CANADIAN RESEARCHER HAILS US PACT

CANADIAN RESEARCHER HAILS US PACT

Restrictions affecting $6.2 billion in Canadian trade with the United States are little more than opportunities for legalized theft by producers and manufacturers, the director of a research institute in British Columbia says.

Michael Walker, head of the Fraser Institute in Vancouver, British Columbia, told a conference of economists Wednesday that the proposed U.S.-Canada free trade agreement would help end some of those restrictions, which he said drive up U.S. prices for Canadian goods by 4.7 percent.The trade agreement was signed Jan. 2 by President Reagan and Canadian Prime Minister Brian Mulroney and now is being considered by the U.S. Congress and the Canadian Parliament. If passed, the pact would wipe out a wide variety of barriers now in place between the world's biggest bilateral trading partners.

Mr. Walker said Canadian exporters worry about recent U.S. government attitudes toward Canada. He said the United States approved only 10 percent to 15 percent of the anti-dumping penalties and countervailing tariffs proposed in the early 1980s but then passed 12 out of 12 such measures filed against Canadian companies in 1984 and 1985.

If you consider the anti-dumping and countervailing tariff actions already undertaken (between 1980 and 1987), 19 of 44 against Canada have been successful and have affected $6.25 billion in Canadian trade, and from Canada's point of view that is very significant action, he said.

It's as though we had suddenly passed through a barrier in U.S. attitudes against protectionism and come to a point where protectionism is nearly a certainty.

U.S. companies that sought those actions against Canadian imports, however, argue that widespread Canadian government subsidies to Canadian producers force the United States to impose tariffs and penalties.

For example, dozens of U.S. shake and shingle mills in the Pacific Northwest were forced to close because they could not compete with Canadian

mills using timber grown on government lands and made available in Canada at reduced prices.

In a letter to President Reagan earlier this week, 20 U.S. senators insisted that Canada agree to an end to such subsidies if the free trade agreement is to be approved.

Mr. Walker, however, said he was heartened by the fact that only 20 senators had supported the letter when about half the 100 senators often take stands opposing free trade measures.

It seems to me that this is a good sign rather than a bad sign, he said. Whether we have a free trade agreement or not, many of the subsidies we have been applying in Canada are already a thing of the past. I don't think it will be any great problem to do away with some specific industrial subsidies.

Mr. Walker argued that trade sanctions against Canada hurt U.S. consumers the most.

Protectionists talk in terms of getting the cheeseheads, or getting the Canucks, or getting the Japs, but you're not really getting anybody outside your own country, he said. Protectionism has nothing to do with third countries - it has to do with theft by producers, by manufacturers, from consumers.

A Philadelphia toothpaste manufacturer who suddenly finds that he's losing part of his market (to foreign competition) will go to Washington, but won't say he's losing profits, or that his bottom line is going down the tube, Mr. Walker continued. He'll say (to the member of Congress), 'Jobs in your constituency are going to go down the tube, and incidentally, we may not have a campaign contribution this year because of this.'

A politician may be willing to back a protective action, knowing that if he can protect local jobs, consumers probably won't notice that toothpaste prices rose four or five cents, Mr. Walker said.