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By Annette Baker Fox

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Secretary of State Cordell Hull's system of reciprocal trade agreements lowering tariffs. These benefits were expanded on a multilateral basis under the Page 19 postwar system of GATT. The "most favored nation" principle underlying GATT's various rounds of multilateral tariff negotiations has greatly opened up world trade. Canada has benefited because well over a fourth of the goods and services it produces is exported. With a relatively small though affluent domestic market it is reasonable for Canadians to prefer for the world trading system to be as open as possible.

The GATT final act included "tariffication" of such arrangements. " Albeit by French intransigence, Canada did succeed in excluding "cultural industries," just as it had done despite American pressure in both the Free Trade Agreement and NAFTA. The preponderant American role in Canada's foreign economic policy dates only from World War II. Previously, Canada's trade with Britain had been of greater importance, but with the decline in British fortunes and especially since Britain joined the European Common Market in 1972, Canada's trade with Britain has greatly diminished in significance.

These issues involve a very potent political interest group in the leading GATT members. Domestic support, export subsidies, and import restrictions of the European Union countries under their Common Agricultural Policy have been particularly injurious to Canada and the United States. For both countries agricultural exports are a vital part of their economies. When the European Union members began to deal with mountains of surplus by high export subsidies, eating into others' traditional markets, the conflict came to a head.

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