Way to Go!


If Congress doesn't blow it, the free-trade pact signed by President Reagan and Canadian Prime Minister Brian Mulroney in January could be the beginning of a new era in international trade. It is not only a model of what trading partners should be aiming for but could spur progress in multilateral talks under the General Agreement on Tariffs and Trade (GATT).

U.S. and Canadian buyers and sellers exchange $150 billion worth of goods annually—the world's largest trade relationship. Canadians purchase one-quarter of our exports, and we are the market for three-quarters of theirs. Prickly trade relations could hardly be good for either economy. Yet the last time the two countries came so close to free trade was 1911, when a tariff-busting agreement fell apart in the final hour.

In phasing out all tariffs and most other import and export restrictions between the two countries over 10 years—and opening up trade in services for the first time ever in a trade agreement—the new pact could light a fire under GATT members to get serious about trade liberalization—or the United States will strike out on its own and forge a series of bilateral agreements with nations willing to open their markets too. Either way, we win.

If Congress sees the light. The Reagan-Mulroney pact needs implementing legislation by the end of March, but Congress's initial response was to say that the legislators couldn't get to it—they had to work first on their own "omnibus trade bill," the monster Son of Smoot-Hawley that's grown to 1,000 protectionist pages of goodies for one special interest after another.

Guess what killed the 1911 pact? The speaker of the U.S. House boasted that political incorporation of Canada would come next. Canada understandably got the jitters and backed out.