TORONTO, SEPT. 15 -- "Save our suds," cried the Canadian brewery workers who descended on the grounds of the provincial legislature here last week.
Fearing that the Canadian beer industry is about to be washed away in a tidal wave of cheaper American beers, the 1,500 demonstrating laborers declared themselves unalterably opposed to any trade deal with the United States that would remove restrictions on importation of U.S. "suds."
As the Oct. 5 deadline for U.S. and Canadian negotiators to complete a draft trade agreement approaches, support in Canada for a deal with the United States is rapidly evaporating. Worry about the outcome of the talks emerged as the central theme in the summer Ontario election campaign, forcing landslide winner Premier David Peterson to act to protect Canadian breweries and a host of other industries from any competition that would mean loss of jobs or markets.
Opposition has intensified across Canada with only British Columbia, which depends heavily on timber and mining exports to the United States, still favoring a free trade deal by a small majority.
Even Prime Minister Brian Mulroney, who had been bullishly confident, appears to be preparing for the possibility of failure. After briefing provincial premiers yesterday he said he still thought an agreement was achievable, but he also expressed concern about the "many important stumbling blocks" that remain.
Although the trade negotiations have not stirred much excitement in the United States, they have been Topic A here for more than a year.
The rhetoric of opponents, who have so far dominated the debate here, is remarkably similar to that of the nationalists and protectionists in 1911 who threw out the government of the day to defeat a free-trade agreement with the United States. Their battle cry was: "No truck or trade with the Yankees."
Three-quarters of a century later, Peterson, a political moderate here, said on the campaign trail earlier this month: "What we can't accept is that Canada always is the one to give and the U.S. takes. I don't want to be in a country where all the economic and social decisions are made in Washington."
And left-wing New Democratic Party leader Ed Broadbent, a staunch opponent of free trade, said in a House of Commons debate in Ottawa today, "Our notion of trade certainly doesn't include the notion that Canada is up for sale."
In this country with a population slightly smaller than that of California, the trade negotiations have intensified an ever-present wariness about the giant neighbor to the south. They also have caused deep worry that elimination of the many subsidies, tariffs and other There has long been a symbiotic relationship between the Canadian and U.S. economies. Trade between the two countries last year amounted to more than $120 billion in goods and $30 billion in services, the largest between any two nations in the world.
protections for Canadian industry and agriculture threatens livelihoods.
"People are afraid for their jobs and that's the real issue," said veteran Toronto television political reporter Colin Vaughn. "It's not a philosophical issue. It's not a sovereignty issue. It's a job issue."
In the newsroom at Vaughn's CITY-TV station here, employes fear competition for advertising revenues from nearby Buffalo, N.Y., stations if the special tax breaks that companies get for advertising on Canadian stations are eliminated in a trade deal.
Although beer connoisseurs prefer the richer, more alcoholic Canadian brands, which sell well in the United States, brewers argue that the American beer giants have enough idle capacity to serve the entire Canadian market without building new facilities and would be able to do so more cheaply than Canadian breweries.
Others expressing concerns, according to George Hutchison, Peterson's press secretary, include dairy, poultry and egg farmers who fear that they might lose up to half their annual income; the television and publishing industries, which get special benefits and protections against takeover by U.S. and other foreign investors, and auto workers who are afraid that there will be changes to the 1965 U.S.-Canada Auto Pact, which requires American auto companies to manufacture as many cars in Canada as are purchased here.
There has long been a symbiotic relationship between the Canadian and U.S. economies. Trade between the two countries last year amounted to more than $120 billion in goods and $30 billion in services, the largest between any two nations in the world.
Heavy American investment helped Canada industrialize after World War II, and Canadians have since complained of living in a "branch plant" economy. Over the past decade, however, Canadian manufacturers and resources giants have begun to make substantial direct investments in the United States, although that is rarely noted here.
Despite the close relationship, Canadians say some important differences between the countries are at stake in the negotiations. Canadians tend much more than most Americans to look to the government for help. There are subsidies for artists, oil companies, steel plants, rock musicians and many others that they are loath to give up. Some American entrepeneurs complain that these grants give the Canadians an unfair advantage when they export to the United States.
American businessmen who have come to Canada to run subsidiaries also say that the style of Canadians is less competitive and more leisurely. The Americans who come here often see this as a drawback, but Canadians cherish their calmer life and fear that it may be imperiled if economic borders are opened.
About 70 percent of trade between the two countries is duty-free and another 15 percent is subject to tariffs of less than 5 percent, as a result of commitments made in multilateral trading agreements, which Canadians prefer to one-on-one bargaining with the United States.
Then "why all the fuss about tariffs?" Washington-based economist Peter Morici asked rhetorically in a recent paper.
"The first reason is that trade tends to flow through duty-free holes," Morici said. "The amount of potential trade that does not take place in sectors where at least some tariffs remain high in one or both countries is unknown. These include apparel, textiles, leather, footwear, furniture, petrochemicals, plastics, nonferrous metals, telecommunication equipment, home appliances, cosmetics, paper products, recreational boats and fish products.
"Second, from an American perspective, much more trade passes duty-free or at low tariffs into the United States than into Canada, and average Canadian tariffs on dutiable items are higher than the U.S. average."
Many Canadian firms obviously enjoy the benefits of sometimes having a one-way street. The Toronto Sun is skeptical editorially about lowering barriers that, among other protections, make it difficult for American investors to buy Canadian newspapers. But the Sun owned the Houston Post newspaper until selling it last week. Asked if the large profits in the sale would be invested in Canadian publications, Sun publisher Paul Godfrey replied, "The world is our turf."
The lonely Canadian proponents of a trade deal closely follow the rise in protectionist sentiment in the U.S. Congress and warn that present arrangements cannot continue long.
"If the talks fail, there will be no return to the status quo ante for Canada," Allan E. Gotlieb, Canada's ambassador to the United States, said in a speech here last week.
Canadian officials who have closely examined the trade bills moving through Congress contend that many of the provisions would have a direct impact on Canada.
"The whole thrust of the bill is really to make it much more complicated to defend a trade law case" in the United States, a Canadian Embassy official said. "It really liberalizes the trade law in matters that could lead to harassment of trade imports."
U.S. trade actions against Canadian lumber products, fish and steel imports over the past year have worried many producers about their security of access to the U.S. market. Opponents of a trade deal have argued that these exemplify the bad faith of Americans.
Mulroney's key demand in the negotiations is for creation of some form of what he describes as a "dispute-settling mechanism" that would make it more difficult for U.S. producers to get trade sanctions against Canada.
Officials here have talked about creating a U.S.-Canada tribunal with binding powers to decide cases involving allegations of unfair trade practices. American officials have tended to be wary of that idea.
"It's a dead letter," said Brookings Institution economist Philip H. Trezise, a former State Department official who was on the U.S. side in the negotiations of the auto pact. "It can't be an outcome that overrides American law and gives sovereign power to a body that in effect is independent of the two governments," he said.
However, Trezise said he believed that negotiators might be able to devise some bilateral forum for airing disputes, with decisions that are nonbinding but influential.
U.S. officials have made it clear that they want Canada to relent on its restrictions on foreign investment and would like any agreement to lower barriers on trade in services, such as insurance and banking.
Any draft agreement reached by the negotiators must be approved by Congress and will need the assent of Canada's provinces.