A landmark free trade agreement with Canada, which now has the approval of Congress, has the potential of boosting Utah's trade surplus with its northern foreign neighbor while increasing local jobs and business opportunities, observers say.
A major hurdle to implementing the trade pact was crossed Monday when the U.S. Senate approved the measure by an 83-9 vote. The House passed the legislation last month.The bill, which now goes to President Reagan's desk, would phase out tariffs and a number of other trade barriers over a 10-year period under the pact signed in January by Reagan and Canada's Prime Minister Brian Mulroney.
But political problems on the Canadian side must be resolved first. Canada's House of Commons has passed a bill to start the tariff phase-out, but majority liberals in the appointive Senate have delayed it until Mulroney calls new elections, expected in November.
Despite opposition from energy- and wheat-producing states, the legislation could improve the healthy trade surplus Utah already enjoys with Canada, according to the U.S. Department of Commerce.
In 1986, Utah exported $293.5 million in commodities to Canada, while importing more than $105 million in Canadian goods, department statistics said.
The top three Utah exports to Canada in 1986 were precious metals and alloys ($184.5 million), electronic computers ($23.3 million) and phosphate rock ($9.8 million). Other exports include non-ferrous metals and alloys, telecommunication and related equipment, various inedible end products, mining and natural resources equipment, medical and lab supplies and motor vehicles.
Meanwhile, leading Canadian imports to Utah include live animals ($13.2 million), petroleum and coal products ($12.1 million), aircraft engines and parts ($7.1 million) and newsprint ($6.7 million).
Canada accounts for $518 million of the $2.8 billion foreign countries have invested in Utah in property, plants and equipment. Canadian tourists spent $9 million in Utah during 1986.
"We set up offices to establish trade with the Pacific Rim, but we already export more to Ontario," said Earl H. Fry, specialist in Canadian affairs at Brigham Young University's Kennedy Center for International Studies.
Fry's comments came at a recent seminar at Salt Lake Community College on trade with Canada. He said the export of domestic goods has increased whenever free trade agreements are entered into.
Fry noted that the timing of the trade pact is ideal as the Canadian dollar enjoys renewed strength, making Utah's goods more competitively priced.
"The greatest opportunities are for computer and electronics firms," he said.
Department of Commerce figures released at the seminar said the agreement's elimination of a 3.9 percent duty next year can boost sales of Utah's computer and electronics products to Canada.
Government contract opportunities will be expanded through the agreement, the department said, which would make Utah firms eligible to compete for an additional $500 million in Canadian federal public sector purchases.
Opportunities for transportation manufacturers, financial and professional services, and foreign investing will be enhanced by the trade agreement. Entry procedures for traveling business professionals will also be simplified.
The trade pact would hurt Utah's struggling uranium and energy industries. But, Fry said, those industries were never competitive with Canada. The agreement will provide free bilateral energy trade, giving Utahns access to Canada's energy supplies and doing away with restrictions on Utah energy exports.
The exact impact the agreement would have on Utah employment is not known, but the Department of Commerce said thousands of Utah jobs are directly related to trade with Canada and that number is expected to increase as trade improves.
"Through the (agreement), Utah consumers and manufacturers alike will benefit from reduced prices and a greater diversity of available products brought about by greater competition, rationalized production and more efficient business operations," the department said.
Fry explained that the agreement is a positive step forward that hinges on Canada's upcoming elections. Mulroney is expected to call elections within a few weeks. Defeat of his Conservative Party could doom the plan in the new Parliament.
"We have done out job on this side of the border. Now it's up to Canada and its voters," Fry said.