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Setting a Trade Example

January 05, 1988

With the signing of the free-trade agreement by President Reagan and Prime Minister Brian Mulroney, the United States and Canada have moved toward the fulfillment of an extraordinary opportunity to enlarge their trade and cooperation. It will create new economic opportunities, with expanded employment for both nations.

The agreement must rank, in historic terms, with the three treaties by which the European Community was created more than 30 years ago. The United States and Canada are the world's largest trading partners, together generating about $150 billion in exports and imports with each other each year. Most of that trade already is free of tariffs, quotas and other restraints. Under the new treaty, almost everything will be barrier-free.

"It is a win-win situation for both countries," Reagan commented at the signing ceremony.

So it is. But not everyone sees it that way. Already those for whom competition will be intensified on both sides of the frontier, and those in Canada who have always harbored a fear of American hegemony, are mounting strong campaigns to block the ratification of the trade agreement. And others with special power bases in Congress have managed to dilute the measure to guard the special treatment of such diverse interests as the U.S. merchant marine and the sugar growers.

The benefits of the agreement will have global implications, offering an attractive antidote to the nostrum of protectionism. Its effectiveness as an alternative to protectionism inevitably will make it a target of some in Congress. There already is talk, for example, of holding the free-trade agreement hostage until the President makes unpalatable concessions on the omnibus trade bill now taking shape in conference committee.

Those negative forces must be resisted. The U.S.-Canadian trade agreement comes to Congress under fast-track authority that allows for no amendments--just an up or down vote on the treaty. To corrupt that with slippery maneuvers on the omnibus bill would send a devastatingly negative message to those negotiating a new world trade agreement in Geneva. The United Stateshas much to gain from the successful conclusion of those global trade talks as well.

An important innovation of the new agreement is the establishment of a process of arbitration for the resolution of disputes. The General Agreement on Tariffs and Trade, the most encompassing trade agreement in the world, has been handicapped by the absence of a means for resolving disputes when rivals interpret the agreement differently. The U.S.-Canada pact could well become a model for reform within GATT itself.

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