Canada Agrees to Resume U.S. Trade Talks

A high-ranking Canadian delegation will return to Washington today for another round of consultations with U.S. officials aimed at resuming formal negotiations on a free trade agreement. Canada suspended the talks a week ago.

Trade Minister Pat Carney, in a statement issued after a day-long Cabinet meeting Tuesday, said the government, after a full review, “found sufficient movement on the U.S. side to justify further consultations on a political level.”

Other Canadian officials said Carney, Finance Minister Michael Wilson and Derek Burney, Prime Minister Brian Mulroney’s chief of staff, will fly to Washington this morning.

That same delegation spent more than seven hours in meetings Monday in Washington with Treasury Secretary James A. Baker III, Special Trade Representative Clayton K. Yeutter and other U.S. officials in an effort to find grounds for a compromise.

Simon Riesman, the chief Canadian negotiator, walked out of the negotiations last week after charging that the United States was refusing to deal with Canada’s major demands while injecting proposals already known to be unacceptable to Mulroney.

In the talks, which began 15 months ago, the Canadians’ most important goal is a binding system for settling trade disputes. Otherwise, they have said, the agreement would be subject to arbitrary and changing U.S. demands regarding subsidies and other alleged unfair trading practices.

The United States has rejected this demand because, in Washington’s view, a binding system for resolving disputes would strip away Congress’ power to set penalties and other regulations for trade. Washington also fears that granting such a concession to Canada would open up the United States to similar demands by its other trading partners.

After the Monday session, Carney and the others returned to Ottawa with suggestions from Baker on how to resume formal efforts for an agreement.

None of the Canadians would say publicly what Baker had proposed, but in private they claimed that the U.S. Treasury secretary had offered a compromise allowing binding arbitration for disputes involving a limited number of goods.

In Washington, government sources supported this assessment but said the Canadians were still pushing for a binding dispute mechanism for all cases, a proposal unacceptable to the Reagan Administration and many members of Congress.