Apres Quebec, Canada looks south

Two threads of concern run continuously through political affairs in Canada and compete for the attention of government. One is relations between the English-speaking and French-speaking communities -- the problem of accommodating two nations within the bosom of a single state, as a British colonial statesman observed with alarm many years ago. The second thread is relations with the United States -- the fear that the colossus next door will encroach upon political sovereignty and swamp cultural identity.

In reality, the two threads are often entwined. It is precisely the English-French duality, for example, which gives Canada an identity distinct from that of the United States and its melting pot. But the searchlight of political attention shifts from one concern to the other.

In the 1960s, the growth of US investment in Canada and the popularity of US TV culture were an urgent problem, at least for opinion leaders, and gave rise to what was called "the new nationalism." But with the growth of the separatist movement in Quebec in the 1970s, attention turned to the problem of preserving national unity.

This phase of national affairs has probably peaked with the May referendum in Quebec in which a surprisingly large majority refused to give to their Parti Quebecois (PQ) provincial government a mandate to negotiate for secession from confederation. This is not to say that the problem of unity has been solved, but merely that the heat is off for a few years.

Thus national attention will turn to focus on economic problems, which automatically involved relations with the United States. Like the United States , Canada is suffering from inflation, unemployment, slow growth, serious deficits in the balance of payments, a confused and divisive debate on energy policy, and a manufacturing sector which finds it hard to compete in world markets.

The short-lived Conservative government -- elected in May last year, defeated in February -- thought the answer to these problems was to place more reliance on the free market, including the possibility of free trade with the United States. In this, it reflected its power base in the Western provinces which have always been inclined toward free trade.

In opposition, the party is likely to develop these ideas. The national president of the party is already talking about the desirability of a North American Common Market, and a former policy adviser to the party leader is promoting the concept of a "Treaty of North America" to formalize the extraordinary network of relations which already link the US and Canada and, to a lesser extent, Mexico.

In the private sector, there has been a remarkable surge of Canadian direct investment in the United States, reflecting the fact that maturing Canadian corporations are coming to regar themselves as continental rathen than national enterprises.

However, Prime Minister Trudeau's born-again Liberal government is adopting a mildly nationalistic stance. It proposes to increase Canadian participation in the oil and gas industry, which is now dominated by foreign-controlled multinationals, and to scrutinize more closely the operations of foreign (mainly US)-controlled corporations in other sectors to ensure that their export, research and development, and other business strategies serve the interests of Canada rather than of their parent companies.

Ministers dismiss as out of the question any talk of free trade or an energy pool. They are demanding a bigger share of the continental auto industry for Canada, at a time when the whole industry is contracting. And they intend to increase Canadian participation in the oil and gas industry from 25 to 50 percent by the end of the decade. US investment will still be required, but US ownership and control of the industry will be reduced.

But the Trudeau government's policies may well be moderated by its urgent need to rebuild support in Canada's increasingly wealthy and populous West, where it has done very badly in recent elections. Western Liberals will no doubt be urging the party and the government to restrain its nationalism, which is mainly rooted in Ontario, ease away from protectionist policies designed mainly to assist Quebec, and respond to the Westerners' free-trade and free-enterprise attitudes.

On the US side of the border, the new factor in the relationship is the widespread but as yet little noticed interest in continental trade, development, and economic integration. A North American Trade Caucus has been formed in the Senate with influential membership. The Commerce Department has a task force studying continental trade possibilities. The National Governors' Association has urged the President to seek to establish a North American forum in which the US, Canada, and Mexico can meet on terms of equality to consider more cooperation.

All this probably reflects the US awareness that Western Europe and Japan are now competitors rather than junior partners, and that it must look elsewhere for economic allies, resources, and markets in an increasingly competitive world. Where more natural than its continental neighbors?

Candidate Reagan worked this theme in his opening policy statement, devoting two of 14 pages to a vision of a North American community of three strong countries enjoying a free flow of peoples and commerce. One might call it a new trilateralism of US, Europe, and Japan.

So, in both Canada and the United States, the conditions seem appropriate for a re-examination of the relationship, and possibly for significant new policy initiatives.