DON'T IGNORE CANADA

LOST AMID THE COMMOTION about the plunging dollar and the U.S.-European Community trade scuffle is the proposed free trade pact this country is seeking with Canada.

While monetary and trade shenanigans have pushed Canada off the front pages in this country there is no shortage of news about U.S.-Canadian trade dealings north of the border. Furious at what he perceives as U.S. foot- dragging, and with his party under the gun in the Canadian polls, Prime Minister Brian Mulroney gave Vice President George Bush a good dressing down last month."Canadians don't want to be on anybody's back burner or taken for granted at any time," he told the vice president.

Mr. Mulroney in 1985 proposed the free trade agreement between the two countries and President Reagan warmly embraced the idea. Any why not? The United States and Canada are the largest trading partners in the world with roughly $150 billion in merchandise crossing the border both ways last year.

For a man who supposedly welcomes free trade, as President Reagan does, there is no better place to start. Yet since the agreement was proposed, the two countries have been sliding further away from free trade.

The United States slapped tariffs on shakes and shingles and on softwood lumber and Canadians countered with a duty on U.S. corn.

Now U.S. steel producers want Canadian steel shipments curtailed. Only last week, Sen. John Heinz, R-Pa., said he plans to introduce legislation reducing steel imports from Canada as well as Taiwan and Sweden.

"These actions only reinforce the notion that we have to move quickly on coming to agreement," says Laurent Thibault, president of the Canadian Manufacturers Association.

It's not so much the pace of the negotiations that concerns the Canadians, its the lack of attention the issue has received from the top brass in Washington. If Mr. Reagan thinks the occasional trip to Ottawa will pacify the Canadians, he is sorely mistaken.

Mr. Mulroney has put his political neck on the line and wants the Reagan administration to make Canada-U.S. trade a top priority. The administration has set September as the deadline for putting the bill before Congress. Canadian officials feel that deadline can be met, but worry that if it is missed they will have to wait until another administration comes to office before a pact can be negotiated.

There is much to gain for both sides in a free trade agreement. Of the world's ten largest economies, Canada is the only nation without duty-free access to a market of 100 million people. Canada needs the economies of scale such a market provides if it is to become more productive. Likewise, competition in the Canadian market would serve to make Canadian companies more competitive.

There is opposition to the pact from the Canadian side. Officials from protected industries worry that a rush of duty-free U.S. products roaring across the border will mean a loss of sales. Some inefficient companies may even fall by the wayside, but a report by the Royal Commission on the Economic Union and Development Prospects for Canada says the increase in investment spurred by the pact would result in an increase in employment. The study also says a free trade pact with the United States would boost Canadian economic growth by 3 percent to 8 percent a year.

For the United States too, the benefits are significant. While the U.S. market is considerably larger, Canada is a large and affluent market where U.S. companies can readily com pete. Absent the heavy tariffs they face, it wouldn't take long for U.S. telecommunications and computer companies, for instance, to realize an upturn in sales to Canada.

Apart from the increase in the duty free marketplace, the U.S. negotiators could point to the free trade agreement as a beacon to other nations as the GATT talks begin in Geneva.

"It would send a very strong signal to the members of the European Community," says Sen. Lloyd Bentsen, D-Texas, chairman of the Senate Finance Committee and an ardent supporter of an agreement with Canada. "We would like to have multilateral agreements - we want to see GATT progress and cover more trade - but if we don't see that then we will resort to bilateral agreements."

With a strong Conservative majority in the Canadian Parliament and with strong support from Sen. Bentsen, there is a every reason to believe a free trade agreement would pass in legislative bodies in both countries. But the longer the delay, the longer the pact is put "on the back burner," the more the opportunity is in danger of fading.

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