Two views of free trade from two sides of the border

Noranda Inc. had sales of approximately $6.2 billion in 1986.

Although Noranda sells many different kinds of products to many countries around the world, the biggest customer for its goods is the United States.

Noranda supports the free trade agreement that was signed on Oct 3, 1987. In the terms of this agreement, the two countries, Canada and the U.S., would have free trade by the turn of the century. And both countries benefit.

In the recent past, protectionism has been evident in the two countries. This protectionism against some of the products Noranda sells has been harmful to the company’s financial health. Although Noranda is showing a profit, the long-term effect of countervailing duties already imposed by the U.S. have not yet been fully felt.

The free trade agreement will provide a mechanism to resolve disputes arising from these protectionist measures now in effect.

The majority of businesses within Noranda are competitive with similar industries in other countries. And while there are businesses in the Noranda group that will have to increase their competitive edge in the world marketplace, the company is able and ready to meet foreign competition.

There have been many arguments against free trade, and one which is most hotly debated is the issue of sovereignty. Allan Gotlieb, Canadian ambassador to the United States, in a recent Globe and Mail article, stated: “. * * we should not think of ourselves as the mouse and the elephant, or as the modest middle power next to the giant. * * * Canadians are emerging as a more confident, even as an exuberant nation that sees more opportunities in the world than threats, more avenues than fences, more challenges in extending our presence in the land of others than closing our own land to the presence of others.”

Restricting trade between Canada and the United States would seriously limit production, employment and future growth for Canadian businesses. For Noranda, the free trade agreement means securing existing markets for our products. It’s also in the best interest of the United States; for example, it’s good for the American farmers who pay more for their fertilizer when extremely high duties are placed on Canadian potash.

Protecting Canadian cultural industries (film and video, music and sound recording, publishing, cable transmission and broadcasting) is one of the chief concerns, and one which has been answered by the agreement. Canada has retained its right to promote and protect its cultural industries now and in the future.

The governments of both countries have agreed to establish a bilateral commission to settle disputes as they arise. “The dispute resolution provisions of the agreement are important innovations,” states Alfred Powis, chairman and chief executive officer of Noranda and chairman of the task force on the international economy and trade for the Business Council on National issues.

A panel with representation from Canada and the United States will ensure that each country will apply its trade remedy laws fairly and impartially. Some critics are suggesting that what has been accomplished in the area of dispute resolution is of little consequence. They are wrong. By international standards, these components of the agreement represent very significant progress in the application of the rule of law to a large and complex 2-way relationship.

The Canada-United States Free Trade Agreement is the foundation for a sound, rational and predictable trading relationship between Canada and the United States. It is an important agreement for Noranda as an employer, as a producer and as an important supplier of raw materials to the United States.003 From Panorama, a Noranda in-house publication.

The proposed United States-Canada trade agreement could close the Asarco Inc. smelter in East Helena, Mont., which pumps a $7.5-million(US) annual payroll into the Montana economy, company and state leaders say.

“The smelter is one of the 20 top employers in the state and the trade agreement is a very serious threat,” said Sen Max Baucus (D-Mont).

Bob Muth, vice-president for government affairs for Asarco in New York, said elimination of tariffs for refined metals as proposed in the agreement would primarily hurt the East Helena operation.

“But there is nothing in this agreement of benefit to the U.S. mining industry as a whole,” Muth said.

Lewis and Clark County Commissioner Dave Fuller said the 300 jobs that would be lost if the smelter closes would devastate the Helena-area economy and cause serious problems for the state’s economy as a whole.

“This isn’t just a local issue,” Fuller said. “If there is any business showing signs of rebounding in the state, it’s mining. This would have serious consequences for its future.”

The basic problem with the trade agreement is that it would eliminate all tariffs between the two nations, including the 20% charge on imported refined metals from Canada.

Many other commodities such as timber are protected by import duties, which wouldn’t be affected by the agreement.

In 1969 there were 39 copper, lead and zinc smelters operating in the United States, Muth said. Since then, however, subsidization of smelters in other countries by foreign governments, including Canada, has cut that number to 13. The East Helena smelter is the last U.S. plant in the West that refines lead, Muth said.

Its primary competition is the Cominco smelter in British Columbia, which currently is being rebuilt and expanded at a cost of $134 million.

The Canadian government is footing the entire bill, Muth said, and tax writeoffs and other advantages will continue in the future.

Asarco recently lost a bid to the Cominco smelter to refine concentrates from the Lucky Friday mine in Idaho, which Muth said has been an important customer for the East Helena plant.

“We fear that the loss of this production is just a taste of things to come,” Muth said.

Asarco isn’t afraid to compete with Cominco “on a level field,” Muth said, but it can’t compete with Canadian subsidization and the elimination of the 20% tariff as proposed in the trade agreement.

“The government of Montana doesn’t have the ability to subsidize the smelter,” Fuller said. “All we’re asking is that our federal government compensate for the Canadian subsidy by making them pay to sell here. It’s just not fair or free trade.”

Baucus said he is drafting a letter to U.S. trade negotiator Clayton Yeutter, who is working on the agreement, strongly protesting elimination of the tariff on refined metals. Other members of Montana’s congressional delegation are backing him.

If a vote were taken now, Baucus said, Congress would probably approve the agreement. From The Missoulian, Missoula, Mont.