Newspaper Article

Unfinished Business With Canada

Feder, Barnaby J

1989

Overview

Adding to the touchiness of the situation is the widespread suspicion in each country that the other has achieved an advantage, or is about to do so. ''There are three people working on this at the U.S. trade representative's office and one at Commerce, compared to 40 in Canada,'' said Teresa Taylor, a policy analyst for the Northeast-Midwest Congressional Coalition in Washington. ''Canada is ultimately going to gain more out of the treaty because they are paying more attention to it.'' Glendale Spinning Mills Ltd. in Hamilton, Ont., is responding to the phasing out of the 17 percent tariff on cotton yarn imports by investing heavily in automation. ''We will be producing about three times as much yarn with about one-third the work force by the end of next year,'' said Mohamed A. Kamel, the company's president. One positive result: the company expects to expand sales into the Northeastern United States. ''It's the only way to compete,'' he said. Labor leaders and other critics say the treaty - and free trade in general - is being used to whittle away Canada's commitment to social benefits, like unemployment insurance, which is much more generous than that in the United States. And they say it is behind such controversial changes as the 9 percent sales tax recently proposed by the Conservative Government to replace corporate taxes that currently burden Canadian business. ''One of the consequences of a unified market is that you have to have common rules,'' said Bruce Campbell, an economist for the Canadian Labor Congress. ''The pressure is on.''

• Publisher: New York Times Company
• Subject: FEDER, BARNABY J / INTERNATIONAL TRADE AND WORLD MARKET / Rugman, Alan M