Canada Halts Talks With U.S. on Trade

Canada broke off negotiations with the United States today on a far-reaching trade liberalization pact, just short of an Oct. 4 deadline imposed by Congress for reaching agreement.

In Ottawa, Prime Minister Brian Mulroney said the talks were suspended because the two sides have not agreed on “the most basic issue of all”--a way of resolving disputes between the two countries.

Earlier, Canadian trade negotiator Simon Reisman announced that he was going home and blamed the stalemate in the talks, which have been going on for nearly two years, on U.S. unresponsiveness to Canadian concerns.

“Negotiations are at an impasse,” Reisman said in a statement. “The U.S.A. is not responding on elements fundamental to the Canadian position.

“I have therefore suspended negotiations,” he said. “I am returning to Canada to report to the prime minister and Cabinet.”

Effect Unclear

It was not immediately clear whether the move meant an end to the negotiations or whether efforts would be made to resurrect them.

A spokeswoman for U.S. Trade Representative Clayton Yeutter, Kelly Winkler, confirmed that the talks had been suspended but had no further details.

“Reisman just walked,” she said.

The proposed “free trade” agreement, first suggested at a summit meeting with President Reagan in 1985, sought to eliminate most remaining tariffs and barriers between the two countries.

Canada and the United States are each other’s most important trading partners, with two-way trade in 1986 reaching $130 billion.

In recent days, the negotiators had hit an impasse over ways in which trade disputes between the two nations would be negotiated.

Canada had insisted on an exemption from U.S. trade laws that call for punitive penalties in case of unfair trading practices.

Another issue dividing the two nations is a 1965 automotive pact, which generally states that U.S. car makers with plants in Canada have to make as many vehicles there as they sell in the United States from those plants.

Canadian negotiators wanted the pact left intact, while the United States favored renegotiating it as part of the overall free-trade agreement.

In an interview last week, a pessimistic Mulroney said he believed a free trade agreement was still possible but added that Canada would break off talks “unless we can come up with what we want in the national Canadian interest.”