QUEBEC'S EAGER FREE TRADERS

When a Quebec businessman plots out potential markets, the gleam in his eye is pointed south.

When Montreal's longtime mayor, Jean Drapeau (he is retiring next month), dreams of a new grandiose undertaking, he sees a high-speed railway link with New York, not Toronto.When the typical French-speaking Quebecer plans a holiday, it's almost inevitably Florida in the winter and the Maine coast in the summer. And Montreal's lively French press cooperates by making its newspapers available at Old Orchard beach and at Fort Lauderdale outlets.

When comedian Andre-Philippe Gagnon was invited to appear on the Johnny Carson show last winter, it was front page news in Quebec.

In short, Quebec is unabashedly pro-American and the major Canadian province that is the most eager for current negotiations with Washington to culminate in a Canada-U.S. free trade agreement.

Even the labor movement in Quebec is less violently opposed to the project than in the rest of Canada. Opinion is much more divided in Ontario, the province that dominates finance and manufacturing in Canada. Unlike many English Canadians, who feel somewhat nervous about the prospect of being gobbled up - at least culturally - by their powerful neighbor, Quebecers feel secure enough in their distinctiveness not to be overly concerned.

The premier of Quebec himself, Robert Bourassa, is a good example of this pro-American environment. He chums around with James Schlesinger, winters in the Sunshine State, cultivates bankers in New York and is fascinated by possibilities of massive increases of electrical power exports to the United States.

But Mr. Bourassa is, of course, not prepared to blindly endorse whatever liberalized trade agreement the negotiators are able to come up with. He is a prudent supporter of the complex exercise that is expected to move to the formal negotiating stage by the end of this year following the recent completion of preliminary talks. In what he calls the province's ultimate insurance policy, Mr. Bourassa has demanded a veto option for Quebec over any Washington-Ottawa deal on free trade.

He summed up his position in the following terms in a recent interview with a leading Canadian business publication: It's risky to negotiate with a giant. Unlike the European Community, where you have 12 different countries of different sizes, here you have two countries, one big, one small.

But, stresses Mr. Bourassa, it would be even riskier to refuse to negotiate when your economic well-being depends so much on international trade. The bigger risk is not to negotiate.

Like the rest of Canada, Quebec does indeed rely very extensively on trade with the United States to maintain its prosperity. Three-quarters of Quebec's exports - equivalent to C$15 billion - flow annually to the United States. The U.S. today absorbs nearly 80 percent of total Canadi an exports abroad compared with 50 percent four decades ago.

The Montreal chamber of commerce considers that the prime objective of Canada's trade policy should be to obtain security of access to the U.S. market.

Two-thirds of Quebec's manufacturers believe that they would benefit from free trade with the United States and 50 percent foresee an expansion of their production facilities in such an eventuality, according to a recent survey. This would translate into more jobs, says the Quebec branch of the Canadian Manufacturers' Association.

The vast majority of small and medium-sized enterprises in Quebec are confident they can meet U.S. competition head-on, affirms a spokesman for the Canadian Federation of Independent Business.

As elsewhere in the country, businessmen in Quebec reason that local industry must become more competitive internationally to maintain and develop export markets. Unimpeded access to a market of over 250 million would facilitate the economies of scale necessary to achieve this goal. (Canada has a population of 25 million, including 6 million in Quebec.)

To Ghislain Dufour, head of Quebec's most important employers' association, the Conseil du Patronat du Quebec, or CPQ, the status quo is unthinkable.

In an interview, he said that if there is no wider opening to U.S. markets, Quebec will run into big problems. There is no alternative solution on an east-west front in Canada.

Compared with a year ago, Mr. Dufour noted that Quebec employers were unequivocally in favor of a freer trade accord with the United States. Even soft sectors in Quebec like textile and furniture support free trade on the condition they can have a 10-year phase-in period.

Several factors have intervened in the past year, Mr. Dufour said, to

shift Quebec business opinion still more in favor of free trade.

Various studies, first of all, have helped to identify the areas where free trade would have the most impact - both positive and negative. Individual businessmen are, thus, better informed.

The business community and provincial governments have been brought into the consultation process by the Ottawa authorities.

Perhaps most critical of all, Mr. Dufour underlines, is the perception that protectionist pressures in the United States have been increasing.

Threats of protectionist measures in Congress, he notes, have in fact been followed up by action in recent months. It has affected Quebec and Canadian interests in agriculture, forestry and fishing.

Moreover, he adds, while President Reagan is a staunch advocate of economic liberalism, his successor might not be similarly motivated.

Mr. Dufour considers that latest developments in U.S.-Canada trade relations illustrate the need for an intensification of efforts to conclude a free trade agreement.

He acknowledges, however, that Quebec businessmen were disappointed at the passing mention given to the free trade project by Canadian Prime Minister Brian Mulroney at the re-opening of parliament on Oct. 1.

To some observers, Mr. Mulroney has begun to hedge his bets on free trade with the United States in the light of recent events, including calls by U.S. industry lobbyists to put Canadian electricity sales on the negotiating table. In several public statements recently, Mr. Mulroney appeared skeptical about the negotiations succeeding.

The official Canadian position remains, nevertheless, that the free trade negotiations constitute a top priority. But Quebec businessmen clearly are disconcerted by confusing signals generated by the prime minister who happens to hail from La Belle Province.

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