Some Issues in Canada-US Trade Relations

Abstract

Moreover, separable trade policy issues arise in the context of the overall or general policy or attitudes of the two national governments concerned. As well, each of the two administrations sees issues created by the other within the policy framework which is believed to exist. In the US view, the present policy emphasis in Washington is to remove some of the restrictions on the free play of market forces in the belief that economic growth and higher incomes will result from less governmental interference. As seen from Washington, Canadians are heading in a different direction. They appear to favor more, not less, intervention by government in the market and to be activated by a considerable distrust of the business community's competence, judgement or ability to work.toward social goals. Moreover, Americans feel at present that Canadians seem to be content to favor Canadian enterprises in Canada as against foreign-controlled enterprises, particularly in the oil and gas industries. Many Canadians in the private sector would not violently disagree with these perceptions. Many others, however, would emphasize the uniqueness of the Canadian situation, particularly the high degree of US ownership of enterprises in Canada, and, in more general terms, the asymmetry in the working of many bilateral and multilateral agreements between Canada and the US because of the differences in economic and political power. Pursuit by the US of its interests is not perceived by this group in Canada as being necessarily benevolent or benign. A most useful way to at least open a discussion about trade policy issues between the two countries is to draw attention to some underlying trends or important tendencies which, whether they are specific or pervasive, have to be recognized. Four particular issues stand out: the rise of a commercial policy based on 'contingent' or flexible protection, as compared to the more conventional and more stable system based on the use of the tariff; the critical role of government procurement in many sectors of production, particularly in Canada, and the rise of protectionism in regard to such procurement; the increasing reliance by Canada on 'performance requirements' (for example, under the Canada-US Automotive Products Agreement, under the Foreign Investment Review Act (FIRA), under the National Energy Policy (NEP), and in relation to some areas of government purchasing) which depart drastically from the concept of 'national treatment'; and finally, as a more general issue which cuts across many others, the problem of whether or not the nationality of the ownership of a corporation should be relevant for economic policy in general, and for trade relations and trade policy in particular.