Canadian Free Trade?
THERE still seems to be no way of making sense of the proposal, launched so abruptly in Washington last week, for what is described as an Anglo-Canadian free trade area. The immediate reactions of hostility from some sections of Cana- dian opinion, and bewilderment in Britain, hardly provided a promising background for the first official discussions of the plan, which took place on Wednesday. The supposed aims will in any case be difficult to achieve. Britain could easily spend more dollars on Canadian goods if import restrictions were removed, but only if the Cana- dians were to reciprocate by exposing to fiercer competition from British business just those in- dustries which are at present demanding more complete protection. The suggestion that Canada should now hold part of her currency reserves in sterling in London would, of course, tidy up the sterling system by making it virtually synonymous with the Commonwealth. But any other advan- tages the idea may offer have yet to be explained. Politically, of course, some progress has been made. Mr. Diefenbaker's pledge to divert 15 per cent. of Canada's purchases towards Britain has been put to the test, and Mr. Thorneycroft is in the happy position of being able to face his party conference as a keen Commonwealth man.
Paradoxically, this proposal has quite over- shadowed the conference of Commonwealth Finance Ministers, where decisions of much greater immediate importance for the Common- wealth ought to have been taken. No doubt the reason why no member of the sterling club has made any contribution towards strengthening sterling since Britain put up Bank rate two weeks ago is simply that they have been waiting for this meeting to co-ordinate their efforts. The success of the conference will be judged by the evidence which accumulates during the next few weeks of the new steps which have been taken to bring about a better relation of financial and monetary policies throughout the area, as well as a closer agreement about the more ordinary use of sterling balances. The intention to hold a full-scale trade conference next year is, of course, to be welcomed as an opportunity to improve Commonwealth economic policies, once the present difficulties are Over.
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