Instructions for Canadian Delegation to Eighth Session of the General Assembly

At the sixth session of the General Assembly, the under-developed countries were successful in passing a resolution, against the strong opposition of the more economically advanced countries, including Canada, calling on the Economic and Social Council to draw up a detailed plan for establishing, as soon as circumstances permit, an international fund for grants-in-aid and low-interest long-term loans to the under-developed countries, to assist in their economic development.

At the fourteenth session of the Economic and Social Council in 1952 agreement was reached on the appointment of a Special Committee to draw up a detailed plan for the fund. One of the effects of this resolution was to postpone discussion of the substance of the issue and in voting for it the Canadian and United States representatives made it clear that they regarded the resolution as a matter of procedure
which did not in any way commit their Governments to the principle of an international development fund.

While not excluding the possibility of Canadian participation in measures undertaken by the United Nations to augment the flow of capital to the under-developed countries, Canadian representatives have consistently opposed the immediate establishment of an international fund of the character envisaged by the under-developed countries in the ECOSOC and the General Assembly. Our reasons have been:

(a) at the time the proposals were first mooted -- and the situation has not changed materially since -- Canada's own resources were heavily strained by defence requirements;

(b) a scheme which did not leave effective control over grant expenditures in the hands of the principal contributing countries was not likely to make the best use of the funds available (this view was not made publicly);

(c) grant aid for development can probably be applied more effectively if programmes are worked out bilaterally, as under the Colombo Plan, rather than through a common fund administered internationally.

(d) it was felt that, rather than set up a new international institution, the United Nations might first explore the possibility of making use of existing institutions (e.g., the International Bank) for the distribution of additional funds for capital development.

At the same time Canadian representatives have endeavoured to avoid a bead-on clash on this issue of a special international fund, since this would further sharpen the division between the developed and under-developed countries in the United Nations. So far this has proved possible because the less advanced countries have been willing to defer the question, at least until a detailed plan for the fund was drawn up.

Such a plan is now available in the report of the Special Committee appointed by ECOSOC. Under this plan the Fund would not be established until a minimum amount equivalent to $250 million had been pledged by at least thirty contributing governments. Assistance would be by way of grants and low interest long term loans. The Fund would be administered by an Executive Board on which the major contributors and the receiving countries would have equal representation. The report of the Special Committee was considered at the recently concluded sixteenth session of the Council, and has been placed on the agenda for the current session of the General Assembly. In transmitting the report, the Council has recommended that the Assembly consider "what other preparatory steps might usefully be taken towards the establishment, when circumstances permit, of an international fund designed to assist the development and reconstruction of the under-developed countries". The Economic and Social Council has also recommended that governments join at the eighth session of the General Assembly in the following declaration:

"We, the governments of the States Members of the United Nations, in order to promote higher standards of living and conditions of economic and social progress and development, stand ready to ask our peoples, when sufficient progress has been made in internationally supervised worldwide disarmament, to devote a portion of the savings achieved through such disarmament to an international fund, within the framework of the United Nations, to assist development and reconstruction in under-developed countries."

The question now arises of the instructions to be given to the Canadian delegation in connection with the draft declaration and the suggestion that the Assembly consider what other preparatory steps might be taken towards the establishment of an international development fund.

Both the United Kingdom and the United States voted for the above declaration at the Economic and Social Council, and it is understood that their representatives will support it in the General Assembly. This means that these two countries are now prepared to accept a commitment to make some funds available for a development fund within the framework of the United Nations, as and when some undefined degree of progress has been made in internationally supervised world-wide disarmament. The United States' position is in line with President Eisenhower's statement of April 16th.

The United Kingdom was prepared to accept the principle of a fund in the light of the change in the United States' attitude. It may be observed that the United Kingdom is likely to favour the establishment of a fund to which it would expect the United States to be the principal contributor and which might create the opportunity for the United Kingdom to earn dollars indirectly from such a fund by selling capital goods to the under-developed countries. It is to be noted that the wording of the proposed declaration.

(a) avoids any definite commitment concerning the level of disarmament at which the fund would be established or the percentage of savings which would be devoted to the fund,

(b) specifies that the disarmament must be internationally supervised and controlled,

(c) leaves the connection between the fund and the United Nations undefined, saying merely that the fund should be within the framework of the United Nations.

Recommendation:

It is recommended that the Canadian delegation be instructed as follows:-

(1) the declaration proposed by the Economic and Social Council may be supported provided the other countries which might eventually be expected to make substantial contributions to the fund including the United States and the United Kingdom are prepared to vote for the declaration.

(2) If, as may well be the case, the under-developed countries seek to strengthen the declaration in a way which would imply a more immediate or specific: commitment to make finance available for international development through a United Nations' fund, further instructions should be sought in the light of the discussions which have taken place before any additional commitment is accepted.

(3) The Canadian delegation should take the position that no purpose would be served by further formalization of the proposal for an international development fund at the present time, on the basis that the circumstances in which the fund might later be established cannot now be foreseen. Similarly the Canadian delegation should support any move which would have the effect of avoiding consideration at this time of the detailed plan for the fund drawn up by the Special Committee. If, despite the attitude of Canadian and other like-minded delegations, the under-developed countries are successful in precipitating a discussion of the merits of the plan proposed by the Special Committee, the delegation might find it expedient to support procedural moves which would have the effect of shelving the question temporarily, such as reference of the Report to governments for an expression of their views or to the International Bank for study. In any such situation the delegation should make it clear that its support in no way commits the Canadian Government to a scheme of the particular kind put forward by the Special Committee.

(4) Because of the undesirability of aggravating any clash which may arise between the under-developed and developed countries, the Canadian delegation should not take the lead in the discussion of the issues to which the Report of the Special Committee gives rise.

(5) In explaining Canadian reluctance to agree to further formalization of the plan for the establishment of the fund, the Canadian delegation should emphasize, as an earnest [sic] of its good intentions, the very substantial. contribution which Canada is already making to the economic development through its subscription to the International Bank, its considerable part in the United Nations' Expanded Programme for Technical Assistance, and the capital and technical assistance being made available to the countries of South and South-East Asia through the Colombo Plan. At the same time the delegation should point out that the ability of Canada to do more is limited by the demands on Canadian resources for the development of our own country and the heavy burden of defence expenditure.

(6) During the debate, the delegation should indicate, as on previous occasions, that in the consideration of economic development, other factors besides the provision of finance are of vital importance and that to be most useful, financial and technical aid should be applied within the framework of sound internal fiscal policies, well-considered development programmes, progressive legal and social conditions, equitable and effective tax systems, and efficient administration. It should be emphasized, while recognizing the part to be played by external finance, that the main responsibility for development inevitably must rest upon the under-developed countries themselves, and that progressive attainment of better internal conditions would improve the outlook for grant assistance and, more importantly, for a natural flow of investment from other countries.

L.B. PEARSON