Canadian-American Relations

MR. GORE:

We are pleased to have as our speaker today a journalist and broadcaster known to people in all parts of this country through his radio and television appearances. He is Mr. Knowlton Nash, Washington correspondent for CBC News.

Mr. Nash is a native of this city and studied journalism at the University of Toronto. He left newspaper work here to join British United Press in 1947 and was its bureau manager in Toronto, Halifax and Vancouver, with frequent assignments to Ottawa.

In 1951 he was named Director of Information for the International Federation of Agricultural Producers, which represents about 35 million farmers in more than 40 coun tries. With that organization he participated in various U.N. committee discussions and helped organize conferences in Europe and Africa of international trade and economics. About this time he began writing for Canadian newspapers, Maclean's magazine, Financial Post, the Star Weekly and other periodicals.

In 1954 he was appointed Washington correspondent for the Financial Post and began broadcasting from Washington for the CBC in 1954. News assignments since then have taken him throughout Canada, the United States, Europe, Africa, Latin America, the Middle East, and the Far East. Beginning in 1954 he concentrated on freelance broadcasting much of it for CBC. He was appointed CBC Washington correspondent in 1961.

Mr. Nash has interviewed many world leaders during his career and has covered such world news events as the U.S. visits of Soviet premiers Khrushchov and Kosygin, the Cuban and Middle-East crises, the Gemini space shot, Commonwealth Prime Ministers' Conferences, and the Vietnam war. He is also an experienced reporter of federal elections in the United States and Canada.

The recent statement of President Johnson regarding the U.S. elections and other political developments on both sides of the border are giving him a busy schedule - many of you probably saw the outstanding TV Special Mr. Nash put together Monday night, only 24 hours after Mr. Johnson's announcement - and we appreciate his taking the time to be with us today.

Gentlemen - Mr. Knowlton Nash.

MR. NASH:

I must confess, it's a bit difficult for me to know where to begin. . . . I've put together some notes several times in recent days, but each time they had to be thrown away because of some new crisis or other suddenly emerging.

Normally, the most impressive journalistic viewpoint of world developments or Canada-U.S. developments is a lugubrious one, filled with forebodings and forewarnings. But certainly looking upon what's happened in just the past few days, it's hard not to be hopeful, if not downright optimistic.

Certainly the Viet Nam peace moves constitute the brightest world happening in years. Although it's just the beginning of a beginning, for the first time almost all attention is on how to stop or scale down the fighting, rather than escalating it.

There is optimism, too, on the world scene in the agreement on international monetary reform reached by the major industrial countries in Stockholm a few days ago. This gives the United States, United Kingdom . . . and Canada, too . . . breathing space . . . time to implement some necessary domestic reforms to save the dollar and pound from devaluation.

And then, too, there are grounds for hope and fresh approaches in Canada and the United States in the political area. Both Ottawa and Washington will have new leaders and in any new beginning there are opportunities not availto old leaders who are sometimes entrenched and entrapped by old policies.

But even with our own Liberal Convention about to choose a new leader and Prime Minister . . . with President Johnson's decision not to run again . . . and even with the gold crisis moderating . . . still the most important happening today is - Viet Nam.

President Johnson is flying tonight to Honolulu, as you know, to prepare for peace talks with the North Vietnamese. These talks could start within a week or so, and they likely will be strictly bilateral - Hanoi-Washington -conversations to begin with and probably relating only to possible mutual moves of de-escalation. One distinct possibility might be for the United States to agree to stopping all the bombing of North Vietnam, provided the North Vietnamese pulled out all their troops from the demilitarized zone.

If there were agreement on that, or something similar, then they could go forward to a general peace conference, perhaps along the lines of the Geneva Peace Conference of 1954.

The danger, of course, is to avoid these Viet Nam talks becoming another Panmunjon where it took two years of talking to end the Korean War while some of the war's bloodiest fighting took place. This is something Washington is determined to prevent.

Equally, of course, Washington is determined to avoid being entrapped in a diplomatic double-cross by Hanoi using the peace euphoria created by talks to mask another TET offensive or all-out assault on Khe Sahn similar to the successful attack on Dienbienphu just as the 1954 Geneva talks got going.

But even with all the dangers and pitfalls of the peace talks, it nevertheless is almost breathtakingly hopeful to see what's happening to try to end the fighting.

I returned from Viet Nam a short time ago, having travelled in the Delta, in the Central Highlands and up around the area of the Demilitarized Zone, as well as in Saigon. And it's one thing to view the war from your morning newspaper, the board room or even before a television set, but it's quite another and staggering experience to be there, both in terms of the ugliness of the war itself and the arid legalism and semantic pretensiousness which until a few days ago seemed to be passing for statesmanship in both Washington and Hanoi.

Much of the information passed out on both sides simply has not been true . . . or to paraphrase Winston Churchill, there have been many terminological inexacti tudes. Some of the things which have been said have been simply preposterous nonsense.

For instance, the so-called "body count" of Viet Nam dead. I've been with American troops up in the Central Highlands where they did make an actual body count, going out onto the field ... and with the South Vienamese Army -the ARVN - when they were counting enemy bodies after an artillery and mortar assault. It's a rather grisly business because there are parts of bodies everywhere.... The troops I was with counted one body for every two legs and one arm they found.

But for the most part, the so-called "body count" is not really a count at all. In some cases, it's a rough estimate taken by a spotter in a low-flying plane skipping over the battle area . . . in other instances, it's a commander's estimate of the number of dead out beyond his compound but he's not going out to check because it's too dangerous.

And certainly the estimates provided by the South Vietnamese military are far more extravagant than those of the American forces, as, for instance, the ridiculous claims of enemy dead in the recent TET offensive. I did not meet anybody in the field in Viet Nam who really believed the body count figures.... Perhaps if you reduce them by a third or a half you might come close.

The exaggerated claims and exotic battle optimism of many American and South Vietnamese officials are so often put forward as fact that many people come to believe them through repetition . . . and this is highly dangerous insofar as formulating new policies is concerned. To obtain a relatively accurate picture on which to base policies, you have to take off the rose-tinted spectacles of self-deception and look at what really is rather than at what you would like to think is.

Anyone doing this, of course, is open to denunciation from all sides. I know I've been accused sometimes of being too pro-American . . . sometimes anti-American. Perhaps the best combination of criticism I've ever had was a letter from a gentleman in Prince Rupert who once accused me of being a communistically inclined fascist.

Certainly President Johnson is now under some intense, although mostly private, attack for his peace overtures toward Hanoi. The bombing pause that he has initiated over much of North Viet Nam was specifically rejected some months ago by the Joint Chiefs of Staff, and he is under heavy criticism from many of his military advisers. But perhaps by lifting himself out of the swirling political controversies in the United States he obtained a broader and more self-less view leading him to really start down the road which may lead to peace. There has been much justification for the American presence in Viet Nam on the grounds that it is to preserve democracy in South Viet Nam or to live up to pledges given to past and present government leaders. This is, I think, a rather fragile rationalization. There would be a more valid justification in saying the U.S. presence is necessary as an element in restraining Chinese aggressiveness and influence. There is, I would think, no question that if the Americans suddenly pulled out of Viet Nam today, the Viet Cong would take over very quickly and most countries in the region - Burma, Thailand, Laos, Cambodia and others - would begin to rejigger their foreign policies and start to make accommodations with the Chinese. I f the United States desires to maintain its influence in the region, it has to there and it must, in that kind of a posture, stay in and around Vietnam in some way or another - but not necessarily in quite the vigorous military role it now exhibits.

The Americans certainly are making heroic efforts to bring some form of democracy to South Vietnam. It's astonishing, for instance, to see rough, tough American Marines up in the hamlets near the demilitarized zone working as dedicated social workers. But they are ... as are thousands of other Americans throughout the country. And in Saigon, the American Ambassador and his staff spend much of their time persuading, cajoling and sometimes bludgeoning the Saigon Government into building more schools, revising the taxation system, building houses, roads and irrigation systems, implementing land reform and improving education. But there is a long way to go. Corruption is rampant in Saigon as racketeers and black marketeers raucously chase the American dollar. Except for the recent period when the war really came to Saigon, normally the bars on downtown Tu Do street run wide open with six or seven dollars for a drink in some places and equally high-priced Bar Girls. There's a saying in Saigon that "You can't buy love, but you can rent it for a while at any bar in town." And this, inevitably, leads to widespread venereal disease, known to many of the soldiers as "Ho Chi-Minh's Revenge."

If the road to peace gets detoured back into escalating war, I must say that I do believe the United States could win it, at least in a military sense. Indeed, I believe the United States could even broadly pacify the country, although never making it fully secure.

But it would take, I think, 15 years or more to achieve anything like a viable and relatively democratic society in South Viet Nam - such as say, South Korea is today.

But the real question - and one that concerns Canadians as well as Americans - is whether the United States can afford the cost involved in staying in Viet Nam either in its present posture or even in a more modest one. Right now, it's costing upwards of $30 billion a year for the Americans in Viet Nam and this, as I've mentioned, is, among other things, having a critical impact on the U.S. balance of payments which, in turn, reverberates on our own Canadian economy.

It's interesting to note on this question of the war cost that in the days of Julius Caesar, it used to cost 75 cents to kill an enemy soldier. In World War Two, the cost rose to $50,000 for every enemy dead. In Viet Nam, I was told the cost now is running about one million dollars for each Viet Cong or North Vietnamese killed.

But not only is it costing American money, but of course American lives as well. Ten thousand Americans were killed last year and likely at least that many will be killed this year in Viet Nam . . . to say nothing of the hundreds of thousands of North and South Vietnamese who have been killed.

This a basic reason why Viet Nam is going to loom as a major issue in the American election campaign. Or, at least it was looming large in the American political scene until President Johnson withdrew from the race. Already his action has diminished if not defused Viet Nam as a political issue. This was a major aim in his decision to reject renomination as the Democratic Party's Presidential choice.

Because of the very real credibility gap that exists in Washington, there is an almost automatic tendency to doubt whether or not President Johnson really means it.

I think he does. He's a man of so many contradictions, so much emotionalism and above all is the complete politician. But he is capable of the most selfless acts - even if they are unexpected. I recall the incredulity that swept the Los Angeles Democratic Presidential Nominating Convention in 1960 when he accepted John Kennedy's invitation to be the Vice-Presidential candidate. He did it against the advice of his wife, his mentor, Sam Rayburn and almost every one of his advisers. He was then Senate Majority Leader -second most powerful man in the United States, and yet he gave it up for a Vice-Presidential nomination - normally a one-way ticket to political oblivion. But he did it because he deeply felt it was right for the party, right for his country and it was the only way in which Kennedy could be elected President because of the strength in the South, and especially Texas, that Johnson would add to the ticket. And now, again, that unexpected, streak of nobility has come forth with his withdrawal from the Presidential race of 1968. He has said he will not spend one hour on U.S. politics this year which is hardly credible, but still, I do believe his action is no coy political ploy.

There are fascinating similarities between what's going on in Ottawa these days with what's happening on the American political scene. Will North America swing with Trudeau in Ottawa and Kennedy in Washington? . . . or will it steady itself with Martin or Hellyer or Winters in Ottawa and Nixon or Rockefeller or McCarthy in Washington?

We'll know one half of that equation by the week- end, but the other half won't be known until next November.

At the moment, Senator Robert Kennedy is clearly the front runner -an incredible shift from the long-shot a few days ago to the favourite today. The U.S. political scene is nothing short of chaotic . . . and there are reports today that Vice-President Hubert Humphrey may declare his candidacy . . . and so, too, may New York Governor Nelson Rockefeller.

Perhaps a key as to who will win the Democratic Party's nomination lies in the choice of Chicago Mayor Richard Daley - the last of the old style, big city political power bosses who is revered for his political effectiveness. More than anyone, he was responsible for John Kennedy getting the nomination eight years ago, and history could repeat itself.

Next fall we might see the ironic spectacle of our American neighbours making a choice for the Presidency between Nixon and Kennedy.

It's no wonder that there is the saying among public men that after love, politics is the most exhilarating sport of all.

Four years ago, the Republicans could not have defeated Lyndon Johnson and won the Presidency, even if they had run all 12 Apostles. This time, however, the election is a toss-up.

But because it's going to be close, there is one element to consider when looking at this quadrennial abberration that our American neighbours go through - that is the third-party candidacy of Alabama's George Wallace. Many Canadians tend to look upon Wallace as a racist joke. But believe me, he is no joke. He could have a vital and even decisive role in choosing the next President of the United States. He will not win, of course, but he could win enough Southern States to be the man who says who will be President. If the race were so close that neither the Republican nor the Democratic candidate had a majority in the Electoral College, Wallace could -and certainly would - try to auction off his votes to the highest bidder. The man who paid the highest price, would then be President. No one knows what that price might be, but it certainly would centre on civil rights. And if something like this did not work out, the choice of the President, in the event nobody had a majority in the Electoral College, would then be made by the House of Representatives - and that would come close to making a mockery of American Democracy with all the backscratching wheeling and dealing and legislative pay-offs that would be involved.

Who the President is, is vitally important to Canada because it's his Administration that sets politics in both international and bilateral relationships. It is the Adminis tration, for instance, that decides whether or not Canada is exempted from the interest equalization tax . . . from oil import quotas, or other trade restrictions. And it is the Administration which sets much of the policy on balance of payments restrictions which affect Canada.

Generally speaking, we have had at least a moderate amount of success in recent years in persuading various Republican and Democratic Administrations to give Canada special treatment.

But it is with the Congress where we have had so little effect and so often get frightened. That's why it is important for Canada to know the kind of Congressmen that are being elected. For instance, the present Congress - elected in 1966 - is much more protectionist and inward-looking than recent Congresses. You can see that in the flood of protectionist legislation that has poured into the Congressional hoppers. Right now, there are bills to restrict Canadian shipments to the United States of about one billion dollars worth of goods - from oil and natural gas to dairy products and mink furs . . . from steel products to lead and zinc. In addition there are scores of Congressional bills proposing general restrictions on imports - quotas or special taxes. Indeed, given the Administration suggestions for a two or three or more per cent tax on all imports and a similar rebate on exports, the Congress almost certainly will approve this. . . . But it will only whet the appetite of the protectionists who will demand more and more on individual commodities.

And the Congress which will be elected next November will be even more inward-looking on trade matters. This is not just an aberration of the Congress . . . it is also the mood of the people of the United States. Partly Viet Nam has contributed to it . . . partly General DeGaulle, and there is a feeling that the U.S. Government has been far too generous in its trade dealings in the past and now is the time to pull back.

It is instructive to note that the other day while appearing before the House Ways and Means Committee, Treasury Secretary Henry Fowler was pleading for a tax increase and liberal trade policy. Recognizing the current uneasiness of the electorate at these ideas, Fowler quoted Edmund Burke who said: "I would rather displease my constituents than harm them."

Immediately, the politically wise and powerful Committee Chairman, Wilbur Mills, dryly noted, "My recollection, Mr. Secretary, is that Burke was defeated in the next election."

So from now on . . . for the remainder of this Congress and the new one elected next November . . . you can expect a strong protectionist sentiment. And whoever is elected as President next November, given the attitude of the country and this reflected and intensified in the Congress, you can expect that the next President will not find any fertile ground for major trade liberalization. There won't be any more Kennedy Rounds for some time to come.

I mentioned a few minutes ago that Canada has been successful in dealing with the Administration in Washington in achieving a degree of special relationship be tween our two economies. It's useful, I think, to list some of these areas where we Canadians do get special treatment from the United States. There is the exemption we have for new issues under the Interest Equalization Tax. This exemption, alone, enabled us to borrow about one billion 200 million dollars in the United States last year.

Even in the new Johnson balance of payments crackdown - which certainly affects us - Canada was given special treatment. A special statement was issued by Wash ington for U.S. corporations with subsidiaries in Canada saying Washington expected those subsidiaries to behave like good corporate citizens of Canada.

We have an exemption from the U.S. oil import quota programme; we are exempted from the proposed tax on foreign travel; we are exempted from the lowering of the American duty-free limit from $100 to $10; we have the Canada-U.S. automobile agreement which certainly has brought and is bringing Canada enormous benefits; we also have virtual free trade in farm machinery; there is the Canada-U.S. production-sharing programme which enables Canadian defence firms to bid on American defence contracts almost on the same basis as any American firm, and which is bringing us more than $300 million a year in U.S. military orders; and we have the increasing acceptance by the Federal Power Commission in Washington of the "continental" approach on gas supplies - which also is bringing us scores of millions of dollars a year.

Any of these special relationships could be ended by Washington if it so wished . . . and this, in addition to U.S. ownership of Canadian industry, makes us highly vulnerable to U.S. Government policies as set by the Congress and the man in the White House.

To achieve these tangible benefits, there is no question we have had to give up at least a portion of our national sovereignty. But in so doing, we must remember that we have been able to provide thousands of more jobs . . . and a much higher standard of living than we would otherwise have.

In a way, I suppose, in our economic relations with the United States we Canadians act as a kind of mixture of fools and angels - we rush in and fear to tread at the same time.

How we achieve some of these special arrangements is interesting and demonstrative of the political aspects of the situation. While officials in Washington and Ottawa spent months putting together the Canada-U.S. auto agreement - under which our car exports to the United States have increased to where they earn us one billion dollars year - it was basically politics which brought it into being.

In the late summer of 1964, Prime Minister Pearson invited President Johnson to go out to British Columbia to mark the Columbia River Treaty between the two countries, negotiated after lengthy and sometimes painful argument. Since this was just at the start of the American Presidential election campaign that year, President Johnson felt it would do him good to be the statesman in action and he not only went along but took Mr. Pearson with him on some of what were labelled non-political meetings in the Pacific Northwest. After the election . . . in January 1965, in fact, Mr. Johnson was chatting in his office with Washington Senator Warren Magnuson, chairman of the Senate Commerce Committee about various things and then he asked Magnuson whether or not he should personally sign and push through the auto trade agreement with Canada. He was doubtful that he should because he knew it would engender some protectionist opposition and he didn't want to get caught in a crossfire. But Senator Magnuson reminded him that Mr. Pearson had helped him out politically by inviting him to the West Coast and producing much favourable publicity at the start of the past campaign. The President slapped his forehead - said, "That's right, by God" - and decided then and there to sign and personally push through the agreement. If he had not, it might very well have not been approved by the Congress.

That's an example of how politics can and does play such a vital role in the relationships between our two countries.

Incidentally, though, I might mention that despite a great deal of academic discussion about the possibility of extending the limited free trade principles enunciated in the automobile agreement between Canada and the United States, that is just not going to happen in the near future. The reason is the more inward-looking attitude that now prevails in this Congress and is almost certainly going to prevail in the next Congress.

All of this runs afoul of the hopes and dreams of earlier years. There was a time when senior authorities both in Ottawa and Washington thought in much grander terms for liberalized trade, both between our two countries and among the industrial countries as a whole. In the Kennedy days there was talk of some kind of grand economic alliance embracing all industrial nations in a single trading unit. . . . The former Under-Secretary of State George Ball also once spoke of what he called the "ultimate logic" of a single Canada-U.S. market.

Political realities, however-in the United States and in Canada-have frustrated these thoughts for some time to come.

One factor in this frustration is, of course, the balance of payments in the United States. As you are all aware, the United States has taken and is proposing to take some critical measures to sharply reduce its deficit. Basically, the big problem the Americans have is that their trade surplus is shrinking, while their other spending overseas is increasing - Viet Nam . . . foreign aid . . . NATO . . . and so on.

But eventually perhaps it's inevitable that the Canadian and the U.S. economies will be drawn closer together. In a way, to charge as some more nationalistic Canadians do, that we are being driven against our will into the arms of the Americans is like saying you would have to bribe Don Juan to have a date with Venus.

With President Johnson out of the Presidential race, there now arises the question of whether or not a lameduck President can fight off the protectionists.

Normally in an election year, protectionism flowers, but the President is able to fight it off because of the power he holds. This year, as I've mentioned, there is more protectionism and high-tariff sentiment in the Congress than at any time since the early 1930s. But now, much of the effectiveness of Presidential trade persuasion has evaporated with the Johnson decision that he will not seek nomination.

His ability to dissuade the protectionists has been impaired, but so too, has his effectiveness in eliciting from the Congress necessary balance of payments reforms . . . tax increases . . . spending cuts and even his ability to sell the Congress on revising the American selling price on chemicals ... a vital part of the Kennedy Round outcome. There could well be dangerous repercussions in the Common Market countries if this ASP were rejected by the Congress and it could lead to a rapidly escalating trade war.

With trade problems . . . with Viet Nam . . . with race riots ... with the money crisis . . . God knows why anybody wants to be President of the United States. But there certainly is no shortage of candidates. And who that next President is, is vitally important to Canada not only as it relates to peace in Viet Nam, but as it relates to our wallets.

On balance, given the mood of the United States and its more inward-looking attitude, I would think we Canadians must be prepared to hold what we have achieved in our special economic relationship with the United States and not plan for any big immediate break-throughs on the so-called "continental approach" to our economies. There may be a few yards made on closer inter-relationships for oil and natural gas and possibly hydro power, but that may be about all. If we do hold what we now have, however, it could provide the basis for a future significant expansion of the "continental approach" as best dramatized in the automobile agreement, when the atmosphere changes, as I believe it will in the years ahead.

I do not believe that in Viet Nam or even in our own Canada-U.S. economic relationships that events are in the saddle riding man. I think we can and must control our future . . . or at least steer it in the right direction. It's been said that God invented man because he was disappointed in the monkey. I hope we don't disappoint him again.

Thank you.

F. Gerald Brander.

Thanks of the meeting were expressed