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Canada Votes for Mulroney and Free Trade
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15644 |
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Section : |
CURRENT ISSUES
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| Issue
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2 / 1989 |
2,839 Words |
| Author
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Sheldon L. Richman
Sheldon L. Richman is director of public affairs for the
Institute for Humane Studies at George Mason University. His
analyses of trade issues have been published in the Washington
Times, Journal of Economic Growth, and the Wall Street Journal. |
Assuming no snags develop, execution of the Free Trade Agreement (FTA) between the United States and Canada will bring strong and steady growth in what is already the world's busiest trading partnership. Brian Mulroney and his Progressive Conservative Party's dramatic victory in the November parliamentary elections assured passage of the historic FTA, which Mulroney's government negotiated with the United States in 1987.
The FTA is important because the postwar global trading system embodied in the GATT (General Agreement on Tariffs and Trade), has ceased to be a liberalizing influence, and efforts to revive it seem stuck in quicksand. Although they carry their own risks of trade warfare, regional blocs are apparently the only way to combat the ugly protectionism threatening the world. The European Community is headed toward integration in 1992, and there is talk of a bloc in the pacific led by Japan.
The Canadian elections were virtually a referendum on the FTA. After some wavering, the electorate gave Mulroney the majority required to maintain control of the Parliament, which must ratify the agreement. This was the first time in the last hundred years that free trade carried the day at the polls in Canada. There is a double irony in the victory. The Conservatives have traditionally been the protectionist party, and the Liberals the free traders; the Liberals lost in 1891 and 1911 over that issue. Moreover, as a candidate for party leader, Mulroney opposed free trade with the United States as un-Canadian and un-Conservative when a royal commission proposed it early in this decade. Foreshadowing the Liberals' argument, he went so far as to say, "Free trade affects Canadian sovereignty and we will have none of it, not during the leadership campaign or at any other time."
The agreement will phase out tariffs and nontariff trade barriers on most manufactured and agricultural products, natural resources (energy), services, and cross-border investment over ten years beginning in January 1989; some restrictions will end immediately, others in five years. For American producers, the end to restrictions on agricultural products will be a major development. Farmers should find a new market for wheat, barley, oats, grain products, poultry, eggs, and meat. Wine and liquor producers will no longer face Canada's discriminatory pricing system and sclerotic distribution and marketing system. Canada also agreed to end rules that severely discourage or prohibit the sale of energy--oil, gas, and electricity--to the United States. Such rules have included the requirement that energy not be sold in the United States for less
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