Page 4-Tuesday, January 23, 1979-The Michigan Daily GSbe £icbtgan BatIQR 420 Maynard St., Ann Arbor, MI 48109 Eightr-Nine Years of Editorial Freedom A North American common market By Kenneth D. Emmond - Vol. LXXXIX, No. 94 News Phone: 764-0552 Edited and managed by students at the University of Michigan i t We apologize ;.<. L&1L, L ! _ c) 11'+tc i ' ' NJ"C' . 1 , 1 'T1 "' " :: i.S y':..< rp~1,' *uis "i " :. !'r y". i a ic: G".PS= "iS v" ! Qdi" ii. " "r scJ" tcC" ; 1": Zi 'r et r i4 y,} r L . d r 7 i i4 "w "1i ! . Lt k , , tjs!~a!' s f. ',f. is s isi a"'": _: : .., ..., ..:... 7:". .. ; :; : :a.:! R . .....,. ' ' ," ". y4:" 7'// 3 EWSPAPERS TRY never to err in reporting. But the best effort -of everyone in this business mistakes do happen. Last week was such an oc- casion for us. This was not merely a spelling error; we misrepresented the facts and may have harmed a reputation. Last week the Daily .reported the events surrounding LSA-SG President Bob Stechuk's decision to lend the Literary College student government's name to a list of sponsors of a demon- stration last December against former Israeli Foreign Minister Yigal Allon. Mr. Stechuk endorsed the protest in the name of LSA-SG under the authorityof vaguely defined position of Advocacy Coordinator. The Daily reported on January 16 that at a LSA-SG meeting Mr. Stechuk promised to apologize to Mr. Allon and to Jack Walker, Dean of Public Policy Institute, who arranged the Allon speech. What in fact happened was that Mr. Stechuk agreed to disassociate LSA-SG from the violent demonstration and also to apologize to Mr. Allon and Mr. Walker for that violence, not for the original endor- sement of the protest. Much to our ciagrin that was not the only occasion we misreported the story of Mr. Stechuk's actions. On January 18 the Daily reported that LSA-SG had condemned Mr. Stechuk's endor- sement of the protest. In fact LSA-SG did no such thing. LSA-SG condemned the "incident," clarified the original intent of the endorsement and disavowed council from the endor- sement. We have stated on this page that the violent protest which interupted Mr. Allon's speech was deplorable. It was antithetical to the principle of free speech. And Mr. Stechuk's decision to lend the Literary 'College student government's name to the list of spon- sors without checking with the entire council was irresponsible. Nonetheless, we have misrepresen- ted the facts surrounding the LSA-SG reaction to the affair. For this we are sincerely sorry. We regret that Mr. Stechuk may have appeared in a bad light as a result of our error. We hope that whatever damage we have done to Mr. Stechuk's reputation, or any in- convenience which we have caused him will be at least somewhat dam- pened by these words. 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Carter chooses guns WTHEN PRESIDENT Jimmy Carter W 1 announced his energy policy two years ago he said the country should wage the "moral equivalent" of war against energy shortages and energy waste. In looking at the ad- ministration's new austere budget it is apparent that either the President has a twisted sense of humor or the priorities of the administration are misplaced. The Energy Department, a new cabinet office created by Mr. Carter, was originally supposed to receive $9.1 billion of the federal budget. Mr. Car- ter and his advisors have cut that back to $8.1 billion in an attempt to keep the trade deficit under $30 billion. Of the total Energy Department allotment nearly 20 per cent, or some $1.6 billion, is being spent on the research, development of nuclear weapons. The President's logic appears faulty. He says he wants to control nuclear proliferation and yet he increases the defense budget by five per cent and spends 20 per cent of the Energy budget on nuclear weapons. He says we must wage ware against our energy problems but he cuts the proposed budget for the department capable of carrying out the wary by $10 billion and spends $1.6 billion of it on weapons of destruction. If controlling inflation is his biggest project and balancing the budget and decreasing the trade deficit are two important steps towards the major goal, why does not Mr. Carter spend more money on energy research and development to end the nation's reliance on foreign powers for energy? Mr. Carter is listening all too well to ' the generals in the Pentagon who per- cieve the Soviet Union in traditional cold war terms. The generals have Carter convinced it is still our role to play policeperson all over the glove. Meanwhile the American consumer is faced with ever increasing prices. Energy, food, and other necessities are becoming incredibly expensive. Because of the post World War II prosperity in the United State and other western industrialized nations, this country has been able to have both guns and butter. That prosperity, however, has diminished with the decreased availability of non- renewable energy resources. For the first time in recent history the United States is faced with a real choice-guns or butter. Mr. Carter's choice is obvious. NEMPLOYED MEXICANS searching for Yankee jobs already have turned America's southern border from a barrier in- to a highway. Now, growing numbers of Canadians, faced with serious economic dif- ficulties of their own, also want to dismantle America's northern boundary.- Trade deficits, currency devaluations and hard times in the marketplace tend to stir up protectionist talk in the United States, but in Canade it's just the opposite. Chronic current account deficits in recent years, the weakest Canadian dollar in decades and reports of net capital outflows from Canada are providing a forum for proponents of a Canadian-American free trade area. In late September, days before the Canadian dollar established a new 47-year low on the New York currency exchange, a delegation of Canadian senators journeyed to Washington for discussions with a group of U.S. senators on a possible North American wheat cartel. And while Canadian farmers are looking south of the border for solutions to their problems, Canadian manufacturers see a nation of 214 million customers south of the forty-ninth parallel that looms just as large - and potentially lucrative - to them as China and its one billion possible buyers seem to U.S. exporters. A question of politics HERE NEVER has been much argu- ment here that a common market with the U.S. would be profitable for Canada. The question has been what political price, in terms of U.S. control of its own economy, Canada would have to pay. Canadian economist Ron Wonnacott has been a proponent of free 'trade between the two countries since the early 1960's - the last time Canada encountered trade problems. Wonnacott, who teaches at the University of Western Ontario, and his brother Paul, now at the University of Maryland, published a book in 1967 which showed that free trade would benefit both countries but would be par- ticularly valuable to Canada. They concluded that a Canadian - U.S. free trade' zone could raise Canada's gross national product by at least 10 per cent by vir- tue of lower consumer prices and economies of scale in production. Looking at Canada's position today, Won- nacott said in a recent interview, "I don't think my position has changed very much." There are some differences, however. For one thing, in the 1960's the average Canadian industrial worker earned about 20 per cent less than his American counterpart, a factor which would have helped lure U.S. employers to Canada, and spurred Canadian sales in the U.S. too. But with the achievement of wage parity in the Canadian automotive industry in the 1970's, a trend toward equal earnings with American workers began. In some industries - notably pulp and paper - Canadian .,r.o c n n- - - LS}l i a so' P on Y mm' .FA t ln Canadian workers, though earning the same number of dollars as Americans in many in- dustries, have seen the currency in which they are paid shrink in value from just over one U.S. dollar the only about 85 cents. After a decade of economic nationalism, Canadians find themselves just about where they started - about 20 per cent behind their American neighbors in real income. Today more and more Canadians have begun to realize that economic integration with the United Sta'tes may be the only way to achieve real economic equality with it - in terms of living standards. Wonnacott admits there would be a tough period of adjustment for, Canadian manufacturers under a free-trade agreement, and he has no illusions that there would be casualties. "I think the big adjustment problem would be the necessary turnaround by Canadian manufacturers." Of course a free trade agreement with the United States would entail much more risk for Canada than for the U.S. In 1977, a typical year, Canada imported $42 billion worth of goods, and just under $30 billion of them came from the U.S. Of the $44 billion in exports, $31 billion went to the U.S. To put these figures in perspective, it would be as if the United States exported $300 billion a year to Canada and bought a similar amount from its neighbor to the north. Still, problems would be matched woth op- portunity, because Canadian producers who met production costs and price levels of American competitors would gain tariff-free access to the immense markets to the south. Nevertheless, great political, social, and emotional obstacles continue to stand in the way of any Canadian-American customs union agreement. Social and emotional obstacles ANADIAN MANUFACTURERS who, stand to lose - or who fear the challenge of being forced to increase efficiency or close down - continue to exert strong political pressure against free trade proposals. Op- ponents of closer economic ties to the U.S. also appeal to nationalism, since, at bottom, many Canadians still fear economic in- tegration as a possible step down the road to political union, a prospect all Canadians regard as anathema. Though the proponents of free trade reject the argument, many Canadians still fear that under free trade Canada would be reduced to the role of "hewers of wood and drawers of water" for a resource-hungry America. "Economic considerations aside, there simply is no way that two nations of such unequal population, temper and power, could become economic partners without Canda being swallowed up in the process," wrote Peter C. Newman, editor of MacLeans' magazine, in a recent editorial. Saskatchewan Premier Allan Blakeney exulted over his re-election as part of Canada's only New Democratic Party gover- nment, after a campaign dominated by the isses nf ennomic nationalism and the selling oil and natural gas to the Americans is there a hint of real free trade walk amen politicians. The businessmen who encourage this trend are connected with the majorrin tegrated oil companies or with pipeline firms. Liberals have long talked free trade as a Canadian policy goal, but under successivE Liberal administrations, including the present one under Prime Minister Pierre Trudeau, there has been little overall tarif reduction.. :, Beneath the veneer of free trade rhetoric and the hard evidence that there are benefit: tobe derived from lowering trade .barriers lit some of the highest tariff walls of the in dustrialized nations. The public justification for this reluctance to lower trade barriers is as much cultural a; economic. The issues of "Canadianism" ant "cultural autonomy" have surfaced as majoi national issues in recent years, but in fac they are as old as the Canadian confederatior itself. ORE THAN A CENTURY ago, Can M ada's first prime minister, Sir Johr A Macdonald, established the "Nationa Policy," which still basically guide: Canadian economic tactics. The 'Nationa Policy" in effect is a tariff barrier higi enough to force Americans wishing to sel manufactured goods in Canada to establisl factories within the country. However dubious the economics of the policy, it was good politics - creating jobs it the short run and allowing Canadians to give rein to their Loyalist sentiments. In addition to the higher cost of manufac tured goods that trade barriers produce there is another, perhaps steeper, price tha Canadians pay for their comparative securit; behind tariff walls. Protection has created defensive climate in which Canadian industr; shuns rather than welcomes the hurly-burl; of international competition. This tendency has caused some frustratio to Canadian trade officials at the 31 con sulates throughout the United States. Bob Burchill, trade commissioner with th< Canadian consulate in Chicago, says trad+ will increase as a result of the bargait basement dollar, but not by as much as i should. "I think that some Canadian firms are ver; reluctant to take advantage of the exchang+ rate to the extent they could," said Burchil recently. "Canadians could do much mor business . . . if they woke up.", Even those Canadians who believe in fre trade is inevitable because of the limitation: of the Canadian market think it will come les: from political choice than force of economic circumstance. Wonnacott, for example, doubts whether Canadians ever will accept free trade withou some prodding, either from -the rest of the trading world or as a result of a sever economic crisis inside Canada. "Canadians are pretty protectionist," h says. "I think we'll get substantial trad liberalization in the next 25 years . . . but it' not clear that it will be a result of Canadia initiatives i