STUDY SAYS U.S., CANADA PACT WOULD SPUR ECONOMIES A free trade pact between the United States and Canada could spur the economies of both sides substantially, according to a study released by the Institute for International Economics. The study, by Paul Wonnacott, said a successful conclusion to the free trade talks now under way could raise Canada's gross national product by more than five pct and expand U.S. export's by about seven pct. He said the pact could resolve the knotty issue of government subsidies, end curbs on trade in services and investments and pave the way for new global talks under the General Agreement on Tariffs and Trade. The United States and Canada - the world's two biggest trading partners with cross border shipments of about 150 billion dlrs a year - opened free trade talks last June. They are aiming for a pact by next October. Wonnacott, an economics professor at the Univerity of Maryland, said an agreement should include: - Elimination of tariffs between the two countries, phased in over a five to 10-year period; - Equal access to federal government procurement in the two countries, replacing current "Buy America" and "Buy Canada" provisions with a "Buy North America" provision; - Fewer restrictions in trade in services, chiefly finance and transportation; - A commitment not to screen foreign investments in favor domestic producers; - A commission to resolve bilateral trade disputes. Wonnacott said that to resolve the subsidy problem, the two sides should permit export subsidies of exports of up to 2.0 or 2.5 pct without imposing coutervailing duties. The limit on subsidies is now 0.5 pct. He proposed that any attempt to impose new duties to offset subsidies should go first a special disputes commission for resolution at an early stage. Wonnacott said "bilateral free trade would contribute to the efficiency of the North American economies and to their competitiveness in facing overseas producers. He said it would it would open U.S. markets to Canadian goods and enable them to benefit from the economies of mass production. Benefits to the United States would be fewer than those to Canada proportionately, he said, because of the already large U.S. gross national product. Wonnacott said also that a U.S.-Canada pact in such areas as export subsidies and the creation of a dispute commission could set an example for the current attempt by GATT to write new and more liberal global trading regulations.