EDITORIAL PAGE — Worrying trade war

Just when you thought it was safe to venture outside, another “war” rears its ugly head on the world stage. In this case, it is a trade war encompassing superpowers and Third World nations alike.

As the world tries to rearrange itself into massive trading blocs, the U.S. gets into a tiff with the European Community and threatens to impose tariffs of 200% on imports of white wine and rapeseed oil. The U.S. announced the trade sanctions, which would take 30 days to become effective, because it is said to be upset with European negotiating tactics.

The danger is that when the big guys quarrel, smaller trading nations such as Canada, which depend on exports to boost their economies, get trodden on. Federal government statistics, indicating that Canada exports almost 25% of its goods and services, place it near the top in that category among the world’s industrialized nations. Looked at another way, one in every four Canadian jobs is directly related to trade.

A country such as Canada which is so closely tied to the U.S. but is looking to broaden its export markets to Europe, Asia and elsewhere, could find itself cut off should an Atlantic trade war escalate.

As well, should international trade talks falter, any gains Canada is seeking to win under the latest round of GATT (General Agreement on Tariffs and Trade) negotiations could evaporate. Canada has been pushing for major cuts in tariffs by its larger trading partners for such exports as wood and paper, non-ferrous metals and telecommunications equipment.

The new GATT agreement is important in that it would allow Canada to gain access to some markets in the U.S. not covered by either the Canada-U.S. free-trade pact or the trilateral North American Free Trade Agreement (NAFTA) currently being negotiated.

South of the border, concern has been raised over possible changes to NAFTA which may arise from the election this month of Democrat Bill Clinton, who has said he wants to review the effect of the pact on the environment and American workers. Canadian observers suggest that Clinton’s advisers may tinker with the agreement but basically leave in place what has been negotiated by the Republicans.

Geology and mining know no bounds and Canada has been exporting its mineral extraction expertise around the world for decades. While NAFTA may have little apparent effect on the exploration side — traces of Canadian geologists and mining engineers can probably be found in every corner of the globe — mining equipment manufacturers should stand to gain a lot. Just talking about a continental free-trade deal ought to have a beneficial effect on the mining industry. News of one junior striking a property option deal in Mexico (and elsewhere) comes to the attention of another junior, then another junior and so on. Soon, the majors are attracted and what was once an exploration play moves on to the development stage.

Arguments in favor of NAFTA are many. By being part of NAFTA, Canada protects its ability to attract offshore investment to serve the North American market. Under the agreement, a Canadian company would have free access to the entire continental market.

Mexico is Canada’s largest trading partner in Latin America; the federal government reports that 2-way trade exceeded $3 billion in 1991, a figure that is expected to double by the end of the decade.

Export opportunities are said to exist in numerous areas. For example, Mexico is the world’s 13th largest market for machine tools and imports 90% of its needs, and its market for pollution control equipment and technology, worth $280 million, is growing.