The 'Conspiracy' Against Canada

JUST before the last Canadian election in the fall of 1988, T-shirts and buttons appeared bearing the slogan: FREE CANADA, TRADE MULRONEY.

Usually these political witticisms have the life of a spring mosquito; they sting for a season then die off. But because this one so succinctly, and sourly, expresses the disenchantment of many Canadians with the Free Trade Agreement and with Prime Minister Brian Mulroney that it has endured through three long winters of discontent.

Under Canada's multiparty parliamentary system, Mr. Mulroney and his Progressive Conservatives won a large majority of seats running on the free-trade ticket even though they received less than half the vote. The uneasiness a majority of Canadians felt over the trade deal with the United States has grown while public confidence in the Conservative government has shrunk.

Recently, three new books by Canadian nationalists have appeared, each accusing Mulroney of selling out his country to US-based international business interests. "The Betrayal of Canada" by Edmonton publisher Mel Hurtig has become an overnight bestseller and may provide the basis for a new political party committed to driving the Mulroney Conservatives from office and tearing up the free-trade deal.

In better days, the suggestion that Mulroney was the Benedict Arnold of the great white North would be dismissed as paranoid piffle. But Canadians are feeling deeply insecure about their nation's future, and almost any explanation for the country's present plight sounds plausible.

In fact, the Conservatives are captives of events. The decision to push ahead on a continent-wide trading arrangement with Mexico and the US, for example, makes sense in foreign policy and economic terms. It would be crazy not to be at the negotiating table because whether Canada is in or out of a US-Mexico trade agreement it will be affected by it. But there is little or no political upside to the deal for the Canadian Conservatives right now.

The unhappy truth is that the Canadian economy hit the skids at just about the time the free-trade deal with the US was signed in January 1989. And though the pact is demonstrably not the major culprit, it's hard to get many Canadians to believe that.

Common sense suggests that it's the worldwide recession, economic globalization, and the Canadian central bank's vicious anti-inflation program that have clobbered the country's manufacturers. Canadian interest rates have been running up to five percentage points higher than US rates, and that's driven the Canadian dollar up from around 80 cents US to around 88 cents. As a result, Canadian exports have become more expensive in the US and the price of US imports to Canada has fallen. In some Canadian manu facturing sectors the result has been devastating.

There have been massive job losses in the textile, furniture, and food and beverage industries. In anticipation of tariffs coming down, multinationals such as Campbell Soup and Beatrice Food Products have closed small Canadian operations and begun to sell into the northern market from much larger, more efficient US plants. The Canadian Labour Congress - the biggest Canadian association of trade unions - claims that 20 percent of the country's manufacturing jobs have been lost since June 1989. The governm ent counters with statistics indicating that Canada's export of high-technology goods has increased by $4 billion in the first two years of the agreement.

But there is no agreement between the deeply divided sides even on what kind of methodology should be used to study the free-trade question. The Institute for Policy Analysis at the University of Toronto issued a study recently suggesting that the trade deal was having a positive effect of about one-tenth of 1 percent of gross domestic product a year. The study was quickly denounced as reflecting a right-wing, pro-government viewpoint.

The hard-core enemies of the trade deal say the Canadian high-interest-rate and high-dollar poli-cy was part of the Mulroney plot to destroy the nation. They claim that his government gave the Reagan administration a secret undertaking to drive up the value of the Canadian dollar. Only conspiracy buffs buy that one. But the number who believe in the plot against Canada is growing.

After all, Peter Pocklington, a known Conservative, traded hockey star Wayne Gretzsky to Los Angeles, and now Mark Messier to New York. And there are lots of Conservatives in the Labatts beer organization that owns a big chunk of the Toronto Blue Jays - who always choke in the American League finals.

Hmmm, maybe there's something to this conspiracy thing.