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Text File | 1993-04-08 | 9KB | 194 lines

                                                                                CANADA, Page 48

Back on Track


After the constitutional referendum, the threat of national
disintegration has dissipated. A TIME panel of experts sees
a dramatically different future ahead.

By MICHAEL S. SERRILL -- Reported by Joelle Attinger/Chicoutimi
and Gavin Scott/Ottawa


    For 30 years, Canada has projected a puzzling image to
the world: a wealthy and comfortable nation that keeps warring
peaceably with itself. During all that time, the French-speaking
province of Quebec demanded additional powers to preserve its
language and unique culture, while separatist pressure,
generated by the Parti Quebecois, threatened breakaway if the
demands were frustrated. The nine mostly English-speaking
provinces were often resentful of Quebec's push for special
status but eager to defend their own vision of the union. In one
failed constitutional negotiation after another, doomsayers
declared that the country's future was at stake. From afar, the
country seemed caught in a permanent state of paralysis.

    Surprise! After the latest constitutional debacle on Oct.
26, when voters rejected yet another complicated package of
reforms, the result appears to be something akin to anticlimax.
Rather than aggravating French-English tensions, the outcome
seems to have left 27 million Canadians relieved that, at least
for now, the perennial constitutional issue has been swept off
the table. The compromise proposal, supported strongly by Prime
Minister Brian Mulroney, lost by a nationwide vote of 54% to
45%; it was rejected in six of the 10 provinces, including
Quebec. That, noted Brian Falesky, a lawyer in Calgary, Alberta,
"was the first time Canadians became passionate about the
destiny of the country since World War II. Sure, there was
divergence on issues. People rejected the package, but they
emphatically didn't reject Canada."

    If anything, as Scott MacKay, an Ottawa computer
consultant, put it, "people decided the politicians were hiding
behind constitutional reform to avoid more pressing issues."
Like the economy. The downturn in Canada has been much steeper
than in the U.S., the country's chief trading partner: the
unemployment rate stands at 11.8%, vs. 7.2% south of the border.
More than 400,000 manufacturing jobs -- 20% of the total -- have
been lost in the past three years, many of them permanently.
Federal and provincial governments are awash in red ink.

    In Quebec, where the unemployment rate is 14%, the
constitutional fight over the role of the province within Canada
today borders on the irrelevant, compared with economic
concerns. "Quebec sovereignty is all well and good," says Mayor
Ulric Blackburn of the St. Lawrence River town of Chicoutimi,
which was once solidly separatist, "but we're a little tired of
that battle when jobs are really what matter." Quebec's 55.4%
rejection of the constitutional agreement produced quite the
opposite of political ferment. "After all these years of
debates, referenda and what have you, what are we left with?"
asks Louise Roy, a senior vice president of the Laurentian
financial group in Montreal. "A dead end."

    If a single factor defines the new mood, it is distrust of
politics as usual. Prime Minister Mulroney's approval rating has
hovered around 15% for years. Now, rising disenchantment with
conventional parties means that in the next national election,
which must take place by November 1993, at least five parties
will compete for votes, including the Western-based and
business-oriented Reform Party, which gained ground on the basis
of its opposition to the latest constitutional package.

    The French-English disagreements may have cooled, but
Canada's confederation is still likely to change dramatically
in the years ahead, according to a panel of experts convened
recently by TIME to consider the country's future. The main
reason: sweeping changes wrought by the 1988 U.S.-Canada Free
Trade Agreement, which will be reinforced by the prospective
North American Free Trade Agreement between the U.S., Canada and
Mexico.

    For 125 years, Canada sheltered its national identity
behind tariff walls, most of which are gradually being
ratchetted down to zero under the trade treaty. One consequence,
TIME's panelists agreed, is that the country's economy is
rapidly reorienting itself north-south rather than along the
historical east-west lines from British Columbia to
Newfoundland. Provincial jurisdictions that regulate everything
from natural-resource extraction to pollution to stock-market
rules are following suit. The outcome is a thickening network
of business and government ties between separate parts of Canada
and their neighboring U.S. states, which will result in complex
transnational regions.

    The regionalization is already under way. The Atlantic
provinces, once heavily dependent on Ontario and Quebec for
manufactured goods, have now opened up wide to trade with
northeastern U.S. states. Quebec and New York State have been
forging similar links, while in the West, British Columbia's
commerce with Washington State and Oregon has expanded far more
rapidly than with the rest of Canada.

    Ontario, Canada's industrial engine, reports the same
trend. "We have a stronger relationship with Michigan than any
other jurisdiction around," said Premier Bob Rae, one of TIME's
panelists. Trade within the Great Lakes region, which Rae called
"our natural economic and geographical basement," has become
"natural and inevitable." The idea "of going back to a highly
centralized structure of government is neither desirable nor
possible," he noted.

    For some provinces, the continental shift already seems to
be yielding benefits. As federal funds have dried up, Ottawa
has cut back heavy subsidies to Canada's have-not regions.
Nonetheless, hardscrabble New Brunswick last year registered 3%
growth, more than any other province. Frank McKenna, the
provincial premier, attributes much of the gain to the reduction
of trade barriers among the Atlantic provinces and to growing
opportunities for export to the U.S. "The launching of free
trade has reshaped our relationships with the federal government
in many ways," he says. "But overall, our experience has been
positive. It means working harder and smarter. What we're doing
here is taking a lemon and making lemonade."

    There are still likely to be sour moments ahead. Like the
U.S., Canada faces a continuing challenge to its
competitiveness, especially as more highly skilled, high-paying
jobs are likely to flee south to lower wage levels after
ratification of the free-trade accord with Mexico. By the year
2000, said TIME panelist James McNiven, the dean of management
at Dalhousie University in Halifax, Nova Scotia, the number of
Canadians working in manufacturing jobs will have dropped from
today's 20% of the work force to only 8%. Most other jobs will
be in the services area, including such sophisticated sectors
as environmental engineering and computer-information systems.
Workers who do not measure up or cannot be retrained will join
the unemployment rolls. Like the Clinton Administration,
Canadian governments will have to combine education, retraining,
social-welfare and immigration strategies to create and retain
a pool of highly skilled workers -- and the jobs.

    One of the most divisive issues that will face the
country, observed noted panelist Barbara McDougall, Secretary
of State for External Affairs, concerns the claims and rights
of Canada's 1.5 million indigenous people. They have made
important gains in recent years, including the agreement a year
ago to transfer 772,000 sq. mi. from the Northwest Territories
to 17,500 native Inuit (Eskimo) people in the self-governing
region of Nunavut. The latest rejection of constitutional reform
cost indigenous people recognition of the "inherent right to
self-government" that would have been theirs under the deal.
Nonetheless, McDougall noted, they retain rights to land and