CANADA ———

Costs high in free
trade deal with U.S.

By ALAN TATE
and KERRY McCUAIG

Given the present state of the Canadian econ- .

omy, it is recognized by all sides in the free trade
debate that the status quo is no longer workable.
World events including new investment pat-
terns, slow economic growth, faltering world
trade and the international debt crisis have
brought Canada to a cross-roads where it must
either opt for integration with the U.S. or em-
bark on a radical restructuring of its economy.
Fueling free trade arguments are the real fears
of a volatile U.S. Congress under intense pres-
sure from its constituents concerned with
protecting the future of their own local industry.
In recent years, Canadian producers of soft-
wood lumber, steel, copper, mass transit
equipment, cement, fish and hogs and pork have
faced uncertainty over threatened or actual re-
strictions As international trade minister, James
Kelleher, told a Jan. 14 meeting of the Canadian
Manufacturers Association, **protectionist sen-
timent in the States is strong and is not likely to
diminish.”
This isa fact that Kelleher and others in Mul-
roney’s cabinet have reiterated in every major
_ speech since taking office. The government's
response to protectionism — free trade — has
become its major policy initiative. It will be
pushed at the First Ministers Conference in Re-
gina, Feb. 14-15 and will again be in focus at the
March 22, Ottawa Economic Conference where
the Tories will attempt to win the minds of busi-
ness, labor, consumer and women’s groups for
it.
Despite the Conservative government’s
strong advocacy of this option, it has been
forced to_at least acknowledge the anxieties, of

those concerned with the price Canadians--

would have to pay for a closer relationship with

the United States.

Canada finds itself in its present dilemma be-
cause of long-term policies which have resulted
in a branch plant, resource dependent economy
with an underdeveloped manufacturing sector.
In 1983 we had a $15-billion deficit in balance of
payments for manufactured goods — the high-
est per capita deficit in the industrialized
capitalist world. Traditionally this deficit has
been offset by exporting raw or semi-processed
resources. In other words, resources have been
sold off to pay for imports of capital and con-
sumer goods.

Obstacles Face Old Strategy

Since the recession of the mid-seventies, this
strategy has faced three major obstacles: a
shrinking of traditional markets for our re-
sources; increased competition, particularly
from developing nations which have been
forced to sell their resources cheaply in order to
pay off international debts; and increased
protectionism in major markets suchas the U.S.
and the European Economic Community.

Since our difficulties stem from resource re-
liance, a logical solution would be an industrial
strategy designed to strengthen domestic manu-
facturing and lessen our dependence on exports,
instead we have business advancing the “‘logic”’

- of the marketplace.

Why? For business and government to adopt
an alternate strategy would involve the
abandonment of their private enterprise ideolo-
gy. An industrial strategy would require a mas-
sive restructuring of the economy, involving re-
strictions on capital, state intervention, and pub-
lic ownership of key sectors of the economy. In
effect, a planned economy. 5

This of course would be anathema to busi-
ness, so instead we hear ‘‘free trade’’ and its
right arm: ‘‘international competitiveness’.

It is generally acknowledged that in a free
trade agreement with the United States, there
would be ‘winners and losers”’ within capital.
The losers will be companies who rely on the
Canadian market, in particular the furniture,
textile, knitting and leather goods industries that
have been protected from cheaper American
imports by tariffs.

Also affected would be U.S. subsidiaries
which constitute 34 per cent of our manufactur-
ing sector. These plants were not located here to
compete with their parents. Unhampered by
tariffs, and guaranteed access to the Canadian
market, the ‘‘runaway plant’’. phenomenon
could mushroom, resulting in massive de-indus-
trialization and the loss of thousands of jobs.

The Tories are counting on the high tech’

industry to be the big winner. But this is unlike-
ly. Canada is already far behind the major high
tech countries, including Japan, the U.S.,
France and Germany and is facing increased
competition from the rapidly developing low-
wage countries in the Pacific Rim. Here Canada
is again paying the price for its branch plant
dependence and is seriously lagging behind in
research and development. Moreover it has al-
ready been conceded that the high tech field
does not hold the answer to unemployment.

More of the Same

International competitiveness is therefore
‘‘more of the same’’: an increased emphasis on
selling resources, with free trade as an attempt
to secure a market for those resources.

The results will exacerbate the structural
problems of the Canadian economy. Since re-
sources are capital intensive (particularly when
the machinery used in extraction is imported),
allowing our already depleted manufacturing
sector to decline further to enhance exports, will
bring an enormous increase in unemployment.

Ironically it is the western provinces, which
have traditionally supported free trade, that will
be the big losers. Many of the resources they
plan to sell off are non-renewable. Even those
that are potentially renewable, such as forest

“ ~produets, have been exploited so vociferously,

with so little attention to reforestation, that it is
estimated we will have difficulty supplying our
present markets before the decade is out.

In the absence of a manufacturing base the
ability to diversify the region is severly re-
stricted and continued reliance on exports will
turn the west into an economic wasteland. We
are looking at a policy of short-term gain for
long-term disaster.

It is foreseeable that a free trade strategy will
entail a renewed attack on living standards. To
become internationally competitive, it is ar-
gued, means enduring a period of “national
pain.”’ As social policy becomes subordinated
to improving ‘‘the investment climate’ and
‘‘increasing competitiveness’; wage restraints,
concessionary bargaining and reduced social
programs become part of the deal.

But the most devastating effect of a reciprocal
free trade agreement with the U.S. is the very
existence of Canada as an independent country.
With the U.S. having undisputed economic
dominance in this ‘‘partnership’’, all decision-
making would emanate from Washington. The
ability of the Canadian working class to wrest
concessions from government, to win gains, to
effect change, would be eroded.

Among the first Canadian prerogatives to dis-
appear would be taxation policy. The option of
raising or lowering taxes, of democratizing the
taxation system, of having the rich and the cor-
porations pay a larger share, would be lost. To
retain an ‘‘equitable’’ trading relationship,
great pressure would be put on Canada to adopt
the same tax structures as the U.S. ;

Use of the public purse would also be set by
the larger partner. The potential of Canadian
programs such as medicare, family allowances,
old age pensions, unemployment insurance and
maternity leave, etc., being viewed as interfer-

ing with competition is real. And as free trade in.

commodities expand, Canada’s possibilities of
preserving its cultural institutions — the media,
arts, publishing and education — would be li-
mited.

In the end, Canadians would be left with very
little opportunity to decide our priorities and

determine our future.

Next week: the alternatives to free trade.

Policy change
puts PQ in limbo

Special to the Tribune
QUEBEC CITY — As ex-

- pected, the majority of the 1,530

delegates to the special conven-
tion of the Parti Québécois de-
cided not to focus on Quebec
separatism in the next provincial
election. They also removed, by a
65 per cent margin, Article 1 of
the program adopted at the 9th PQ
congress held in June last year,
which stated that a ‘‘vote for the
PQ is a vote for sovereignty’’.

The results of a public opinion
poll published just prior to.the
Jan. 19 convention, indicating
that popular support for separa-
tion had fallen from 40 to 19 per-
cent in the past five years, fueled
the arguments of those who
wanted to relegate the sover-
eignty issue to the background.

‘*We have to trust the people of
Quebec,” said the very first dele-
gate who spoke in favor of the
policy change proposed by Pre-
mier René Lévesque, and backed
by the majority of his cabinet and
deputies.

With rare exceptions, it was an
emotional debate that dominated
the three mikes on the convention
floor: one ‘‘for’’ change (‘‘the
revisionists’’); a second for those
voting ‘‘against’’ (‘the ortho-
dox’’); and a third for those who
favored a change in electoral pol-
icy, but opposed dropping sover-
eignty.

According to Louise Harel, a
former minister who had resigned
from the cabinet in protest of the
policy change, popular support
for sovereignty had fallen off be-
cause the PQ hadn’t pushed it
hard enough.

But other delegates noted that
it was not the silence on sover-
eignty that caused support for the

PQ to fall, but rather the govern-

ment’s inaction and backtracking
on economic and social policy.

‘*Ask the 100,000 members
who quit the party during the pub-
lic sector negotiation if they will
vote for independence. They will
vote ‘NO’’’, said one delegate at
the ‘‘against’’ mike.

Sovereignty obviously wasn’t
on the minds of the hundreds of

‘ demonstrators who gathered out-

side the convention site. About
100 members of RAJ (a federation
of youth and student groups) were
protesting the government’s
latest attack on youth social
benefits., Two hundred workers
who have been on strike for five
months against Marine Industry
were calling for action by the
government, which holds a 65 per
cent interest in the company. In
addition, 300 members of the
Quebec provincial police noisily
voiced their dissatisfaction with
their employer.

But where jobs and social cuts

"were a priority with the demon-

Strators, these issues were
quickly dispensed with by the
delegates. Although the govern-
ment had said that unemployment
had to be urgently examined, job
creation was not included in the
list of proposals for the PQ elec-
tion platform.

‘‘Sovereignty,’” however, still
appears in the PQ program as an
eventual goal. But judging by
resolutions -adopted at the
convention, the PQ has abdicated
its right to be called a pro-sover-
eignty party.

Prompting the leaderships to
relegate the issue to the back-

ground is their hope that recently
installed Prime Minister Mul-
roney ‘will listen to Quebec.”

Dissenting delegates accused
right-wing ministers Pierre-Marc
Johnson and Bertrand of wanting
to ‘‘union nationalize’’ the PQ, re-
ferring to the Duplessis era. *“You
are dragging us into a neo-fed-
eralist gallery ... so go ahead;
Mulroney and Bourassa are wait-
ing for you with open arms’’, one
delegate remarked.

While voting down a resolution
calling for “specific recognition of
the existence of the Quebec
people in the Canadian constitu-
tion, as well as their right to self-
determination,” the convention
preferred to ‘‘take the time neces-
sary and wait for the auspicious
moment to again present the basic
choice to’ the population; the
government will strive to use all
the appropriate legal and political
measures and means to con-
solidate the national’status ... of
the Quebec state, and to seek
through negotiations the exten-
sion of the competence of Quebec
in the economic, cultural and so-
cial fields.”’

With this resolution the PQ
abandoned its quest for the right
to veto and to “‘opt out’’ of federal
programs. In his closing remarks,
Levesque again spoke of the de-
mand for reparations that will be
made to the Mulroney govern-
ment.

Despite Levesque’s attempts
to calm the waters, the PQ’s
membership rolls were not saved.
Several members left at the
convention, and many more re-
main dissatisfied. It is a different
party from the one that five years
ago claimed 300,000 members;
today membership stands at
70,000.

Despite the labelling by the
mainstream media of the dis-
senters as the “‘left wing’’ in the
PQ, the battle over sovereignty
does not represent a left-right
split.

The defection or prominent
leaders is certainly a blow to the
party. In many cases these were
the activists, the sluggers who
weren’t afraid of the door-to-door
work the-party needed to win
election. They instead represent
the ‘‘sincere nationalists’’, and al-
though some are progressive-
minded, they had all voted in line
with government restraint
policies. Indeed, only one PQ de-

_ puty has ever resigned in a con-

flict over social policy — Guy
Bisaillon who left two years ago in
disagreement over the govern-
ment’s attack on public sector
workers.

Levesque’s opportunist drop-
ping of the sovereignty issue may
help the PQ in its next round at the
polls. But as the party’s wart
healers called for unity to take on
Bourassa’s Liberals, Quebec
voters are left in limbo as to what
the PQ actually stands for. The ©
separatists have lost their party,

while Quebec workers, who orig- 4

inally supported the PQ for its re-
form program, have seen those
policies swept away as the party
increasingly follows a pro
Reagan-Mulroney line.

Now that the PQ has been
stripped of its trappings, perhaps
Quebec labor will again look at
placing the establishment of a

mass party of the working people
on the agenda.

PACIFIC TRIBUNE, JANUARY 30, 1985 e 5