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Mulroney's Stance Contrasts With Trudeau's : Canada Woos U.S. Investors--Without Immediate Success

February 25, 1985|KENNETH FREED | Times Staff Writer

TORONTO — When Brian Mulroney was a boy in the Quebec village of Baie Comeau, he used to sing for his supper, so to speak. He would get $50 for crooning "Dearie" and other Irish songs for the American tycoon who owned the mine that dominated the town's economy.

"So my family became the first Canadian family to benefit directly from American foreign aid," Prime Minister Mulroney jokes now in a standard opening to speeches he gives to American audiences.

If the young Mulroney looked to an American benefactor for his family's sustenance, Prime Minister Mulroney is looking south of the border for something else. He wants billions of dollars in investments to rejuvenate his country's troubled economy.

All through the campaign last summer, and since his Progressive Conservative government took office in September, Mulroney has pushed the idea that overseas money will spur the economic growth necessary to create jobs, increase government revenue and cut the massive federal deficit.

In exchange for this money, he has been singing a song of friendship and cooperation that contrasts with the impression created by the Liberal Party government of former Prime Minister Pierre Elliott Trudeau.

Mulroney's government has pledged not only that the door will be open for profit-seeking investors but that the United States can count on Canadian support and cooperation in defense and trade matters and in the United Nations.

For instance, Canada's secretary of state for external affairs, Joseph Clark, carried the new pro-business message to Los Angeles last week, speaking to a luncheon gathering of the Canada California Chamber of Commerce. Tailoring his speech to the Southland's aerospace and high-technology industries, he emphasized Canada's commitment to military preparedness and to freer trade in the areas of telecommunications and transportation.

Clark also said he has taken a similar free-trade message to London and Tokyo and will visit Moscow and Paris this spring.

Even on the question of acid rain, Mulroney has taken the edge off Canadian criticism of U.S. industry by saying that Canada's own hands are dirty and that it must clean them before expecting the Americans to take any steps.

Still, no significant new money is making its way north, and interviews with economists, diplomats and politicians indicate that there is little possibility of getting the money that Mulroney hoped for when he told 1,500 New York executives Dec. 10: "Canada is open for business again."

Government figures for the first nine months of 1984, when the Liberal Party was in power, show that foreign investment totaled $1.7 billion Canadian. (The Canadian dollar recently has been worth about 72 cents U.S.) Estimates for the last quarter of the year, under Mulroney, indicate that there was a decline, to an average quarterly inflow of $300 million Canadian from $566 million Canadian.

While the expected 1984 total of $2 billion Canadian in foreign investment is a huge increase over the previous year's $200 million Canadian, the last-quarter decline is what worries economists, particularly when compared with the amount of Canadian money invested outside the country.

In the first three quarters of last year, Canadians sent $2.15 billion Canadian to other countries, mainly the United States. A rough estimate for all of 1984 is $2.8 billion Canadian.

There are those who argue that Mulroney's strategy cannot be written off yet. An executive with a New York investment firm who asked not to be named said: "Americans have a wait-and-see attitude. It is far too early to tell if it will or won't work."

Others, including Paul Robinson, the U.S. ambassador to Canada, say that even if there isn't a lot of new money flowing into Canada now, Mulroney has created an atmosphere that will pay off later.

"In the long run," Robinson said in an interview, "his (Mulroney's) New York speech improved the climate for foreign investment."

Nevertheless, according to the Canadian Conference Board, Statistics Canada and private economic groups, the money is just not coming in, and given world conditions it is not likely to in time to provide the economy with the fuel it needs to create jobs and defeat recessionary trends.

Still, Mulroney is continuing with a program designed, at least, to remove the barriers imposed on foreign investment 11 years ago by Trudeau, particularly the Foreign Investment Review Agency.

FIRA, as the agency is known, was designed to force foreign businessmen to prove that their investments would primarily benefit Canada and reduce the country's economic dependency on outsiders. "Canada for Canadians," was the watchword.

Even though the Trudeau government drastically cut back on FIRA's narrow policies when the country was hit by a severe recession in 1982 and 1983, foreign businessmen continued to see the agency as an irritant.

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