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Canadian Panel Urges Free Trade With U.S.

September 06, 1985|KENNETH FREED | Times Staff Writer

OTTAWA — A government-financed commission called Thursday for major social, political and economic reforms for Canada, including a free-trade agreement with the United States.

Dubbed the MacDonald Commission after its chairman, former Finance Minister Donald MacDonald, the 13-member group said that "Canada stands at a turning point in its economic history and that a new era demanding innovative foreign and domestic economic policies is about to dawn for Canadians."

To meet the challenges of a fast-shifting international economic scene and growing and costly domestic political and industrial inefficiency, the commission recommended:

- Abolishing several extensive social security and welfare programs and replacing them with a guaranteed yearly income for all citizens.

- Creating an elected Senate, to replace the present body, which is appointed and virtually powerless. This would give the provinces and regions more power in the federal government.

- Eliminating many tax breaks, including standard tax deductions for spouses and children.

- Halting all federal welfare and public housing payments, slashing unemployment benefits and tightening requirements for those who would remain eligible.

But the most controversial proposal is the call for free trade with the United States, an idea that has destroyed previous governments advocating it.

MacDonald told a news conference that Canada is facing growing international competition and protectionism at a time when its own market is saturated and its economic base is suffering from inefficiency and obsolescence.

Canada's trade surplus with the United States has grown to $20 billion from only $2 billion three years ago, and Canada slaps duties and non-tariff barriers on most U.S. products while American barriers on Canadian products are relatively light. Since 80% of Canada's exports go to the United States, the nation is vulnerable to any American protectionist measures, the report said.

"The old solutions don't seem to work," MacDonald said. But he added that "there is a window of opportunity for Canada at this particular moment" and that a free-trade arrangement would provide "an opportunity to renew and revitalize Canada."

With only one dissenting vote, the commission recommended that obstacles to trade with the United States be removed, including duties and non-tariff barriers.

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