BULLYING CANADA

CONGRESSIONAL ELECTIONS may be only days away, but is this a sufficient excuse for the United States to mistreat Canada, its best friend and principal trading partner?

Those who have favored recent protectionist actions against Canada have lost sight of the longer perspective. This notably includes the possibility of a U.S.-Canada free trade agreement, currently under negotiation.There's a fine line to be drawn between protecting legitimate commercial interests in the United States and taking corrective steps to help ailing industries. This line, recent events suggest, has not been found in Washington. Moreover, as the protectionist winds rage on with gathering fury, the Washington administration can hardly be said to be gaining credibility as the free world's prime defender of liberalized trade.

Just a few weeks ago, did not President Reagan himself state the following: The answer to our trade balance problems is not to close our markets, cut imports or collapse trade. Millions of American jobs are tied to imports.

One should recall, too, that when Mr. Reagan and Canadian Prime Minister Brian Mulroney, at their Shamrock Summit in Quebec City in March 1985, put the wheels in motion for free trade talks, they made a significant pledge. As a first step, they agreed, we commit ourselves to halt protectionism in cross- border trade in goods and services.

As a goodwill gesture, Mr. Mulroney previously had made major changes in Canada's foreign investment and energy policies that had been widely assailed in the United States. A new look, Tory government did not waste time in jettisoning key elements of the former Liberal regime in Ottawa.

The entire free trade exercise, in fact, seems to have lost much of its appeal for the Canadian public-at-large, while Americans generally continue to be unaware of its existence or importance.

The bilateral talks for a comprehensive trade agreement had barely started last spring before the president put his signature to a 35 percent tariff on imports of Canadian cedar shingles and shakes. Then last week came the 15 percent duty slapped on Canadian softwood lumber imports on the grounds they are unfairly subsidized. The preliminary ruling by the Commerce Department reversed a decision taken in 1983.

Lumber producers in the United States had sought a countervailing duty of up to 32 percent, so they did not receive total satisfaction, and neither did Canadian interests get hit as hard as they feared. But such measures undermine the whole process aimed at further liberalizing the world's single largest trading relationship. Two-way, U.S.-Canada trade exceeds $120 billion.

In addition, Canada stands to be among the chief victims of the planned surtax announced last week on U.S. imports from all countries beginning next year. The surtax has been qualified as illegal under the General Agreement on Tariffs and Trade by Canada's minister of international trade, Pat Carney. No doubt, other trading partners of the United States share this view and will not take it lying down. If the surtax goes through, the Canadian government has vowed to take retaliatory action.

All through this difficult period in bilateral trade relations, Mr. Mulroney has, apart from the occasional angry word, acted like the ship master waiting for the storm to blow itself out. The official Ottawa attitude remains that the protectionist measures underscore the need to keep the free talks alive in order to eventually maintain access to U.S. markets for Canadian exporters.

But as these measures accumulate, Mr. Mulroney's political position on free trade is becoming increasingly untenable.

If Mr. Reagan wants to depart from the White House in 1988 with some form of new trade agreement with Canada as part of his legacy, radically altered signals will soon have to come out of Washington.

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