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Free trade: going down
| the tubes with the U.S.

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In large measure Canada owes its existence as a Economics
for you

unified country to the resistance of its people to
U.S.-Canadian free trade’’ or as it was then

_ Called “‘reciprocity’’.

With respect to the reciprocity treaty of 1854, the
Americans had no illusions as to what they were up
to. The American consul of the time noted the

_ treaty was ‘‘quietly but effectually transforming

these five provinces into States of the Union,
commercially speaking.” The answer was Con-
federation and Sir John A. MacDonald’s ‘‘National

Policy’’ of high tariffs. Sir Wilfred Laurier’s at-

tempt to negotiate a second reciprocity treaty 50
years later led the voters to end his long career as
prime minister.

In principle, free trade is not a bad thing. It is in

__ the interest of all peoples to promote the inter-

National division of labor, which, in theory at least,

enables each country to specialize in those ac-

tivities that it can best do. For that interest to be
tealized, however, the removal of barriers to trade

_ must be truly international and in the context of
_ trade relations among equals. A ‘‘free trade”’
_ agreement between Canada and the United States

is like the recognition of the equal rights of a lion
and a rabbit confined within the same cage.
The treaty now being proposed is the very oppo-

_ Site of free trade. By free trade we mean, or ought

to mean, the removal of tariffs and other barriers to
trade among all countries. Now if the existing av-

_ €rage tariff duty on foreign products entering

Canada or the United States is, say, 10 per cent, the

Manufacturers have a 10 per cent advantage over

foreign goods on their own national market. If
Canada were to eliminate the tariff only on U.S.
manufactures, then that is equivalent to increasing
the tariff against the rest of the world by 10 per
cent. That is hardly free trade.

The ‘‘continentalists’’ — who argue for eco-

- Nomic and political integration with the United
States — are today seizing on the alleged decline in

the U.S. demand for our natural resources, and the
threat of protectionist measures by U.S. Congress.
They are being less than honest. The table shows
the percentage change in output and in exports of
our principal resource products, from 1980 to 1984,
that is the period spanning Reagan’s first term and
the recession.
Percentage Change (1984 over 1980) in:

Output Exports

(physical (dollar

Commodity Group units) values
Ores 5.4% —12%
Crude oil and gas 2.9% 20%
Lumber 9.3% 27%
Pulp 2.1% 1%
Newsprint 4.4% 30%

_Ina world whose population is expanding at too
high a rate, and whose natural resources are being
depleted rapidly by over-exploitation, pollution

and neglect, the last thing we have to worry about

1S a market for our resource products. If we pre-
Serve and protect those resources, the world will
Come to us on its knees seeking our lumber and
ores,

_ The continentalists are playing on the fears of
those employed in the resource industries, fears
that are fed by rates of unemployment not seen
Since the thirties. The table shows, however, that
the unemployment is not caused by falling produc-
tion or markets. The fact is that during the 1981-82

_ Técession, employers took advantage of the fall in

market which did take place at that time to lay

«off tens of thousands of workers. They also re-
_ quipped their plants so that when output returned
_ toits former level, the unemployed did not need to

KC VAS NPE

FREE TRADE EXPLAINED

be rehired. They had been replaced by the
machine. Instead of being the beneficiaries of in-
creased productivity, they were permanently out
of work. This is a point that should always be
stressed whenever our betters seek to beguile us
with sermons about productivity being the sole
source of high wages.

Industries Will Perish

If we enter into a deal to eliminate tariffs be-
tween Canada and the United States, what hap-
pens? Certainly the U.S. share of the Canadian
market for manufactuared goods will increase both
at the expense of other countries and of Canadian
industry itself. No doubt some Canadian industries
will benefit by easier access to the U.S. market but
many more will perish through unequal com-
petition.

Do we need closer trade relations with the U.S.?
Between 1980 and 1984, the percentage of our ex-
ports that went to the U.S. increased from 63.3 per
cent to 75.6 per cent. Our trade is obviously too
narrowly channeled to one country now. The Mul-
roney version of ‘‘free trade’’ will only make it
more so. What we need is to extend and broaden it
with all countries. The more we increase our de-
pendence on the U.S. market, the more we are at
the mercy of the transnational corporations and
their humble servant, the U.S. Congress.

The true underlying basis of the U.S. interest in
‘‘free trade’’ with Canada lies not in custom tariffs,
but in the exchange rate of the U.S. dollar. Both the
U.S. dollar and the Canadian dollar are overvalued
in the international currency exchanges. This is
caused by Reagan’s need to finance his absurdly
high military budget, and therefore to keep interest
rates high enough to borrow money. Those high
interest rates attract foreign money, which, by
simple supply and demand, keeps the value of the
dollar high in terms of pounds, marks, yen and
Canadian dollars. If the U.S. dollar is expensive,
so are American goods, and by the same test,
foreign goods are cheap for Americans. What has
been happening, with all U.S. trading partners, is
seen most clearly in the Canadian example:

Canada’s balance of sabia ded

980 1984
Excess (deficit) of our (millions
receipts over of dollars)
payments arising from
trade with
The United States (8875) 6679
All other countries 6971 (4126)
All countries (1904) 2553

Whereas the U.S. had a net take of nearly $9-bil-
lion from Canada in 1980, by 1984 Canada’s net
receipts from the U.S. were nearly $7-billion. Be-
cause our dollar, although undervalued in relation

- to the U.S., is overvalued in relation to other coun-

tries, our former surplus with them has become a
large deficit.

The U.S. adverse position vis-a-vis Canada is
also being experienced in its trade with other coun-
tries, so that it now has an adverse trade balance of
more than $100-billion a year. It has, for the first
time in the twentieth century, become a net debtor
country. At the present rate, it willina few months
time have a net foreign debt higher than that of
Argentina or Brazil. Given continuation of present
policies, that debt, in a very few years, will be too
high for even the U.S. to carry.

From the U.S. point of view the ‘‘free trade”
deal would provide a partial relief. Since we are
America’s biggest customer, if they could get back
from their 1984 annual deficit with Canada to their
1980 $9-billion surplus, Reagan could continue to
finance his engines of death a little longer.

But from the Canadian point of view, since in the
absence of disarmament the United States is going
down the tube, the free trade agreement would
simply mean voluntarily electing to go down the
tube with them.

Legislative agenda
only in B.C. Fed
accord statement

Continued from page 1

:we need to determine what

problems are to be tackled first.
How do we reconcile the differ-
ent, and sometimes apparently
conflicting, interests that we
occasionally have in our move-
ment?

“We need to participate in a
process that will continue to
defend our fight for free collec-
tive bargaining through an
independent trade union move-
ment.

“We also need to participate
in a process that can bring all
working people together, what-
ever their union affiliation, to
co-operate and aid in the reali-
zation of these goals.

“We need to strengthen the
coalition between unions and
other organizations in our
community; to involve women,
anti-poverty groups, environ-
mentalists, seniors and others
because the only people who
can determine their needs are
the people themselves.

“In order to achieve these
ends the B.C. Federation of
Labor will participate with the
New Democratic Party in dev-
eloping a framework for on-
going discussion of these
common issues and concerns.”

The statement echoed com-
ments by Kube in his opening
address in which he stressed the
need for an NDP government
to be “equipped with a legisla-
tive agenda” to ensure that it
wins “more than one provincial
election.”

He'emphasized that develop-
ing “a united trade union posi-
tion” is one part of establishing
a legislative agenda. “But that is
just the first step,” he added,
**..it is essential that the rela-
tionship between the two wings
of the social democratic move-
ment — the trade union move-
ment and the New Democratic
Party — be made fully effective
and be understood by our
members and the public alike.

“T believe that the key step in
this regard is the development
of an ongoing formulated con-
sultative process between the
NDP and the labor movement
and the parallel development of
an effective method of input for
the many people’s organiza-
tions in the province,” he said.

Kube also insisted that the
media got “carried away with
the notion that we want to
duplicate the Australian pro-
gram here in B.C. That is not
the case,” he said.

Although the media was
handed the blame for distorting
the issue, Kube’s remarks indi-
cated a shift in emphasis on the
issue of the accord. Following
the delegation’s return from
Australia, NDP leader Bob
Skelly focused on the wage res-
traint aspects of an agreement in
his discussions of the accord
with unionists and Kube him-
self emphasized the need to give
the public assurances that labor
“won’t go after 40 per cent
increases just because an NDP
government is in power.”

It was also apparent that the
concern among many unionists
about voluntary wage restraint
prompted the shift from a dis-
cussion of an accord which
might trade off a legislative pro-
gram for an agreement for
moderation from the labor
movement to a straight legisla-
tive agenda. Most unionists
support discussions with the
NDP to ensure that labor’s
legislative program on such
reforms as repeal of anti-labor
legislation and restoration of
social services is recognized and
some commitmient given.

The assurances were repeated
by executive officers on the con-
vention floor as delegates
debated the statement Tuesday
afternoon.

The statement “‘says what it
does and no more” said Federa-
tion first vice-president Art
Gruntman, adding that there
“always has to be an arms’
length between the NDP and
the labor movement.

“There certainly won’t be the
kind of accord the papers have
talked about,” he said.

Telecommunications Workers
Union president Bill Clarke also
emphasized that the document
“has nothing to do with any
other place but B.C.”

Hospital Employees Union
delegate Jack Gerow told the

convention that he had been —

concerned by the statement’s
intent, “but my concerns were
set aside by the comments of the
executive officers.

“Tm glad we’re no longer

talking about an ‘accord’,” he
said, adding that to him, it was
“a dirty word.

“The last time we had an
accord, it came from Kelowna
— and all we got was the core
while Bill Bennett got the pol-
ished apple.”

CUPE delegate Jim Quail
echoed some of the lingering
questions about the issue, not-
ing that it was “difficult to
remove the debate from the
comments made in the media”
about the accord.

However, this statement
“does contain a call for a legisla-
tive commitment from the
NDP,” he said.

“But it doesn’t give a man-
date for any kind of accord,
Australian or otherwise, which
involves restraint on wages,” he
declared.

“This shouldn’t be inter-
preted as an endorsement of an
accord such as they have in
Australia — we’re not giving
that kind of mandate in adopt-
ing this statement.”

‘

P's ,

PACIFIC TRIBUNE, NOVEMBER 27,1985 5