Fresh Trade Winds

Bundled against the Canadian chill, Britain's "Minister for Europe," Lord Privy Seal Edward Heath, flew into Ottawa last week to batten down some Commonwealth hatches before Britain sails into the European Common Market. After the usual pleasantries in the airport VIP lounge, a newsman pushed a microphone at Heath: "Just say that you've come to assuage Canadian anxiety."

The statement, half question, half demand, was a reflection of Canada's present unsettled mood and its concern for its economic future. As a relatively underpopulated (18 million) young nation with vast natural resources, Canada must trade to grow, and Britain's prospective entry into the Common Market, perhaps bringing an end to its cozy Commonwealth tariff preferences, is a source of anxiety.How deep the anxiety goes was indicated last fall at the Commonwealth conference in Ghana, where a Canadian Cabinet minister bluntly warned the British that their Common Market entry "could weaken the Commonwealth to a point where it exists in name only."

From Thorns to Roses. Canada's doubts about what lies ahead are all the sharper for the good times of the moment. Having just weathered a considerable recession, Canada is enjoying a substantial comeback. Going into the new year, gross national product is clipping along at a record $36.8 billion annual rate, and unemployment, which hit an icy 11.3% last winter, has thawed to a more livable 5.4%. Steel, autos, housing, oil and gas production are all strong. Most spectacular of all in the upturn is foreign trade--the very issue that stirs all the debate.

Exports last year gained 7 1/2% (to a record $5.8 billion), and by holding down imports, Canada enjoyed its first merchandise trade surplus since 1956. Trade and Commerce Minister George Hees, who likes to wear gold cufflinks initialed G.O.Y.B.S.A.S. (meaning "Get Off Your Back Side And Sell"), sent his tradesmen to cultivate markets wherever they could find them. Canadian sales to Eastern Europe are up 90%, to Latin America 36%, to Asia a muscular 61% (to $312 million). Biggest Asian customer is famine-struck Red China, which has engaged to buy $425.6 million worth of Canadian grain over the next 2 1/2 years. Canada's qualms in the matter are more economic than ideological, turning on the Communists' ability to pay. But on terms of 25% down, the rest in nine months, Canada already had $83.2 Red millions in the till at year's end.

Some of Canada's new partners, particularly Red China, seem chancy for the long haul. And big gains in new markets obscure losses in the old: Canada's sales to its Nos. 1 and 2 customers, the U.S. and Britain, are off 3%. Canada has slipped in rank since 1954 from the world's third trading nation (after the U.S. and Britain) to fifth (behind West Germany and France, as well).

Get Out & Sell. The loss of Commonwealth preference is painful to contemplate: economists estimate that fully two-thirds of Canada's $915 million yearly sales to Britain will be seriously affected by Britain's entry into the Common Market. Canada's initial response was to threaten Britain, just as during last winter's recession it had lashed out strongly with complaints about U.S. economic domination. But some of this mood of economic nationalism is fading. Many Canadian businessmen realize that the days of protective family arrangements are numbered. The new call is for Canada to stop worrying and start competing in freer world trade--or in Hees's cruder words, to get off its backside and sell.

In Ottawa last week, Britain's Com mon Market Negotiator Heath assured Canada that Britain would do all possi ble to safeguard Commonwealth interests. Next to pressing the British to drive a hard bargain in Europe, Canada's high hopes are riding with the U.S. Canadians see great possibilities in President Kennedy's appeal to Congress to lower U.S. tariffs in order to obtain matching reductions in the Common Market wall. If Kennedy succeeds, Canada hopes to work out similar arrangements. The alternative is posed by Canadian Imperial Bank of Commerce President Neil J. McKinnon: "If we find it impossible to come to satis factory terms with the European Economic Community, then we should certainly explore the possibilities of more intimate trade agreements with the United States."

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