Sen. Max Baucus (D-Mont.) said yesterday that President Reagan's proposal for a free-trade agreement with Canada is being jeopardized by the failure of administration trade officials to consult with Congress.
"There's a serious chance" that either the Senate Finance Committee or the House Ways and Means Committee will deny the administration the authority it needs to negotiate such an agreement unless those committees are brought into the process within the next two months, Baucus said at a National Associations of Manufacturers meeting with reporters.
Earlier this week, another Finance Committee Democrat, Sen. Lloyd Bentsen (Tex.), told the Senate, "Without complete consultations with Congress on lumber and other issues, it will be difficult to build the necessary support for a free-trade area with Canada."
President Reagan and Prime Minister Brian Mulroney agreed at their "Shamrock summit" last March to make a free-trade agreement a priority between the countries, whose two-way trade of $120 billion last year was the largest between any nations. The two leaders are due to meet here this month, and Baucus suggested the agreement will be on their agenda.
The president asked Congress on Dec. 10 for the negotiating authority, and either of the two key committees may vote the proposal down until April or May -- whenever 60 legislative days have passed. If they take no action, the president automatically gets the authority.
The free-trade agreement is a major issue in Canada, where there are concerns that that country's industries and national identity will be overwhelmed. In Washington, Canadian Ambassador Allan E. Gotlieb said the issue is being treated with "a yawn," but he added that the debate is likely to intensify as the negotiations get closer.
Although the U.S. reaction has been muted, a number of groups -- including lumbermen, the fishing industry, pork farmers and publishers -- are pressing complaints of what they see as Canadian unfair-trade practices that they want settled or included in the talks.
At least 40 senators, for instance, made speeches Wednesday attacking Canada's timber policies, which they said include subsidies that have allowed Canada to take one-third of the U.S. lumber market.
Baucus, a lumber-state senator, said he is pleased with two rounds of talks U.S. and Canadian officials have held on the lumber issue, even though no progress has been made in settling it. A third meeting is set for March 10.
Baucus acknowledged that the Finance Committee, which is deeply involved in writing a new tax bill, has not scheduled a hearing on the Canadian trade agreement. But he added that it is up to the administration to show Congress why the agreement is important.
"We're not saying we want everything," Baucus said. "But we're not going to give away the store. We're not going to agree to a free-trade agreement because the text books say it's a good thing. Many sectors of the American economy could be hurt by it."
He said, however, that American industries such as furniture makers and printers could benefit from lower Canadian tariffs, which generally are higher than those in the United States, and other industries could gain from reductions in federal and provincial subsidies and an end to restraints on U.S. investments.
One of Canada's main aims appears to be a bilateral dispute-settlement mechanism that takes trade complaints between the two countries away from the International Trade Commission and the Commerce Department. Athough there is a precedent for a bilateral agency to settle boundary disputes, Baucus said setting up a similar agency for trade involves a loss of U.S. sovereignty that Congress may not accept.