FREE TRADE BETWEEN CANADA and the United States is an unattainable ideal that should be discarded in favor of fair trade deals that benefit both parties, Chrysler Corp. Chairman Lee Iacocca told the Canadians last week.

The words free trade and protectionism are terms that serve only to polarize debate, Mr. Iacocca said in a speech to a local service club in Vancouver. What is needed is a sensible middle position, he said.I'm convinced if we don't come up with a world trading system soon that's fair to everybody and that still serves the self-interests of each individual country, we're going to see more and more tension, and I mean a lot of tension, over trade issues, he said.

"Free trade is a nice lofty ideal but it's become a myth. It doesn't exist anywhere in the world." Free trade, with its implied lack of rules, creates winners and losers, Mr. Iacocca said, while protectionism creates losers on both sides. International trade is nothing more than business deals - both sides must come away feeling good or they won't do business, he said.

Mr. Iacocca ended by reiterating that he will not seek the 1988 Democratic presidential nomination. I've spent 40 years in the automobile business and I'm just getting good at it, he quipped. I'm no politician so I don't think I qualify. I know somebody's gotta do it - but not me."

How about U.S. trade negotiator?

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