ROSALIND MCLYMONT'S TRADE TALK

ROSALIND MCLYMONT'S TRADE TALK

EFFORTS TO CREATE a North American free-trade area encompassing Canada, the United States and Mexico have given rise in some circles to the notion of North American continentalism.

By the year 2,000, says Diane Francis, U.S.-born editor of Canada's

Financial Post and an avowed "continentalist," there will be a North American citizenship that will entail worker mobility. There will be one central bank and one currency, the U.S. dollar, she says.Canada, she said at the Americas Society in January, will become ''Americanized" in its political institutions, and the United States will become "Canadianized" in its social safety net.

"Canada does look after its underclass," she explained. "We (Ms. Francis is a naturalized Canadian citizen) are the 'kinder, gentler nation' that President Bush always talks about."

Mexico, most of whose population is under 55 years old, will be the ''labor, muscle and growing consumer market" on the North American continent, she said.

Already, the bi-national dispute panel in the current U.S.-Canada Free Trade Agreement represents an "emerging surrendering of sovereignty," said Ms. Francis, who is one of Canada's most renowned journalists. (She has been referred to as "Attila the Pen.")

Eventually, she said, Australia and New Zealand, which are now shut out of just about everyone else's trading bloc, will try to get into the Nafta.

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THIS WHOLE BATTLE for free trade - which is really concerned with allowing exporters to freely enter any market once they agree to behave in those markets in a managed way - has taken many prisoners.

One of them is none other than the World Bank, whose structural adjustment programs were used in the 1980s to whip state-controlled, import-restrictive regimes into free-market economic shape.

Privatization, selling off state-owned businesses to private entrepreneurs, was at the center of the structural adjustment programs, or SAP.

But for all intents and purposes, the SAP has died a quiet death with the failure of the nearly six-year-old Uruguay Round of multilateral talks to achieve its market liberalization goals, those close to the World Bank say.

The hope, says one, was that a successful Uruguay Round of multilateral trade talks would liberalize markets so that developing countries could earn enough money to support reforms under the bank-imposed structural adjustment programs.

But with Uruguay Round success still uncertain, and with the clamor for protectionism by some U.S. legislators and industries frightening exporters in developing countries away from the world's most lucrative market, "SAP is essentially dead," he says.

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THE WORLD BANK therefore has tucked its tail between its legs and eased away from SAPs, focusing its attention on the economic salvation of Eastern Europe and the former Soviet republics and on the environment.

At present, every bank-funded project requires an environmental impact statement, which turns out to be very costly for the so-called beneficiaries.

The word is that the bank's brightest people are moving away from involvement with areas like Latin America, Africa and the Caribbean to Eastern Europe and the republics, "where the bulk of the money is shifting."

This flight could be attributed in part, of course, to the sheer frustration of dealing with countries that pay lip service to privatization and foreign private investment but render their bureaucracy so cumbersome that the investor simply packs up and leaves.

In some cases, the much ballyhooed one-stop shop for private investment in these countries becomes merely "one more stop," scoffed one World Bank consultant.

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BUT AS PRESIDENT Bush himself has declared, "trade, not aid" is what developing countries most need.

Maintaining an "iron curtain" against exports from such nations has already caused a flood of economic refugees in wealthier nations. They flee, for example, from Eastern Europe to Western Europe, from Latin America and the Caribbean to the United States.

Says Ms. Francis, the continentalist: "You either allow them to export their products to your market or they will export themselves."

Someone else put it this way: "If goods don't cross borders, armies will."

Ms. Francis notes that Austria maintains a heavy military patrol along its border with Czechoslovakia and Hungary to keep economic refugees out of Austria. That, she says, is the new "iron curtain."

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IN A JANUARY foreign policy briefing, the Cato Institute, in Washington, D.C., described Washington's own "iron curtain against East European exports." Here are some examples from the briefing:

* Czechoslovakia was made to sign an agreement restricting its clothing exports to the United States (198,000 men's and boys' wool coats and 160,000 men's and boys' suits a year), even though they amount to only 0.05 percent of the U.S. clothing market.

* Yugoslavia is forced to restrict steel exports, although they amount to only 0.02 percent of American consumption.

* East European nations can't sell a single pound of butter, dry milk or ice cream to U.S. citizens.

Imagine if that curtain is drawn around the entire North American continent.