Canada Seeks Talks on Free Trade With U.S. : Prime Minister Mulroney’s Bid for Closer Ties Is Expected to Trigger Major Internal Debate

Prime Minister Brian Mulroney, putting forth the most important proposal of his young government, told Parliament on Thursday that he has asked President Reagan to open negotiations on a free-trade agreement between the two nations.

The statement climaxed lengthy consideration by Mulroney and his ruling Progressive Conservative Party over how to enhance trade between the two nations--which is expected to reach $150 billion this year--and to guarantee access for Canadian goods to the American market. It also started a process that is expected to generate intensive debate in Canada. Free trade has always been a controversial issue here.

Earlier free-trade proposals have been rejected--and the politicians who advanced them have usually been defeated at the polls--in the face of arguments that free trade would bind Canada too tightly to decisions made in the United States.

Canada’s present trade relationship with the United States is based on multilateral rules laid down under the General Agreement on Tariffs and Trade, plus a variety of bilateral agreements.

But Mulroney, who has just completed the first year of what is expected to be a five-year term in office, said in his statement that Canada’s future prosperity depends on enhancing and guaranteeing trade with the United States. The nation must act now, he said, before protectionism in the United States precludes such a possibility. And he pointed out that “our share (of the world market) has been declining.”

“I today have spoken to the President of the United States to express Canada’s interest in pursuing a new trade agreement between our two countries,” Mulroney told the House of Commons in Ottawa. He said that he and Reagan “will be meeting in the spring of 1986 to review progress as well as the prospects of a new agreement.”

The two leaders agreed in a meeting last March in Quebec City to explore the possibility of a free-trade pact, but Mulroney waited until now to openly advocate negotiations because of resistance not only from the opposition but within his own party as well.

In his statement, Mulroney said only that he had told Reagan of Canada’s interest in a new agreement, but he formally presented a report by his trade minister, James Kelleher, saying that “Canada should advise the Reagan Administration as early as possible of its readiness to begin trade negotiations.”

The proposal was immediately attacked by the leaders of the two opposition parties on the grounds that it was premature and vague and that it opens the way to the erosion, if not the destruction, of Canada’s political, economic and cultural independence.

John Turner, a former prime minister and the leader of the opposition Liberal Party, said that, while his party has always favored freer trade with the United States, it feels that Mulroney has not laid out the parameters of Canada’s position and is not going to permit adequate debate.

He also expressed doubt, as did Ed Broadbent, leader of the New Democratic Party, over the Mulroney government’s ability to protect Canada’s interests--particularly concerning the country’s extensive system of subsidies for welfare programs--in the face of perceived American demands that such policies give Canadian business an unfair advantage.

Both said there should be no negotiations until the government makes it clear to Washington that nothing will be discussed that affects Canada’s unique social welfare system, the prerogatives of the provinces or the nation’s cultural independence.

Canada sells about 80% of its exports in the United States. But there have been growing U.S. complaints that Canadian lumber, fish, steel and pork products are unfairly priced.

A White House spokesman said that Reagan “warmly welcomes” Mulroney’s initiative. Before formal negotiations can begin, Reagan must seek permission from the Senate Finance Committee and the House Ways and Means Committee. Diplomatic sources in Ottawa predicted that both committees will approve any request from Reagan to begin the talks.