Canadians Must Yield on Key Trade Pact Issues, Bentsen Says

Canada must make concessions in some key areas of a proposed free trade agreement with the United States if a final pact is to be approved by Congress before the end of the year, Senate Finance Committee members warned Wednesday.

Committee Chairman Lloyd Bentsen (D-Tex.), stressing that the agreement must be “mutually beneficial,” said Canadian insistence on a joint tribunal to arbitrate trade disputes could sink the pact in Congress.

While progress is being made in negotiations, he said, “much remains to be done” in the two months remaining before the deadline Congress has set for completion of a tentative pact.

“It’s important for us to make clear to both this Administration and to Canada that we are looking out for the interest of the United States, and just any old agreement is not going to satisfy us,” said Sen. John C. Danforth (R-Mo.), a committee member.

The senators discussed obstacles to the agreement after receiving a private, 90-minute briefing on the negotiations from U.S. Trade Representative Clayton K. Yeutter and members of his staff.

The United States and Canada have been seeking an agreement since 1983, when President Reagan and Prime Minister Brian Mulroney authorized talks to improve bilateral trade. A free trade pact would clear away most of the tariffs and trade barriers for imports and exports between the two countries.

Committee members said they oppose Canada’s proposal for a separate tribunal to oversee the agreement because it might allow circumvention of U.S. trade laws on below-cost “dumping” of products, excessive government subsidies and other trade abuses.

Danforth also warned that Canada would have to relax its “cultural nationalism,” which restricts U.S. media entry into Canada and limits U.S. investment there. Canadian officials, on the other hand, have repeatedly stressed that they believe such restrictions have already been eased sufficiently.

Although Canada has warned that a separate arbitration mechanism is a bottom-line demand, the senators stressed that Canada must realize that it has much more to gain from free access to the massive U.S. market than the United States has to gain from increased exports to Canada.

“Both sides will have to do some giving,” said Bentsen, who noted that it is traditional in such negotiations for each side to hold back from hard bargaining “until the 11th hour.”

Citing the Oct. 5 congressional deadline, he said, “Right now, it’s 10:30.”