Canada's Roiled Politics
WALLER, HAROLD M.
MULRONEY TRIES TRADE Canada's Roiled Politics BY HAROLD M. WALLER Montreal "NO END TO TORY WOES" proclaimed the oversize headline in the tabloid Toronto Sun last May 16. Prime Minister Brian...
...He believes that free trade— or at least "freer trade"—is essential if Canada is to enjoy prosperity in the future...
...Even if the present government remains intact after all its bungling, the Tory faithful will continue to be nervous about the tendency of their leaders to shoot themselves in the fool...
...Considering the relative position of the two major parties less than two years ago, when the Tories were immensely popular and the Liberals were on the ropes, this is a remarkable recovery...
...The Senate Finance Committee originally voted to withhold support for the negotiations with Canada, then hesitandy went along in a tie vote after strenuous lobbying by both camps...
...After negotiations proved unsuccessful, the doctors called a general strike at the beginning of June...
...This has now become the top issue in Ontario politics and a source of vexation to Peterson...
...The lender, it turned out, was linked to a company that had received tens of millions of dollars in grants from Stevens' department...
...Canada has a popular universal system of public health insurance that was created in Ottawa and is partially funded by the Federal government...
...The provincial prime ministers also feel strongly about freer trade, and have demanded—and received—a role in formulating the Canadian position...
...It would not be unfair to say that their fears are well-grounded, for the PC's current woes include disarray at several levels...
...nonetheless, the Conservative government's decision not to renew Deaver's contract is widely construed here as tacit admission that the lobbying arrangement was ill-advised...
...When it was revealed that his wife had accepted a one-year, interest-free loan of $2.6 million (Canadian), Stevens was hoist by his own petard...
...Disaffection within the ranks of the largely new and relatively unknown Tory MPs from Quebec is thus regarded ominously by the party's strategists...
...The Liberals have governed successfully and appear to be waiting for an opportunity to call an early election that would enable them to cash in on their new-found popularity and form a majority government...
...The affair served to confirm the prevalent notion that Conservatives are prone to folly when they are in office...
...American grievances against Canada are not limited to trade...
...Probably the most difficult aspect of the negotiations, which began in May after months of preparation, will involve existing nontariff barriers . These consist of the subsidies each government pays to selected domestic industries in order to give them an advantage over their counterparts in the other country...
...Canada retaliated by slapping new tariffs on a slew of diverse items—books and periodicals, semiconductors and computer parts, cider, oatmeal, and Christmas trees— raising the specter of a small trade war...
...Canadians are aware of the gamble they are taking in jettisoning the tariff structure and other measures that have traditionally provided some measure of protection for their industries...
...Without preferred access to markets in either the U. S. or Western Europe, he points out, the trading options for an industrialized country of 25 million are virtually nil...
...How Peterson resolves this knotty conflict will in large measure determine his ability to face the electorate at an early date...
...Prime Minister Brian Mulroney was faced with yet another government crisis, the latest in a series that lias plagued his administration since he took office in 1984...
...The move produced an outcry in Canada, where people took it as a slap in the face just as freer trade negotiations were getting underway...
...The Prime Minister has devoted considerable political capital to achieving the elimination of trade barriers between the two countries...
...Mulroney, who was in the Far East attending theTokyo economic summit and visiting South Korea at the time the scandal broke, tried to shunt it aside...
...This has evoked strong support from the NDP and bitter opposition from the physicians, who see it as a basic question of professional freedom...
...The most recent ignominious casualty was Industry Minister Sinclair Stevens, one of the most powerful senior Cabinet members...
...to investigate the activities of President Reagan's former White House aide is expected to turn up additional evidence of an awkward nature concerning Canada's motives in hiring him...
...When these provincial developments are considered alongside the Federal picture, even allowing for political discontinuities it is hard to deny that the Liberals are in the ascendant and the Tories are in a slump...
...A strong presence in Quebec is crucial if the PC Party is to realize its ambition of governing the whole country...
...The next Tory administration, Joe Clark's short-lived minority government of 1979-80, came to a humiliating end with an unforgivable tactical blunder in Commons...
...Peterson therefore moved to abolish extra billing in Ontario by levying fines on offending physicians...
...No specific impropriety was uncovered...
...The basis for such a generalization is necessarily thin—the Tories have been in opposition for most of the 55 years since Britain gave Canada autonomous status in the Commonwealth...
...Rumors abound that additional Quebec MPs are on the verge of dropping out as well...
...Although Mulrone/s Progressive Conservative (PC) Party controls 211 of the 282 seats in the House of Commons, it has constantly been on the defensive, and no fewer than five Cabinet ministers have been forced to resign...
...point of view include lumber-thought to be exceptionally hard-hit— fishing, steel, hogs, potatoes, telecommunications equipment, and uranium...
...Only the PC Party, with its faith in markets, has endorsed the idea...
...explicit and forceful views are being expressed by almost all sectors of the society...
...In some, such as Quebec, doctors must accept the provincial fee scale as full payment for their services...
...The press and theOpposition, however, hammered away at the manifest conflict of interest and dubious ethical standards...
...Indeed, Mulroney appears to be hoping a free trade agreement with the United States will save the Progressive Conservatives from electoral disaster...
...These developments are undermining Mulroney's efforts to give his party solid footing in Quebec—a province that normally votes Liberal in Federal elections yet went massively Conservative in 1984...
...Tariffs themselves are bound to be less of a problem, since they are already relatively low on most items...
...As the negotiations progress his opponents will undoubtedly raise their voices several octaves...
...In 1957, the late John Diefenbaker was the first Conservative to be elected Prime Minister, and he won by a huge majority...
...Specific industries that are suffering from the U.S...
...After two weeks of sustained embarrassment for the Tory government, Stevens finally gave in to the pressure and resigned...
...Two other provinces where the Liberals have taken power during the past six months are Quebec and Prince Edward Island, and the PC government in New Brunswick may be in trouble...
...All of this provides a complex context for the new negotiations...
...offers the more feasible and attractive alternative (each country is already the other's leading trading partner), Mulroney has been trying to sell the idea to his countrymen...
...The committee's ambivalence reflects intense feelings in some parts of the economy that Canadian competition is hurting—the evidence being the huge trade surplus Canada enjoys...
...But given the aversion of certain sectors of their economies to foreign competition, and the general sensitivity to the danger of job loss, neither country can be expected to make concessions easily...
...Constraints on participation in cultural industries, and sundry other restrictions on foreign investment are further exacerbations...
...But his six-year government, while not hopelessly inept, suffered numerous discomfitures...
...The trade issue is certainly a salient one in Canada...
...businesses are unhappy with the many obstacles Canada has thrown in the way of foreign involvement in its domestic economy, such as the (now abandoned) National Energy Program of the Liberals, which forced out Canadian subsidiaries of U. S. companies...
...HAROLD M. WALLER, a frequent contributor, is associate professor of political science al McGill Universilv...
...Canada's biggest labor federation, the Canadian Labor Congress, emphatically opposes freer trade out of an overriding concern with jobs, but the smaller Canadian Federation of Labor has come out in favor of the objective...
...After 40 years of provincial frustration, topped off by a crushing Federal defeat in 1984, Ontario's Liberals needed rejuvenation and Peterson has provided it...
...In the United States there has been substantial opposition to the freer trade talks in Congress, where worries about job losses and trade deficits are running high...
...Yet Canada wants to secure and maintain its strong foothold in the American market in the face of growing support for trade restrictions...
...A notable case is Ontario, where Liberal David Peterson leads a government backed by the New Democratic Party (NDP...
...Canada of course knows that it comes to the bargaining table in a fundamentally weak position—with an economy that is, willy-nilly, to a considerable extent already dominated by American interests...
...In all likelihood he will survive any intramural challenges before the next election...
...That is a much bigger issue in the United States than it is in Canada...
...Though less than half of his term has elapsed, Mulroney is increasingly regarded as a one-term Prime Minister...
...The political fallout embarrassed Mulroney, who faced taunts from the Opposition benches over his inability to use his vaunted friendship with Reagan to reverse the action...
...Their comeback should redound to the advantage of the Liberal Party at the national level, too...
...If, that is, they don't trip over a newly emergent trouble spot: the matter of "extra billing" by physicians...
...Federal legislation a few years ago imposed penalties on provinces that continue to permit this practice...
...The trend away from the Conservatives since the 1984 election has been further fortified by a flourishing of the Liberal Party in the provinces...
...They voted to end it three weeks later, resorting instead to rotating walkouts and a threat to resume the strike if the fines for extra billing are not lifted...
...A survey conducted by Angus Reid Associates last winter, for instance, showed 61 per cent of Canadian adults back the concept...
...This despite fears of losing j obs (in an economy where unemployment is already chronically high), suffering diminished political independence, and seeing the country's cultural fabric weakened...
...The logic behind the freer trade approach is that both countries will realize an overall gain from the relaxation of present barriers...
...Public opinion polls, meanwhile, have generally indicated majority support for freer trade...
...Some have even pressed for the right to veto any proposed agreement...
...Each province's plan is different, though...
...In any event, the talks on these matters could last well into 1988, much as both sides would like to reach agreement before their respective elections...
...The cumulative effect of all this is to render remote the prospect of a Conservative victory in the next general election, which will probably be held in 198 8 or 1989...
...In Ontario, by contrast, they have until recently been permitted to charge more than the official fee scale, billing patients directly for the uninsured increment...
...Surprisingly, an additional source of distress for Mulroney has been the embassy in Washington—not only because of the much-publicized slap administered by Sondra Gotlieb, the wife of the ambassador, to her social secretary, but also because of the Michael Deaver case...
...Moreover, the special prosecutor appointed in the U.S...
...The Liberals, who have been staunch advocates of economic nationalism for many years, are opposed in principle to the dropping of trade barriers...
...One Conservative MP from Quebec, for example, has been charged by the police with 50 counts of influence peddling, and another has abandoned the party over policy differences...
...In Alberta, a province suffering from the drop in oil prices, PC candidates watched their share of the vote decline dramatically in recent elections, although they won by a comfortable margin...
...The views of a particular prime minister will typically depend on parochial considerations...
...During his many years as a prominent member of theOpposition, Stevens had been a persistent advocate of tough conflict of interest guidelines and sharp critic of those adopted by the Liberal government...
...Turner has his own problems to worry about, foremost among them being the failure of his leadership to inspire confidence in many quarters of his own party...
...Turner does have one big plus: Under (some would say despite) his stewardship the Liberals have taken the lead over the Tories in the national polls, albeit by a narrow margin...
...Late in May President Reagan imposed a five-year tariff on red cedar shakes and shingles from Canada in response to mounting complaints from American producers about loss of market share (and j obs...
...But for Mulroney, a successful conclusion to these talks may be the only path to a second term...
...It worries about the introduction of unfair trade laws and countervailing duties against foreign subsidies by the U.S...
...There is still time to turn things around before the balloting, but so far Mulroney has exhibited little facility for regaining the ground lost by his administration's clumsiness...
...Until now, Mulroney has maintained a steady course in support of lowered trade barriers because he is convinced that Canada will benefit from meeting this challenge...
...On the other side, the Liberals, led by John Turner, seem content to let the PCs undo themselves...
...And having decided that enhancing trade with the U.S...
...Still, the leadership review that will be held later this year could produce some nasty surprises for him, such as an embarrassingly small show of support from delegates to the midterm convention...
...Among the parties, the NDP, with its close ties to the labor movement, has voiced skepticism over Mulroney's initiative...
Vol. 69 • June 1986 • No. 9
