Ratification road for US-Canada trade pact has some bumps. Some US industries support it, but textiles and movies dig in
Simon Reisman, Canada's chief negotiator for the free-trade deal reached with the United States last October, has little nice to say about the American textile industry. ``They have been completely and miserably unreasonable,'' he said in an interview here. ``They want protection from everybody.''
Mr. Reisman figures the trade pact will eventually pass the US Congress, probably with about two-thirds support. But he does worry some about the opposition of two powerful American lobbies, that of the textile and motion picture industries.
Congress will begin drafting the legislation needed to put the pact into effect April 25. When completed, this draft will go to the Reagan administration for review and possible alteration. An actual bill is to be presented to Congress June 1. Congressional leaders have promised to make their best efforts to have it passed this summer. They pledge to have a vote before the end of the year.
The pact is scheduled to take effect at the start of 1989. It will eliminate many tariffs immediately, the bulk of the rest over 10 years, and reduce many other trade barriers between the two nations. Two-way trade across the border amounted to $173 billion (Canadian; US$139 billion) last year, the largest volume in the world. To a degree, the deal will create a merged $5 trillion market, 15 percent larger in terms of goods and services produced than trade in the European Community.
In Canada, the Progressive Conservative government of Prime Minister Brian Mulroney has given ``top priority'' to draft legislation to put the trade pact in effect. With the Conservatives enjoying a huge majority in Parliament, the bill should pass easily this spring, despite the opposition of both the Liberal and New Democratic Parties. The law, however, will not be proclaimed by Governor General Jeanne Sauv'e until Congress has approved the corresponding bill in Washington.
Most of the major business organizations in Canada support the trade deal. These include the Canadian Manufacturers Association, the Canadian Chamber of Commerce, the Business Council on National Issues, and the Federation of Independent Canadian Businesses, which represents small business.
The Canadian Labour Congress opposes the deal. So does the Liberal provincial government in Ontario, the most populous and industrialized province. But the Liberal government in Quebec backs the pact, along with most other provinces. A New Democratic government in Manitoba was opposed to the agreement before its fall last month. And the Liberal premier of tiny Prince Edward Island criticizes the deal, but has said he won't attempt to block it.
Indeed, the federal government says Parliament can ratify the pact without the consent of the provinces.
Many businessmen are already acting as if the deal is certain to come into effect. Canada's large conglomerates have been purchasing American properties, `a la Robert Campeau's purchase of Federated Department Stores Inc. US multinationals have begun thinking of how to best make use of their Canadian subsidiaries when duties disappear.
Business opponents, however, are making last stands.
``The longer the deal hangs out there, the more opportunity there is for the critics to attack it,'' negotiator Reisman laments.
The American Textile Manufacturers Institute didn't want textiles in the deal at all. The industry, which employs about 2 million in the US, was further upset when Finance Minister Michael Wilson announced March 22 a $63 million (Canadian; US$50.3 million) program for assisting the Canadian textile industry. The program includes immediate tariff reductions on specialty fabrics, a new duty remission system, and a plan to reduce textile tariffs in the future to levels comparable to those in other industrial countries.
Reisman says the textile program was allowed for in the trade agreement, if put into effect before June 30. Further, he notes, the announced measures are less ambitious than those previously discussed with the Canadian textile and apparel industry.
The American industry, however, protested. It says Canadian interests will get ``far greater benefits than those accorded US textile manufacturers'' and ``set a dangerous precedent for similar agreements with other countries.''
Mr. Wilson said the measures would ``ensure that Canadian companies, which use significant amounts of textiles, can compete on an even footing with companies based in other countries.''
The office of the US Trade Representative hopes the American textile industry will not attempt to kill the whole free-trade deal in Congress. ``We told them [the Canadians] it would cause us political problems,'' a spokesman noted.
The US motion picture industry, whose campaign donations and glamour give it considerable political clout, is upset about a threat to its control of virtually all movie distribution in Canada. Communications Minister Flora MacDonald announced last year that she would introduce measures encouraging Canadian-owned companies to take over a portion of the business in Canada. The goal is to increase Canadian film production.
Under the new trade pact, Canada will retain control of its so-called ``cultural'' industries, including the movie business.
Nonetheless, the proposal prompted an outcry by the Washington-based Motion Picture Association of America. Negotiations to find a compromise are under way between Ms. MacDonald's office and the US motion picture industry.
Reisman believes it will be ``resolved to the satisfaction of both countries.''