Mines ministers differ on free trade

Canada’s two chief political spokesmen for the mining industry appear to be at odds over the recent Canada-U.S. free-trade agreement. In a recent interview with The Northern Miner, the federal mines minister expressed optimism over the agreement — optimism which his Ontario counterpart doesn’t share.

“At first blush, this agreement looks very worrisome,” said Sean Conway, a week after having been sworn in as mines minister for Canada’s biggest mineral -producing province. “It appears, from what we now know , that there is more bad news than good news in what was agreed to at 11:59 p.m., Oct 3.”

In Ottawa, Mines Minister Gerald Merrithew is singing a different tune: “This agreement carries distinct advantages for industries and individuals in every single region of Canada. Once the Canadian people are told of these advantages, they will be convinced it is a very good deal.”

Mr Conway said he was speaking only from an Ontario perspective and that he wants to examine all the details of the agreement before making a final judgment. But when asked whether the agreement would have a negative impact on the resource sector (including mining), he responded:

“Well, you’re talking with someone who has had to live with the softwood lumber deal (late last year Ottawa imposed a 15% export tax on Canadian lumber exports to appease a coalition of U.S. lumber producers). That was a very bad deal. My initial inclination is that (International Trade Minister) Pat Carney has done it again.”

(Mr Conway hails from eastern Ontario which has a significant forest industry.)

Ontario Premier David Peterson has declared the deal unsatisfactory for Ontario and for Canada. “But he doesn’t speak for all the people in the province,” Mr Merrithew insisted. “Many people in Ontario see distinct advantages to proceeding with this agreement with our largest trading partner. Premier Peterson is going to be hearing from a lot of industries and individuals who will say to him: `Look, this initiative is important for our province and our Canada, and we want you on our side.”‘

Mr Merrithew acknowledged that Ontario is a big player in Canada’s economy and is the country’s biggest mineral-producing province. But he doesn’t think Peterson’s opposition will prevent the agreement from being ratified.

Under the agreement, the two countries would eliminate all tariffs between them over a 10-year period, starting Jan 1, 1989. (Details are still being drafted and will not be available for a few weeks.) One of the main winners could be Canadian metal smelters and refiners. Others include petrochemical companies, furriers and meat packers.

Dutiable products are assigned to one of three categories: (1) immediate duty elimination; (2)duty elimination in five equal annual stages (20% per year); and (3) duty elimination in 10 equal annual stages (10% per year). This would continue a process of tariff reduction under way for the past 40 years under the General Agreement on Tariffs and Trade

In an extended interview, Mr Merrithew explained how the proposed deal is expected to benefit the mining industry: Mining a big winner

* What does the mining industry stand to gain (or lose) from the deal?

“There’s no question that mining will be a big winner. In the long term, the industry will have new market access for its process minerals and its metals. It will also have the assurance that resource markets will be more secure than they are at present.”

* Will there be any immediate effects on the industry?

“No, we won’t see any major changes immediately after the agreement comes into effect (Jan 1, 1989). But in the long term there will be significant new export opportunities. That, of course, means new investment and new jobs. It’s a bit early to say precisely when these effects will be evident.”

* Just how damaging would it be to the industry if the agreement were, in the end, to be killed? “Very damaging. The same view is shared by almost everyone in the mining field. Everybody knows the status quo is not satisfactory, as is evident from recent threats to potash and steel, among others.” Uranium and coal

* How will energy minerals such as uranium and coal be effected?

“We have, of course, the biggest and the richest supply of uranium in the world, so there’s no question that that sector will benefit tremendously.” (A 1985 U.S. District Court decision, now under appeal, would effectively ban all imports of Canadian uranium into the U.S., the market for one third of Canadian production. Mr Merrithew said he thinks Canada will come out a winner in the case.)

“As for coal, the fact of the matter is that Canada really doesn’t sell much to the U.S. at the moment. However, any agreement which improves access for Canadian mineral exports is good for the coal industry. This may be an opportunity for us to crack that (U.S.) market.”

* Canada’s principal goal of a binding dispute-settlement mechanism to ward off countervailing duties and other harassment has been only partially realized. Is the mechanism agreed upon going to be effective for mining?

“It’s better than what was in place originally. At least we know that there will be a board which will examine decisions taken by either government. That is a major step. There is also a commitment for both countries to review their trade legislation over the next five years.” No assurance

* Can you assure the industry that the stiff duties imposed by the U.S. on Canadian potash won’t be repeated?

“No. No one can give that assurance. First of all, both countries will maintain their existing trade laws. But at least there will be a bi-national panel to determine whether legal procedures are followed. There is also a stand-still provision which means neither country will undertake any measures before the agreement comes into effect.”

* The opposition parties in Ottawa are claiming the deal is a sell-out of Canadian sovereignty. Will that seriously affect public response in Canada to the deal?

“There is no question about that. I’ve listened to the rantings and ravings of the New Democratic Party and, to a lesser extent, the Liberals. They say we’re going to be assimilated into the U.S. That’s not going to happen, it never has happened and it never will happen.”

* What are the chances of an election being called over the free-trade issue?

“You’ll have to ask the prime minister. But even if an election is not called (to determine popular support for the free-trade agreement), the issue may still be on the burner by the time we go to the polls.”