'IRON LADY' FIGHTS US PROTECTIONISM

Advocates of protectionism in Washington better scurry for cover: a formidable tigress in Canada has begun to show her claws.

Pat Carney, the minister of international trade, is sometimes referred to as Canada's Iron Lady. She is, in truth, a somewhat weightier and bigger version of Maggie Thatcher, but probably can be said to possess the same steely determination as Britain's prime minister.When Ms. Carney responds in her direct way in Parliament to critics of government policy, there are bodies on the opposition benches that can be seen to be wilting on the spot. The lady is one tough cookie.

Formerly in charge of the energy portfolio in Ottawa, Ms. Carney is now devoting much of her attention to the sensitive free trade negotiations with the United States. And she may prove to be the most effective political weapon of the Tory administration of Prime Minister Brian Mulroney on this issue.

Last week, Ms. Carney was in Boston, where she spoke before the Canada-New England Business Society on the recent U.S. restrictive trade measures affecting Canadian exporters.

Citing the 15 percent tariff imposed on Canadian softwood lumber exports, Ms. Carney said many Canadians will perceive - wrongly in my view - that this action of one U.S. industry is an indication of the general view of Americans toward their northern neighbor. The minister predicted that relations between the two countries will suffer if the interests of a minority are permitted to override the interests of the majority.

According to Ms. Carney, Washington's protectionist actions are poisoning the current negotiations to further liberalize the world's single largest trading relationship. She notes that despite President Reagan's staunch support for free trade in Canada, the mood in the U.S. seems to be very protectionist.

While Canada, Ms. Carney argues, is sympathetic to U.S. concerns over its trade deficit, the U.S. problems are not with us - we are fair traders.

In response to complaints filed by the U.S. lumber industry, the Commerce Department ruled that provincial timber pricing practices in Canada amounted to a subsidy. This reversed a decision taken in 1983.

During her Boston speech to Canadian and U.S. businessmen, Ms. Carney described the lumber ruling as an unacceptable attempt to impose U.S. views on how other governments should manage their natural resources. This is an attack in our sovereignty. On the same occasion, she pledged there will soon be a diplomatic assault on Washington.

These were strong words uttered, moreover, on U.S. soil.

But to what extent the Ottawa authorities will be able to persuade Washington to overturn certain restrictive trade decisions remains to be seen.

Observers consider that the latest developments have made Canadians still more wary of dealing with their giant neighbor to the south.

You are going to hear from the nationalists that this is the final straw, that this proves why the Yanks aren't to be trusted and that we should break off the negotiations, remarked John Crispo, political economy professor at the University of Toronto.

Ironically, however, the most recent Washington actions, which also include a levy on imports from all countries, could help to tip Canadian public opinion more resolutely in favor of negotiations aimed at securing access to the U.S. market.

The Financial Times of Canada, a business weekly published in Toronto, suggests that as the Americans get meaner, with softwood lumber duties and the like, the supporters of free trade sound more and more convincing - mainly

because the status quo looks scarier by the minute.

Such thinking is not lost on the trade relations strategists of the Canadian government. The Ottawa policy is to hang tough and keep the negotiations moving along, no matter how provocative the rhetoric on both sides of the border.

The actual negotiations, meanwhile, will be entering their critical second phase over the next few weeks, shortly after the U.S. congressional elections. The preliminary phase, during which the two sides hammered out the topics to be dealt with at formal negotiations, began last spring and ended in late September.

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