Now or Never

The Canadian walkout Wednesday from talks on creating a free-trade agreement with the United States serves to dramatize how much would be gained, and how much would be lost, if these negotiations should fail as the deadline nears.

There is no good reason why an agreement cannot be worked out on the last great stumbling block--a device or procedure for resolving disputes over allegations of export subsidies and dumping. The Canadians call this simply a settlement mechanism. The Americans counter by accusing the Canadians of trying to get a free ride into the American market by winning exemption from the countervailing duty and anti-dumping law. But there is evidence that both sides are prepared for agreement on a settlement procedure that keeps in place each nation’s penalties against unfair trading practices by the other while controlling the past excesses in applying these laws. Arbitration, or a reasonable facsimile thereof, is called for.

Other issues also remain to be resolved, including the auto agreement that constitutes the largest single element of the bilateral trade. These problems, it seems, would more readily fall into place once Canada offered fresh assurances against the use of export subsidies and dumping, and the United States agreed to a mechanism that would end its sometimes arbitrary unilateral imposition of countervailing tariffs.

One thing that cannot be forgotten in the days remaining before the Oct. 4 deadline is that this is a historic opportunity not likely to recur in the foreseeable future. On both sides of the border, special interests seem to be gaining influence with protectionist policies, and the spirit of free trade and cooperation that inspired these negotiations may be waning. Prime Minister Brian Mulroney and President Reagan appear to understand that it is now or never.

Failure of the talks would be a loss for both the United States and Canada. As the world’s largest trading partners, they have demonstrated the validity of cooperative agreements that already leave a majority of their trade unrestricted. Furthermore, the failure would have a chilling effect on the new round of world trade talks so vital to economic growth in the United States. As The Economist of London commented, failure of these talks would be saying: “Forget the new deal that America wants with the 91 other members of GATT (General Agreement on Tariffs and Trade); it cannot negotiate the basic ingredient with its friend and neighbor to the north.”