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Lethbridge Herald, The (Newspaper) - October 20, 1971, Lethbridge, Alberta Odobtr ID, THI ItTHMIDO! HOtALD S Peter Newman Economic union with U.S. unrea istic SINCE the middle of Au- gust, when Richard Nixon threw his first economic bomb- shell, Canada has existed in a elate of neurotic agitation, like the bewildered favorite neph- ew of some rich and once gen- erous uncle who has suddenly and inexplicably turned cold and uncaring. For years the basic prem- ise of economic life in this country was thai Ihe Ameri- cans would give us special pro- tection from the stormy winds of international trade. Now they've served notice that they will shelter us no more. So far, Ottawa has managed to make Ihe worst of a bad situation, first by pub- lic panicking and now by pri- vate dithering. Even Pierre Trudeau's unflappable mask is showing faint cracks of con- cern. It- may well be that his old disdain for life's realities will never cany complete con- viction again. What troubles the Prime Minister and his advisors are private economic projections that indicate the American trade offensive, on top of ev- erything else, could mean an unemployment rate in Canada of by February. This would mean an army of jobless larger than the number of men and women enlisted in Can- ada's armed services al the height of World War H. In this awkward and ebbing time, the search for desperate counter measures in Ottawa nnd elsewhere has turned to the examination of an intrigu- ing notion: if we can't wheedle favors out of the Americans, why not join them? Over their pre-1 uncheon martinis and their after-dinner cigars, busi- nessmen are examining Ihe suggestion that Canada should move towards a common mar- ket with Hie United States. Neil German, the Calgary law- yer who recently became president of the Canadian Chamber of Commerce, has al- ready endorsed the idea. The Economic Council is studying the possible implications of such an approach and U.S. Secretary of the Treasury John Connally lias informally dis- cussed the advantages of a common market thai would in- clude Mexico as well as Can- ada. The advocates of this option claim that economic union with the U.S. would ensure a much more efficient allocation of Ca- nadian resources; that we would, both as a nation and as individuals, become richer as our living standard reached that of the U.S. They be- lieve that such an arrange- ment would give Canadian in- dustry the one chance to ob- tain what it has never had; ac- cess to a huge consumer mar- ket. resources boom. The trouble is that primary extractive indus- tries don't create jobs. The spectacular resource boom of the '50s failed to provide any base for expanding employ- ment opportunities. Despite the billions of dollars invested in new mines, pulp mills, smell- ing and oil wells, by I960 all of these industries were employ- ing only four per cent of the labor force, one per cent less than in 1950. Canada's most, pressing eco- nomic problem is thai we have the fastest growing labor force in the world. Dr. Sylvia Ostry of the Economic Council of Canada has predicted that new jobs will have to be found in the '70s merely to ab- sorb the influx of new job seek- ers. That's the equivalent of new Jobs a month dur- ing the next 10 years. Only such labor-intensive activities as manufacturing could even begin to produce jobs in those numbers. At the heart of the argument put forward by the proponents of a common markel with the U.S. is conviction that our factories would obtain the ad- vantages of large-scale pnxiuc- tion and gain access w the huge consumer markets of the U.S. It would give them the kind of quantum leap in custo- mers they couldn't hope to reach without at least another century of Canadian population growth. There are four main flaws in tills simplistic notion: 1. Al the same time as our industries would gain access to the U.S. market, American manufacturers would be swamping us with their goods, which would slart with a com- petitive edge over our own products, because of the built- in price advantages of their longer production runs. 2. The disadvanlaged regions of Canada would be no better off than before. It would be mainly the factories of On- tario's Golden Horseshoe that could be successfully inte- grated into the American eco- nomy. Most of the industrial expansion started after the es- tablishment of a Common Mar- ket would take place south of the border, through the exten- sion of production runs in Am- erican factories. Of the many factors that 'go into Ihe produc- tion of any item, only marginally lower wages and proximity to raw materials- might favor a few Canadian locations. 3. A study for Ihe Royal Com- mission on Canada's Economic prospects by D. H. Fullerton and H. A. Hampson showed that the average costs of manufacturing in Canada run about 36 per cenl higher than "He used (o ;usf worcA football in tfie afternoon, but now that fAey've upgroded the kills' morning ore comaleteh in the U.S. And an Economic Council investigation of the same problem concluded that the capital invested for each Canadian employed in manu- facturing is 40 per cent greal- er than in the U.S. These are disadvantages that no common market arrangement could overcome. 4. Nearly two-thirds of the factories that do operate in Canada are now American owned. In fact, more lhan 90 per cenl of Canadian plants im- portant enough to have more than names on their pay- rolls are owned by the outsid- ers. Under a common mar- ket, it's highly doubtful that American plants would be al- lowed to compete with their parent firms. The classical doctrine of free trade implies that business transactions are carried on by independent companies in different coun- tries at arms length. But in this era of multi-national cor- porations, it would be a pure illusion to imagine that most of the subsidiaries operating here would become anything but feeder plants for head of- fice operations. Canada's only long term ex- perience with industrial free trade supports- these pessimis- tic predictions. The Canadian agricultural implements indus- try, wlu'ch has had duty-free access to both countries since 1944, has had most of its pro- duction facilities transferred to the U.S. Canada's share of North America's total produc- tion of farm implements was formerly 12 per cent; it has since dropped to about six per cent, even though several of the giants of the industry are Canadian firms. There are now tractors on Canadian farms, but tractor production has virtually ceased in this country. Massey-Ferguson still makes tractor parts in Toronto and Brantford, Ont., but they are shipped for assembly to the firm's Detroit factory. Advocates of a common mar- ket dismiss these unpleasant technical realities and insist that Canada's standard of liv- ing would go up nevertheless. They ignore Ihe harsh facts of regional economic disparities, which are even more pro- nounced in the U.S. than they are here. There are no tariffs between Ontario and Quebec (which can be viewed as a common yel there has historically been a persis- tent income differential of about 25 per cent for exactly the same jobs between the two provinces. In other words, there is no guarantee that we would become better off. More likely, the young would have to solve their unemployment problems by moving south, where the jobs would be. In calculating our chances and choices in the face of the Nixon administration's eco- nomic initiatives, it's important to analyse the root causes of the current American manoeu- vres. One of the characteristic responses of any country in economic difficulties is to try to export its problems. This is the basis of the U.S. plan Presi- dent Nixon is engaged in the incredibly ambitious feat of trying to reverse al one blow a billion deficil in his coun- try's balance of payments by holding the rest of the world to ransom. In effect, he is deny- ing other countries access to It's an alluring prospect, all right. But it won't work. There is little proof that a common market would deliver the benefits claimed by its pro- ponents and considerable evidence that it would produce some disastrous effects they aren't even discussing. But be- cause it's an option that Cana- dians must now consider se- riously and may eventually even have to vote on, it's essen- tial to understand what's in- volved: The establishment of a North American common market would mean the gradual dis- mantling of the tariffs on the 528 billion worth of goods thai flow across Ihe 49lh parallel every year. H is a commerce that constitutes the world's largest trading partnership. Historically, our tariffs have been considered the legitimate price of Canadian indepen- dence; the economy's only pro- teclion against unlimited con> petition from the industrial gi- ant south of the border. At the same time, the nature of the U.S. lariff structure has been at least partially responsible for I h e Canadian economy's concentration on raw material extraction. American tariffs rise according to the degree of processing. The tariff on cod, for example, jumps 30 per cent when it's shipped in the form of fish sticks instead of frozen blocks. President Nixon's new 10 per cent surcharge on oiu1 process- ed goods has erected a formid- able wall in the U.S. market for most of our manufacturers. By cl e 1 i b e.ratcly exempting most of our raw materials from the new lariff, the Americans liavo relegated us to Hie role of hinterland supply house for the U.S. industrial machine. A common market willi the U.S., and Ihe totally unimpeded access to our resources such an arrangement would allow might well mean, as ils advo- cate claim, an unprecedented Apathy greets crisis inquiry IVTONTKEAL Beside the main entrance of the Union Nationale Francaise on Viger Square, two blocks from Montreal's city hall, stands a bronzed statue of Joan of Arc. She was completely out of place last week as the building houses the opening sessions of the Citizens' Commission of Inquiry into the War Measures Act. The launching of the com- mission last Tuesday, before 20 spectators and as many journ- alists, was the ultimate expos- ure, as a result of the crisis of October, 1970, of the frailty of whal mighl be called the "crit- ical left" in Canada. It showed that the spirit of Joan of Arc, the spirit of an audacious and critical minority, is weak in Quebec and almost inconse- quential in the rest of the coun- try. And it raised an intercsl- ing question as to whether this weakness is an after-effecl of the severe measures adopted during the crisis or a perma- nent feature of political life in Canada in the mid-twentieth century which has been hidden up to now by the stability of our political institutions. The absence of audience on the first day was only a minor symptom. The real problem lay in the absence of Canadians of stature from the panel of in- quiry. To say this isn't to criti- cize the good intentions of the 10 Canadians who did agree to serve on the commission. It is a criticism of the motives which prompted dozens of prominent Canadians, in politics, in uni- versities, in the churches and the arts, to refuse to serve. The initial encouragement to "those who will voice concern at the extent of power assumed by the government under tills procedure" was given by tho Prime Minister himself when lie introduced the Wnr Mea- sures Act in the House of Com- mons last Oct. 16. By Peter Desbarats "I can only say that I sym- pathize with their attitude, and applaud them for speaking he said. In fact, only a handful of Canadians spoke out at the time as the authorities detained more than 500 people under the War Measures Act and its suc- cessor, the Public Order (Tem- porary Measures) Act 1970. A year later, critical study of the event is represented by only a thin sheaf of articles and pam- phlets and a few books. But the weakness of this critical oppo- sition hi Canada was never ex- posed to the public as clearly as it was last week when the commission opened its hear- ings. The questions which had to be answered by the commis- sion were many and insistent. Were the authorities justified in adopting such an extensive and prolonged scheme of deten- tions? What was the role of radio and television during the crisis? Was there censorship of the media? What wore the root causes of the event? In his television address to the nation last Oct. 16, Prime Minister Trudeau assured Ca- nadians that "the government recognizes its grave responsi- bilities in interferring in certain cases with civil liberties, and that it remains answerable to the people of Canada for its actions." But very few answers have been given and the gov- ernment has made it clear that it has no intention of establish- ing an official inquiry. This leaves a citizens' inquiry as tho only alfernatve. It has many disadvantages. It. is usually partisan. It is open to political exploitation. But in tills case, the organizers fell; that tho gravity of the event might persuade prominent Ca- nadians to tako a few political risks. The result of tlw six-month search is a 10-membcr com- mission that contains only two names of some national reputa- tion: Woodrow Lloyd, the form- er NDP premier of Saskatche- wan, and Laurier Lapierre, his- torian, television commentator and former NDP federal candi- date. The other members of the commission are the executive secretary of the Manitoba Hu- man Rights Commission, an as- sociate professor of law from the University of British Colum- bia, the president of the stu- dent council at Simon Fraser University in British Columbia, a Unitarian minister from To- ronto, three Quebec labor union officials and a journalist em- ployed by a union-supported weekly newspaper in Montreal. Organizers in Montreal and Toronto admitted that difficulty in finding commissioners was the main reason for the late slart. Prominent churchmen declined to serve. Senior labor officials in English-speaking Canada didn't want to become involved. Only one member of the House of Commons initially agreed to serve but only if tho inquiry were held during Parl- iament's summer recess. The same lukewarm response has met the commission's ap- peal for funds, although the S20.000 that is being sought is a bargain price for a commis- sion that will hold hearings in nine major Canadian cities and a number of smaller ones be- tween now and the end of De- cember. During the first day of hear- ings in Montreal, the problems of tho commission were all too evident. Witnesses were all on one side of the question. There was insufficient, cross-examin- ation. By the em.' of the after- noon, the public audience was down to six people and oiilsido tho building, it looked as if Joan of Arc had stopped listening for Canadian voices. (Toronto Star i the rich U.S. consumer market until they alter their exchange rates favorable to the U.S. The international community of na- tions including Canada is be- ing asked to bear the cost, among other things, of the dis- astrous American incursion into Vietnam and the expen- sive process of buying up Ca- nadian and European industry as part of the U.S.'s expanding hegemony abroad. The more severe the U.S. in- ternal crisis becomes, the less likelihood there is that they will listen to our pleas for a spe- cial relationship. Except for one. thing: The Americans want and need our energy resources. To put it bluntly, the Ameri- cans would like to drive us into some kind of common market arrangement because they must have access to energy re- sources that their own country can no longer provide at a rea- sonable cost. At the moment, the U.S. has six per cent of the world's population and util- izes 50 per cent of the world's total energy resources. By 1980, America's share of the popula- tion will be up to 9V4 per cent, but the U.S. industrial machine will be utilizing 83 per cent of all raw materials and re- sources being produced by the entire world. "The arithmetic implied here is Prof. F. H. Knel- man, chairman of the humani- ties and science department at Sir George Williams Univer- sity, has predicted. "The pro- jected U.S. needs of oil, nat- ural gas, uranium, water, hydro electric power, etc. are such that Americans will want to have free access to all these resources, no matter where they are on this continent or in its continental waters. This means only one tiling: Com- plete ownership and exploita- tion of Canada by the U.S." A U.S. cabinet Task Force, headed by George P. Shultz, Nixon's labor secretary, last year called for the devel- opment "of common or harmo- nized United States Canadian policies with respect to pipe- lines and other modes of trans- portation, access to natural gas, and other related energy matters." To Americans, the idea of treating North Americans as a single entity is hardly startling, since they "tend to think of us as an economic adjunct any- way. But to Canadians, such an arrangement would have se- r i o u s political implications. Could two nations of such dis- parate population and power realistically concern them- selves with "conlinentaliza- or would the outcome of such an agreement be bound to end up as something closer to "Americanization." As George Ball, the former U.S. Undersecretary of State, so knowingly forecast in his book The Discipline of Power: "S'ooner or later, commercial imperatives will bring about free movement of all goods back and forth across our long border; and when that occurs, or even before it docs, it will become unmistakably clear that countries with economics so i n e x t r i c ably intertwined must also hove free move- ment of the other vital factors of production-capital, services and labor. The result will in- evitably be substantial eco- nomic integration which will require for its full realization a progressively expanding area of common political decision." Any tariff-free arrangement would place severe limitations on independent Canadian ac- tion in every area of domestic concern. Eliminating the 50- cents-per-ton tariff on U.S. coal coming into Ontario, for exam- ple, would not satisfy the con- ditions of free trade, unless the S6-per-ton subvention on Nova Scotia coal sold in Ontario was also eliminated. Already, ns a condition of removing the 10 per cent surcharge, the Ameri- cans are demanding prior con- sultation with Ottawa in cases of provincial or federal indus- trial development programs. In other words, if a Canadian fac- tory is granted a low interest loan or n special tax writeoff that might make it more com- petitive in the export market. Washington would have to ap- prove the scheme. The removal of U.S. Cana- dian tariffs inevitably would be followed by "harmonization" of the two countries' monetary fiscal and social policies. Com- mon institutions for dealing with pollution and other social problems, common sccuril i c s regulations, common anti-trust laws and a common currency would follow. Eventually, pres- sures would come for the re- moval of all boundaries and the establishment of common citizenships. It would be tho end of the Canadian dream.' (Toronto Stnr Syndicate) Doubtful prescription. The Winnipeg Ji-rec I'rcss VINANCE Minister Edgar Benson's measures announced Thursday night amount to a mini-budget of maximum size. In effect, the government now concedes that part of the old budget, under debate as late as Wednesday, has ceased to be relevant and requires a huge correction. The minister explains that he was wrong in his projections of unemployment, al- though he claims to have been right in everything else. But the larger reason for change is, without question, the govern- ment's concern over the probable impact on Canada of the emergency policies in- troduced by the Nixon administration in Washington. Tile new programs bear ttie marks of hasty improvisation. This is understandable because the government has been, and re- mains, in the dark as to the duration of the U.S. restrictions and the further course of American protectionism. Its early ef- forts, intended to win exemption for Can- ada, obviously have failed, and the sub- sidy bill for industry was plainly a stop- gap measure designed to win time and re- assure business. The ministers now have assembled more comprehensive defences. They are impressive from the standpoint of the public money involved. If they are to be effective, however, they must be con- sistent with each other and well designed to meet the threat now confronting the Ca- nadian economy. Mr. Benson has put together a large and fairly diversified spending and loans pro- gram and a scheme of across-the-board personal and corporation income tax cuts. This is certainly a change from his earlier emphasis on selective incentives. Make- work schemes may be necessary for a dif- ficult winter. But the public treasury is no satisfactory substitute for threatened mar- kets. Industry must be made more compe- titive and the temporary reduction in cor- poration tax is. from this stand point, a Rounder approach to Hie economic prob- lem. Mr. Benson is sacrificing even mom of his revenue, however, to stimulate con- sumer spending although he told the Houso that the consumer performance already has bettered his expectations. The net re- sult is that we are to run a billion dollar deficit with non-budgetary requirements of million. This must mean rencwrl pressure on prices with its normal accom- on industry for higher wages and at a time when the Nixon administration, with unexpected co-opera- tion from union leaders, is presiding over a program of price and wage restraint. The minister of finance gave no indict tion in his speech that the Canadian gov- ernment is making a similar appeal. Would it, in any case, be effective when the gov- ernment is priming the pump with such abandon? Will industry lose through cost increases what it gains through temporary tax cuts? It is not necessarily a serious criticism to label a program on improvisa- tion, because improvisations may be good, or bad. But it is another matter if policies are in conflict, as appears to be the case with this latest budget revision. Much business criticism in recent days has been directed less against the ways and means resolutions, which now have been drastically changed, but against tho vast program of tax reform developed be- fore Mr. Nixon's new course created such grave difficulties for Canada. But in this respect the minister announced no change at all; indeed, he exhorted the House to move ahead with his controversial bill. Whether this is the final word remains to be seen. In any case we havo, overnight, a budget wliich is new in part. Us impli- cations require serious study; certainly at first sight it appears a mixture of propo- sals of uneven merit and of doubtful over- all value in equipping industry for the rougher competitive times now pressing upon us. Remember the trees The Christian Science Monitor WE can understand why President Nixon used the automobile industry as his first instrument for stimulating the Ameri- can economy. We are still in the automo- bile age. The quickest way to provide jobs and give a fresh flush of apparent prosperity to the economy probably is through De- troit. The 10 per cent extra tariff on for- eign car imports, the excise tax rebate, and the quicker investmenl writeoff are all goodies for Detroit which probably will pay off in benefits to everyone in the United Slates who sells tilings through the automobile industry or benefits from sell- ing the Detroit products to the public. A lot of jobs will be secured and im- proved. More, we trust, will be provided. We doubt that there was any quicker way. But now that Mr. Nixon has used the internal combustion engine as his chosen stimulant for the economy, we trust that he will give some thought in his further planning to the American environment. What's good for the economy is the short run, and Detroit as well, is not necessarily good for the future of life in the United States. Even if it turns out that lead in gasoline is not as dangerous as il was for a time presumed to be, we all know that motorcar exhaust fumes have made the air of Los Angeles, New York, and var- ious way points unfit for human (or ani- mal) consumption. And we all know that nothing chews up scenery, and farm land as fast as super-highways. In the good society of the future there will be more emphasis on public transpor- tation, less on the individual luxury of the automobile. There are other ways of sti- mulating the economy for the long run which will do all good and no harm. Urban renewal, modern schools in city slums, underground rapid transit, high- speed rail service between cities where rail can actually beat air at less cost (Bos- ton-New York for example) are all urgent necessities. Investment in such projects would stimulate (he American economy while improving, not further damaging, the environment, So far Mr. Nixon's economic policies, necessary and justifiable as they are from the short-term point of view, are going to leave an even bigger clean-up problem for his successors than the one he inherited. We urge the White House to keep in mind the importance of salvaging as much as possible of the natural American en- vironment Future generations will thank him more for green forests and clean wa- ter than for more highways and bigger automobile scrap heaps. Waiting for LeDaiu o The Hamilton Spectator 'REPLYING to a question in the House the other day, Health Minister John Munro said he expects to receive the final report of the LeDain commission on the non-medical use of drugs about the end of this year. An interim report was published in June last year. There have been no angry protests either on the political or public level at this de- lay. The subject is apparently not of such burning importance now as it was even a year ago. Social attitudes change so quick- ly these days, and so, too, do social condi- tions. The LeDain commission was the answer to a growing public anxiety about the use of drugs in our society, particularly by Uio young. Parents were disturbed at discov- ering that their teenage children were smoking marijuana and were defiant about their right to do so. Some social philoso- phers were saying that the Cleavage of viewpoint between parent and child on the legislation of marijuana was, in fact, the chief cause of the so-called generation gap. Then there was UK Great Argument: If adults get stoned on liquor, what's wrong with young people getting high on pot? Tills is a piece of sophistry. A healthy so- ciety, in its majority, is as opposed lo get- ting stoned on one tiling as it is to getting high on another. This argument seems more transparent today than it. did two years ago, and, paradoxically, Ihis is dis- tiu'bing. It is not enlightenment but ac- ceptance that has softened t h c dispute. And this is one more step down into de- generacy. Smoking pot, particularly by young peo- ple under 25, is no longer daring and de- fiant. If it is sn-Jokcd, then il is smoked without n feeling of nose-thumbing at so- ciety. Thus the LeDain findings of even a year ago insofar as they dealt with the social and legal implications of marijuana and hashish have probably had to be up- dated. This is doubly so in view of the amount of pot smoking that apparently goes on among older people. Where the smoking of pot is one manifes- tation of disorders in a personality a sense of isolation from family and environ- ment, say it can, if opportunity offers, prove to have been but the stepping stone to hard drugs. When a moral barrier has been eroded and there is a pre-existing psychological disorder, a tempter promis- ing a bigger "kick" is not likely to meet the hard resistance that would be encoun- tered from a rational, socially well-oriented individual. Yet if smoking marijuana is no longer the what is? Young people today appear lo lie more interested in life style, whether it be communal living, anti-pollu- tion, organically grown foods or any of sev- eral ways of showing continuing disen- chanlmenl with the old social order. Thus defiance seems to have been transformed into creating social embryos based on pri- mitive, simplistic models. In tiie meantime, those who arc hooked on hard drugs are, by the nature of tho idealistic (not tlie degenerate) type of commune, regarded as This is not tio say that drugs arc nol a major social problem. They arc, only the landscape has changed. Tho rules of Hie protest game have changed, too. Thus the LeDain commission is probably having to shape its report to contemporary conditions so that it docs not look socially out of date. ;