In a major shift in policy, designed to strengthen trade ties with the United States, the Canadian government has decided to seek free-trade arrangements with the United States in some key industrial sectors.
Although Canadian Trade Minister Gerald Regan did not identify which industries might be included in such arrangements, a Canadian government policy paper he unveiled today named textiles, petrochemicals and urban transit equipment as possibilities.
The goal of such sectoral arrangements would be to increase Canadian exports to the United States, permit larger U.S. sales in Canada and to allow manufacturers in both countries to adopt continental planning strategies based on economic conditions in both of the two neighboring countries.
The model for the new policy is the existing Canadian-U.S. auto trade pact, which permits North American manufacturers to ship passenger cars and trucks duty free between Canada and the United States, provided they assemble an agreed portion of their production in Canada.
The study says that such agreements would be preferable to unlimited free trade between the two countries, which, it warns, poses dangers for Canadian political independence. Even so, the policy goes much further than any in the past decade in acknowledging the close economic links between the two countries and in warning that Canadian economic policy must be sensitive to U.S. concerns.
"While Canada is not formally a member of a regional bloc, at a practical level we are to all intents and purposes part of a North American regional market and thus partner with a very significant player the United States indeed," the study concludes. "There is no other way to read the various links that have been forged over the years with the U.S.A."
The study says that the two-way trade between Canada and the United States is the largest of any two countries in the world and the United States takes about two-thirds of Canada's exports. According to Canadian govenment data, Canadian merchandise exports to the United States in 1982 totaled $55.7 billion (Canadian dollars), while imports from the United States were $47.6 billion (Canadian dollars).
To enter into negotiations leading to sectoral arrangements would be a major shift in Canadian trade policy. In its last major statement on Canada's trade policies, published a decade ago, the government emphasized the need for trade links with Europe and Japan rather than the United States. While the government did not say so, the shift in policy is an acknowledgement that the decade-old strategy has failed.
"The United States market is our best market," Regan said. "Because of its proximity, because of the ease with which even our small exporters are able to deal with American conditions, it provides our best opportunity for continued expansion."
While he gave no indication when Canada might make a formal approach to the United States to negotiate arrangements, Regan said the government was embarking on the study of the advantages of free trade in a number of sectors.
"I think there is very considerable sentiment in the United States in favor of greater integration of our markets," Regan said.