CANADA : Free trade: why all the debate now? By ALAN TATE and KERRY McCUAIG This week in Washington, the International Trade Commission is hearing from U.S. and Canadian officials on the merits of free trade between the two countries. Talks between the Canadian and U.S. governments began last year under the Liberals to explore extending sectoral free trade arrangements for steel, urban transit equipment and information services. But the election of Mulroney’s Conservative govern- ment in Sept. gave a boost to the across-the-board “free traders”. The Toronto-based C.D. Howe Institute, the the Royal Commission on Economic Union and Devel- opment Prospects for Canada, have led the call for a “leap of faith” which would tear down any trade barriers and embrace a full economic union with the U.S. Depite media reports to the contrary, there has been no wholesale change of view on free trade. The capitalist class has always supported the concept, although some sections of capital have argued for temporary exception in their own sector. As early as the late 1940s, a conscious path was embarked on by Canadian business to share in the profits of U.S. economic and military domination. Relatively unscathed by the Second World War, the U.S. emerged as the dominant imperialist power. In exchange for turning itself into a resource base for U.S. industry, Canada was given wide access to the U.S. market and benefited from its military contracts. However the emergence of Europe, Japan and the socialist world challenged U.S. dominance, and improve- ments in technology, transportation and communications which allowed for the increased exploitation of the re- sources of the developing world, placed Canada in a pre- carious position. Fierce rivalries between the U.S., Japan and Europe helped precipitate the recession of the mid-1970s. A slow- down in the American economy sent shock waves throughout Canada. Canada was sacrified as U.S. capital vied to regain some of its competitive edge. Inefficient Canadian subsidiaries were closed or moved to low wage areas in the developing world. Without a strong, independent manufacturing base, Canada was unable to respond. Even the resource sector was not immune. Mineral and forestry resources from Scandinavia and the third world came in direct competition with us for the lucrative U.S. market. It is in this environment that “free trade” became entrenched. The “solution” is both a continuation of long- standing capitalist policy, which has subordinated Cana- dian industrial policy to trade, and made industrial devel- opment contingent on it; and a response to the current economic crisis which has seen consecutive Western governments abandon Keynesian economics and embrace the Reagan-Thatcher monetarist line. It has also given birth to the new catchphrase for capital — “international competitiveness.” But Canada is very much a junior participant in the competition game. The creation of the European Eco- nomic Community has made expansion into that market very difficult. Statements by Mulroney’s chief policy advisor, Charles McMillan, about relations with the Pacific Rim countries becoming the “cornerstone” of Canadian economic policy are being viewed with suspicion. In response to McMil- llan’s goal, Macdonald pointed out that Japan already had the undisputed edge in the region, and although the coun- Canadian manufacturers would be unable to compete with the low-cost domestic goods of Asia. The U.S. is therefore seen as providing the greatest opportunity for Canadian capital. Seventy-eight per cent of our overall trade is already with the U.S., the U.S. market has been expanding since 1983, and the decline of the Canadian dollar has made our exnors more competi- tive. But perhaps the most romping: Sepach rarely articu- lated, reason for free trade liesin the fear that the U.S. will become increasingly protectionist. The U.S. “recovery” has been based on $200 billion deficit financing, the bulk of this going to the armaments industry. As a result, U.S. companies are producing for the military rather than for export. U.S. exports have declined 5.5 per cent leaving a $140-billion trade deficit. Washing- ton has responded with more protectionist measures for its industries. Canadian capital is hoping to get under the U.S. wing before the door is closed. Fraser Institute in B.C. and Donald Macdonald, head of : tries involved might have an interest in our resources, Mulroney’s Tories take lessons from B.C. Socreds The right wing federal Tory and B.C. Socred govern- ments are enjoying a ‘““honeymoon’’, according to edito- rial writers in the B.C. media. It’s more than a honey- moon. The federal Tories and B.C. Socreds have been in bed together for a long time, sharing the same right wing philosophy and policies. : The only difference between the Tories and the Soc- | reds is one of approach to the problem of how to go about ‘ implementing their right wing policies. The federal To- -ries have learned from the experience of the near dis- astrous Socred drive in 1983 when they attempted to implement their program in one big thrust, giving rise to massive public protest and the Solidarity movement. The Tories don’t want to repeat that mistake. In fact, some of Premier Bill Bennett’s top advisors have been working with Brian Mulroney to help avoid the same mistakes. Both the Tories and Socreds are faced with the. same dilemma: having elected governments with huge majorities, how do they implement right wing policies which were mainly concealed from the public during the election campaign; and how to counter strong public opposition to right wing policies. The Tories were elected by a large majority with 50 per cent of the popular vote. The Socreds also won a big majority with nearly the same margin. In both cases one out of every two people voted against them. This is significant considering they kept most of their right wing program under wraps and misled the public by false promises and in some cases outright lies. The Tories took advantage of the wide-spread desire for a change and captured most of the protest vote. But the difficulties the Socreds experienced when they im- plemented their right wing program, and the subterfuges the Tories are resorting to, demonstrates that the major- ity of Canadians are opposed to right wing policies and will fight against them once they realize what govern- ment is up to. Jobs Promise Unfulfilled The Socreds promised that their program would bring jobs to B.C. and get the economy rolling again. It hasn’t. Mulroney promised ‘‘jobs, jobs, jobs’’. But they are nowhere in sight. The Socreds said their policies of curbing and abolishing social programs, cutting back drastically on education and health costs, and massive government layoffs would bring down the deficit. It hasn’t. The Tories are now offering a similar program of social service cuts, layoffs and curbing people’s income through cuts in UIC and other programs. The Socreds said they would not tamper with social service programs and pledged not to raise hospital costs and user fees. They did the opposite. Mulroney said _ universality of social programs was ‘‘a sacred trust’’. He is doing the opposite. Premier Bennett said that ‘‘governments don’t create jobs, the private sector does”’ and that the way to over- come the economic crisis was *‘to restore the confidence of the private sector’’ by giving them incentives such as lower taxes, easing up on resource royalty payments, anti-labor legislation to drive down wage standards, etc. The Mulroney government also rejects government ac- tion to create jobs and talks of ‘‘incentives’’ to the pri- vate sector. YROOOM! VVROOOMM!/ ull 10 e PACIFIC TRIBUNE, JANUARY 23, 1985 ‘duced taxation of all kinds, subsidized low cost energy _ thousands of children of much needed school program Commentary Maurice Rush The way to economic recovery, said Bennett, was to create ‘ta favorable climate for foreign investment.” Mulroney’s recent pitch to U.S. corporations to invest in Canada, the scrapping of FIRA, and his heralding of a | new day for U.S. investors is part of the same right wing philosophy of the Bennett government. The Socreds in B.C. are now carrying this further by announcing legislation for the upcoming February 11 session of the legislature to establish Special Economic Zones in B.C. to attract foreign investors. These will i fact, be similar to colonial enclaves which gave foreign capital extra-territorial rights. They will be cheap labor ghettos. Unions will be unwelcome, special concessions to provide low cost leases on lands and buildings, re- and special customs duties. Privatization of Crown Corporations Both the Tories and Socreds have put a lot of emphasis on ‘‘privatization’’ of Crown corporations. The Socred had a head start on the Tories. A few years ago it set up the B.C. Resources Investment Corporation (BCRIC) and turned over the major publicly-owned resource companies to a handpicked group of capitalists. BCRIC has been a disaster. Shares, which sold for around $6.00 when the corporation was set up have now dropped to $2.60 a share. No dividend has ever been declared for common shareholders. BCRIC has moved from one crisis to another. The Tories have looked for a similar vehicle to unload the assets of the Canadian Development Investmen Corporation. Recently Sinclair Stevens, the Tory cabin- et minister charged with privatizing CDIC, approached a B.C. Socred cabinet member with the proposition tha’ BCRIC take over the federal Crown corporations. When this news broke in B.C. it was the cause of much amuse- ment and hilarity among those who knew the disastrou record of Bennett’s venture into privatization wi BCRIC. But both governments are committed to tun over to private capitalist interests every public company or government function from which financial interests can squeeze a profit. Those which are not profitable, they will leave to the government to operate and for the” public to foot the bill. The last two years of the Socred right wing policies : have been a disaster for B.C. Once a leading ‘have’ a” province, B.C. has become a ‘‘have not’’ province. | Economists have described the B.C. economy as “basket case’’. Real output in the province declined b 0.5 per cent in 1984 and is not expected to do much bette in 1985. Unemployment which was 111,000 in 1981/82 jumped to an unprecedented 213,000 in 19842 Whe other factors are concerned it’s probably over 250,000 Some economists are predicting it may rise as as high as 17 per cent before the winter is over. In addition, 215,000 people are on welfare. That in- cludes thousands of workers who have used up thei UIC and have no other means of survival. One out 0 every five British Columbians is either unemployed or of welfare. To feed the growing army of the hungry churches, unions and other organizations have set food banks, and long line-ups for a bag of groceries hay become part of the B.C. scene. E The education system is in a shambles as the cove! ment takes an axe to school budgets, depriving In some areas even school buses have been abandoned, and it’s no wonder that school trustees, parents and teachers are up in arms. q The people of B.C. are not taking the right wing poli- cies of the Socreds lying down. They are fighting back and the government is increasingly on the defensive. A recent poll taken across Canada showed that the B.C. Social Credit government is the most unpopular provin- cial government in Canada today. The tragedy of B. today should spur Canadians everywhere to fight the Tory right wing program and prevent it from carrying through policies which will be equally disastrous for Canadians.