Canada Approves U.S. Trade Pact : Final Senate Action Puts Agreement Into Effect Jan. 1

Canada’s Senate on gave final approval Friday to a sweeping agreement that virtually erases trade barriers between Canada and the United States. The Free Trade Agreement now goes into effect New Year’s Day.

Furious debate over the pact forced Prime Minister Brian Mulroney to call new elections on Nov. 21. But the contest gave Mulroney’s Progressive Conservative Party its second straight majority government and a clear mandate to push for passage of the legislation.

Voice Vote

The vote in Ottawa was by voice and not tabulated. Senators from the opposition Liberal Party, which fought the agreement fiercely during the fall campaign, abstained.

The pact was approved by the House of Commons during a volatile session Dec. 24. The Conservatives used their majority to muscle the bill through 141-111 while irate opposition lawmakers sang the national anthem in protest.

The Liberals control the non-elected Senate and had tied up the legislation there last fall, forcing Mulroney to call the election. They promised, however, not to repeat their action if he won a majority government.

Even so, they pledged to monitor the trade agreement closely as its effects begin to be felt in coming years.

“Even though we intend to acquiesce and the bill will become law, our concerns have not disappeared,” Allan MacEachen, the Liberals’ leader in the Senate, said during the debate. “The government has chosen the hard discipline of the market. We will have to monitor whether the market does its job.”

The Liberals hold 59 of the 98 Senate seats, allowing them to set up a monitoring committee as trade talks under the agreement with the United States get under way.

The pact was signed Jan. 2 by President Reagan and Mulroney, sparking a year of soul-searching by Canadians.

Many believed the trade pact represented a final subjugation of the Canadian identity by its rich southern neighbor. But supporters, especially big business, heralded the agreement as a potential economic boon that would open up U.S. markets and eliminate $2 billion annually in U.S. tariffs.

The two nations, with $150 billion in annual trade, already form the world’s biggest two-nation trading partnership. But the trade agreement now phases out all remaining tariffs, quotas and duties between them.

It also dismantles many investment barriers, frees up trade in energy and services and creates U.S.-Canadian panels to settle disputes.

Low-Key Beginning

The actual start of the agreement will be low-key, with an exchange of diplomatic notes.

Special interests on both sides of the border, mainly union and farm groups, criticized elements of the legislation because it would eliminate protectionist rules for specific industries.

Ontario grape growers, for example, were upset because the pact would eliminate an automatic 65% markup on U.S.-made wine.