

The question of trade must also be addressed
in any economic alternative. Key here is lessen-
ing our dependence on imports of finished pro-
ducts and the export of raw materials. Neverthe-
less, Canada would still find it necessary and
desirable to trade. Given the size of our domes-
tic market, it would not be efficient or possible
to produce all the goods required. The country
would however be capable of producing com-
modities that once having satisfied Canadian
needs, could be sold in the international market.

Trade arrangements in the mutual interest of
both partners would permit us to develop trade
with the newly independent nations of the de-
veloping world and with the socialist countries.
This process could be aided by the advancement
of low interest, long term credits to help these
countries buy our goods.

Opposition to free trade policies will come
from many areas — some segments of Canadian
capital, cultural institutions and workers, labor
and political parties. :

At this crossroads, all proposals designed to
strengthen Canadian independence should be
supported. However as the struggle to extricate
ourselves from U.S. imperialism heightens, our
only real alternative — socialism — will become
clear.

Last in a series

VRS eg

THe TORY SAFETK NET

Epp options will
cut$410-M from
child supports

The federal government’s blue paper on Child and Elderly Benefits
tabled in the House Jan. 27 dropped plans to restructure social benefits to
the elderly, but has proposed changes which will take between $280
million and $410 million from families with children.

Officials with the Department of National Health and Welfare admit

the revisions were drafted with the aim of cutting the child benefits —

system, and the paper adds there will be no increase in funding for social
benefits in the coming year. :

Health Minister Jake Epp obviously took into consideration criticisms
of social advocacy groups, which have pointed out that government
schemes to families with children end up benefiting the rich more gener-
ously than the poor, but rather than penalizing the wealthy, his document
has targeted working class Canadians.

The first of the two packages contained in the 30-page paper would
save the federal government $80 million and its provincial counterparts
$330 million. It involves maintaining the monthly family allowance of

$31.27 per child, and eliminating the $710 annual Child Tax Exemption,

which has been the. target of public interest groups, since it benefits high

- income earners the most, and provides no return to the poor.

This package also includes upping the $367 Child Tax Credit to $595.
However the threshold ceiling — the income level where credits are
reduced — would be lowered from $26,330 to $20,000. Families earning
under $20,000 would gain up to $358 a year, but an estimated 2,236,000
families earning more than $20,000 would have their incomes cut.

The second option would lower the family allowance by one third to
$20 a month, and the child tax exemption would be cut to $240 per child.
Child Tax Credits would be increased from $367 a year to $610, but
benefits would be phased out beginning at $25,000.

Under this proposal, families earning under $20,000 would gain up to
$175 a year, but 1.8 million families earning over $30,000 would have
their incomes reduced.

The paper notes this package would save the federal coffers $130-
million and the provinces $150-million.

Criticisms of the government’s approach were harsh. Communist -

Party leader William Kashtan said while the Tories seem to have moved
away from undermining universality, “the budget will show if this is in
fact the government’s position.

“The actual proposals try to bargain with the Canadian people by
offering two options — both inadequate. What is called for is not a cut
but an extension of social programs,” the party leader said.

“This government claims to be concerned with the poor, but if it was
really concerned, nothing stands in the way of its making a massive attack
on poverty. ..this could be through democratic reform of the taxation
system which would result in a redistribution of wealth from the corpora-
tions and the wealthy. . .This is the objective which needs to fought for.”

Canadian Labor Congress President Dennis McDermott said that
instead of seeking to save on social programs, Canada needs to increase
its commitments and at least try to match the social expenditures of other
major industrialized countries.

“In our upcoming discussions with the federal government, we intend
to point out that Canada is in effect an underdeveloped country as
regards social expenditures,” he said. “‘A recent study by the Organiza-
tion for Economic Co-operation and Development showed that, in fact,
Canada ranks sixth out of seven major industrial nations in proportion of
gross national product spent on social programs.

“This means we still have a lot of catching up to do. .. The government
would do well to give up on any attempts to save on social programs. It
should rather generate increased tax revenues by stimulating the econ-
omy and putting people back to work,” the CLC leader said.

PACIFIC TRIBUNE, FEBRUARY 13, 1985 e 5

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