U.S., Canada Open Talks on Expanding Trade

Canada and the United States opened talks Wednesday on a trade agreement aimed at expanding what is already the largest volume of trade between any two countries in the world.

The first two days of the talks are expected to set the guidelines for detailed negotiations that will get under way later in the year and last for perhaps as long as a year.

The Canadians hope to expand trade between the two countries, which now totals about $150 billion a year, guarantee Canadian access to the American market and ensure that Canada continues to be the United States’ largest trading partner at a time when the U.S. government is under increasing congressional pressure to enact protectionist measures.

The Americans want to readjust the trade balance, which is heavily in Canada’s favor and has left the United States with a $22-billion bilateral deficit. They hope to eliminate the remaining tariffs, covering about 15% of the goods that cross the border, as well as non-tariff barriers that impede penetration of the Canadian market.

Despite statements on both sides that these discussions are preliminary, both American and Canadian sources acknowledge that the talks are important and touch on crucial differences.

Among the differences are Canadian concerns that the U.S. delegation, headed by Peter O. Murphy of the U.S. Trade Representative’s Office, will seek to eliminate measures that protect the Canadian broadcasting, publishing and film industries.

Officials in Canada, from Prime Minister Brian Mulroney to Joe Clark, the minister of external affairs, have insisted that these are not subject to negotiation.

Canadian concerns have been exacerbated by conflicting statements from Murphy and other American officials. Murphy told Canadian reporters last week that everything is up for negotiation, including the provisions for the so-called cultural industries. But on the same day, U.S. Ambassador Thomas Niles said in a speech that these would not be brought up.

Canadian sources indicated that the first day’s meetings were businesslike and good natured.

Simon Reisman, a veteran Canadian trade negotiator who was instrumental in shaping an agreement that set up a free trade zone for automotive products, was reported to have spent a great deal of time explaining the Canadian political and economic systems.

A successful outcome of the talks is considered essential, not only in terms of expanding and stabilizing the trade relationship but in promoting Mulroney’s political fortunes. To a considerable degree, Mulroney has staked his future on negotiating a pact that will create new jobs and spark economic growth for a country that has an unemployment rate of nearly 10% and a weak economic base.